Question 1 (of 2): MicroTech Limited Case Study MicroTech Limited (MT) 1 is a leading manufacturer of computers, notebooks and printers. MT's strength lies in research and development and, is constantly coming up with the most innovative products in the industry. To focus on its core competence, MT outsources the following activities to multiple contractors: (i) the manufacture of their older products, (ii) the manufacture of all but key components of new products, and (iii) post-sale repair and maintenance (R\&M) of products at customer premises. Recently, customer complaints about the quality of notebooks have been increasing. Upon investigation, the defective notebooks were primarily produced by one of MT's new major manufacturing contractors. The CEO of MT, Jack, had previously failed to discuss how product quality should be ensured when negotiating contracts with contractors. Recognising a potential problem with MT's outsourcing process, Jack hired a consultant, Stephen, to assess MT's outsourcing process. "Our contractors usually do their own thing and we leave them alone," Jack explained in response to Stephen's questions. "We have received very few complaints previously. In fact, our customers surveyed last year indicated that they were especially pleased with the R\&M services provided by our suppliers. The customers said they arrived on time and fixed all problems with their computers and printers promptly. This reflects well on us as these suppliers wear our uniform when working on our jobs." Jack mentioned that MT manufactured the most critical components of new products in-house, especially those using new technology. "Part of the reason is because we don't believe our contractors have the technological expertise to manufacture them. It is a different story when it comes to our R\&M suppliers - they are really good at what they do, probably the best. Also, they have the numbers. We neither have enough employees nor the resources to train new ones to that level." "How did you select your contractors?" Stephen asked. Jack was unsure but thought selection was based on price. Jack said, "It's a pretty competitive market out there, and there are always some rumours about specific contractors. If I don't hear anything negative, I assume they are pretty much the same skills-wise. We have only started to hear a few complaints recently." "You have been very lucky," Stephen commented. "Selecting a new supplier should get as much attention as employing new staff. You should aim to develop a partnership with your suppliers that will benefit your business and theirs. The contractor essentially becomes part of your business. This is especially important for suppliers that interact with your customers because we have evidence that customers are placing increasing emphasis on customer service and the entire customer experience". Required: Read the above case and answer the following questions. Draw on case evidence where possible. 1. Assume that MT is thinking of outsourcing the activity of manufacturing key components of newly developed products and reassessing the outsourced activity of post-sale repair and maintenance of products at customer premises. Should MT outsource both activities? Draw on the outsourcing matrix to provide a recommendation for each activity. Justify your recommendations and draw on case evidence where available. Question 1 (of 2): MicroTech Limited Case Study MicroTech Limited (MT) 1 is a leading manufacturer of computers, notebooks and printers. MT's strength lies in research and development and, is constantly coming up with the most innovative products in the industry. To focus on its core competence, MT outsources the following activities to multiple contractors: (i) the manufacture of their older products, (ii) the manufacture of all but key components of new products, and (iii) post-sale repair and maintenance (R\&M) of products at customer premises. Recently, customer complaints about the quality of notebooks have been increasing. Upon investigation, the defective notebooks were primarily produced by one of MT's new major manufacturing contractors. The CEO of MT, Jack, had previously failed to discuss how product quality should be ensured when negotiating contracts with contractors. Recognising a potential problem with MT's outsourcing process, Jack hired a consultant, Stephen, to assess MT's outsourcing process. "Our contractors usually do their own thing and we leave them alone," Jack explained in response to Stephen's questions. "We have received very few complaints previously. In fact, our customers surveyed last year indicated that they were especially pleased with the R\&M services provided by our suppliers. The customers said they arrived on time and fixed all problems with their computers and printers promptly. This reflects well on us as these suppliers wear our uniform when working on our jobs." Jack mentioned that MT manufactured the most critical components of new products in-house, especially those using new technology. "Part of the reason is because we don't believe our contractors have the technological expertise to manufacture them. It is a different story when it comes to our R\&M suppliers - they are really good at what they do, probably the best. Also, they have the numbers. We neither have enough employees nor the resources to train new ones to that level." "How did you select your contractors?" Stephen asked. Jack was unsure but thought selection was based on price. Jack said, "It's a pretty competitive market out there, and there are always some rumours about specific contractors. If I don't hear anything negative, I assume they are pretty much the same skills-wise. We have only started to hear a few complaints recently." "You have been very lucky," Stephen commented. "Selecting a new supplier should get as much attention as employing new staff. You should aim to develop a partnership with your suppliers that will benefit your business and theirs. The contractor essentially becomes part of your business. This is especially important for suppliers that interact with your customers because we have evidence that customers are placing increasing emphasis on customer service and the entire customer experience". Required: Read the above case and answer the following questions. Draw on case evidence where possible. 1. Assume that MT is thinking of outsourcing the activity of manufacturing key components of newly developed products and reassessing the outsourced activity of post-sale repair and maintenance of products at customer premises. Should MT outsource both activities? Draw on the outsourcing matrix to provide a recommendation for each activity. Justify your recommendations and draw on case evidence where available