Microsoft - Outsourcing XboxBackgroundMicrosoft, since its creation, has been known for its software, particularly its Windows platform. He changed the way we use computers and through his software made the computer user-friendly and very efficient. Microsoft, however, does not want to specialize only in the software department. They thus extended their excellence into other departments such as gaming, music and hardware. Problem When Microsoft entered the video game console market, they were faced with a dilemma: make the Xbox themselves or subcontract it to a third party company. Microsoft ultimately chose to outsource production to Flextronics. Flextronics' "industrial park" strategy allowed it to manage its supply chain, making Xbox production more efficient and profitable. They also had factories around the world, all under a centralized information system, which allowed them to move production from one country to another if necessary for optimal profitability.Analysis1. What is the strategic advantage for Microsoft of outsourcing Xbox production to Flextronics? Microsoft has a lot to gain by outsourcing Xbox production to Flextronics. Microsoft's core competency is producing software, not hardware. So, according to the law of comparative advantage, it is better for Microsoft to let someone good at producing hardware produce the Xbox. Flextronics not only offers its hardware expertise, but also its network of connections around the world that reduces production costs, thereby making the market value of the Xbox lower and more affordable. Through Microsoft's web information system, they are able to share information with Flextro...... middle of paper ... for Xbox and as a result, Flextronics can change its production schedule to meet these requests in the same way. in real time as well. Communication ensures that the entire process is closely monitored by both parties to ensure closer coordination and efficiency to minimize inventory, avoid shortages and develop a balance between supply and demand. ConclusionMicrosoft made a wise decision in choosing to outsource Xbox manufacturing to Flextronics. They're not as skilled at making components for Xbox as they are at making software. Flextronics, on the other hand, is a large enough company with sufficient funds and experience manufacturing hardware, like the Xbox. They have the expertise and logistics to produce efficiently and cost-effectively, whilst maintaining the level of quality demanded by Microsoft as a well-known brand..