Recently I came across the concepts of
“Global Value Chain”, “Electronic Value Chain Management (E.V.C.M.)”
& “Value Chain Modularity”. Till now I have had heard about simple
good old Michael Porter’s Value Chain. What could this word “Modularity”
possibly mean? Started surfing in net for some material which would be
little easier for me to understand. I wonder, where would I possibly
have gone if there was no “Google”! Ran though some really interesting
articles. Whatever I understood I am sharing with you & will try to
make it as simple as possible.
Electronic Hardware Industry is one of
the most crucial goods producing sector, generating greater revenue than
any other industry and gives employment opportunity to a huge base of
skilled human resources. The electronics manufacturing industry enhances
the output productivity of other industries as well, adding value to
the other industry value chain. As a result it is entitled as the
“Propulsive Sector”. Thousands of odd companies from different countries
contribute to the industry on day to day basis. Even a single product
can contain work carried out by ten different firms in multiple
countries.
There are mainly 3 major players in the
industry – the Lead Companies (Contract givers), the Contract
Manufacturers, and the Platform Providers (the Software Firms). They all
the interdependent for their sheer existence and growth. There are many
hitches and death traps for the Electronics firms to overcome. The
developed countries get better facilities, whereas the developing
countries struggle harder to sustain in this highly competitive market
scenario.
In the developing countries the electronics firms uses 4
strategies to overcome these limitations.
(1) global expansion though acquisition of declining brands (emerging multinationals);
(2) separation of branded product divisions from contract manufacturing (original design manufacturing (ODM) spinoffs);
(3) successful mixing of contract
manufacturing and branded products (platform brands) for contractors
with customers not in the electronic hardware business; and
(4) the founding of factory-less
product firms that rely on global value chains for a range of inputs,
including production (emerging factory-less start-ups).
Strategic Action Plan could be, Attract
FDI from component manufacturers, Form joint ventures with component
manufacturers, Manufacture under license, Move away from contract
manufacturing to ODM and OBM, Establish Design Services, Establish
Support Industries, Establish a Branding Strategy (Via subsidiaries, Via
links with buyers).
For further studies please refer the
below mentioned .pdf materials. These are very enriching and indepth
informative research papers.
http://www.unescap.org/tid/projects/sasme_s4b.pdf
http://unstats.un.org/unsd/trade/s_geneva2011/refdocs/RDs/GVC%20in%20Electronics%20Industry%20%28Sturgeon%20-%20Sep%202010%29.pdf
http://elibrary.worldbank.org/content/workingpaper/10.1596/1813-9450-5417
http://spectrum.ieee.org/webinar/1705632
http://elibrary.worldbank.org/content/workingpaper/10.1596/1813-9450-5417
http://spectrum.ieee.org/webinar/1705632
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