The Hollow CorporationMGMT280-01 Final PresentationMichael Burke, Andrew Nelson, Ken Onyechi, Vinnie Rodriguez

Presentation Summary1. Introduction2. Definition3. Influences4. Outsourcing/Offshoring5. Hollow vs. Vertical6. Flexibility is Key7. Size Matters8. Westinghouse9. Ikea10. Dell, Inc.11. Drawbacks 12. Our Hollow Corporation

Defined:

Firm wherein production of all goods and services are outsourced to suppliers. Only remaining corporate functions would be: planning, coordination & administration

Influences/Trends on the Hollow Shift

Low-cost manufacturing opportunities in Far East, Eastern Europe and MexicoLiberalization of international trade (average level of tariffs in industrial countries now less than 1/10 the level before 2nd world war) Global competition, putting pressure to cut costs by outsourcing/offshoringEasier, quick-money

Outsourcing & Offshoring

“White-labeling”Expanding to financial servicesApplied through Internet

# of companies outsourcing in 2004 tripled in two-yr periodOffshoring expected to account for 80% of outsourcingMore manual workers becoming white-collar

Buy or Make | Hollow or VerticalVerticalHollow

-More resources available-Reduced operating costs-Simplified costs-Access to highest expertise-Greater focus on investment

-Broader technological intelligence-Increased opportunities-knowledge

-Reduced dependency of suppliers-High volume by internal demand

Benefits-Flexibility is Key

Almost non-existent overhead costVirtual or Hollow Companies enjoy great Flexibility.Easy to change direction according to demand or market fluctuation. Very few actual employees.Greater span of branding

Size Matters

Most virtual companies try and limit their total employees to the bare minimumThe employees are usually spread across the country or world Meetings usually occur over the internet or phone

Hollow Corporation 1: Westinghouse

Order WinnerPrice

QualifierQualityDelivery Speed

Hollow Corporation 2: Ikea

Order Winner: QualityStyleDurability

QualifierPriceDelivery SpeedDelivery Reliability

Hollow Corporation 3: Dell, Inc.

Order Winner: QualityQualifier: Price

Offshoring of call centers to IndiaCurrently switching their manufacturing strategy

The Hollow Drawbacks

Less control of operationsLess technological/market intelligenceLess room for technological innovation

Focus more on short-term than strategic directionPotentially add to foreign country’s economyHuge dependability on suppliers

Our Hollow Corporation

Click here

Works Cited:•“The age of the hollow company”. Times Online. Apr 2004. 12 Apr 2008. http://business.timesonline.co.uk/

•Roach, Steven. Harvard Business Review. “The Hollow Ring of the Company”. http://harvardbusinessonline.hbsp.harvard.edu/

Thank you! This has been a presentation by:Michael Burke, Andrew Nelson, Ken Onyechi, Vinnie Rodriguez