Lars Inman needs to turn RLK Media around in twelve months. With no marketable product on the table, his only option is to get their new iVid gadget in the market. He is faced with the decision whether to in-source or contract out its software development. This paper explores the different strategies available to the company and the various issues associated with these strategies as well as their implications to middle management.
Nothing exemplifies globalization more than the way most businesses create their products. Today, we can have a device designed in the United States with software created in India, a hardware made in China and the final product assembled in Taiwan. It is no longer enough to be the best in the land, today companies are playing in a much bigger field-the world. The RLK Media case presents a company torn between its core competency and the allure of contracting out.
According to Premji, the company's survival depends on the success of a single product that it doesn't have the expertise to develop (Nohria, Huston, Brown, Hagel III, Lipman-Blumen, & Premji, 2005, p. 28). Lars Inman views the iVid as a make or break strategy. They have to produce it one way or the other. The only question is, should the management bring people in or should they bring the development out? This paper explores the strategic decisions RLK management needs to resolve and the different strategies proposed by some experts as well as the management issues and their implications to the management.
The case presents several strategic decisions the management need to contend with. These issues include outsourcing, in-sourcing, innovation, marketing analysis and Premji's proposed collaboration method.
[...] As the chief scientist, Kelner is afraid to loss control of the design his team had labored for. The team had been used to doing everything themselves that the idea of letting another firm take over their design is threatening. Long-term implications Although Inova claims to be open for collaboration, their experience with Pycosonics show that there are limits as to the kind of intrusion they consent to. The firm values its “autonomy” as much as RLK Media and they would make sure that collaboration remains within specified boundaries. [...]
[...] Managers need to have a clear understanding of the nature, extent and consequences of outsourcing to the company in order to enlighten their people and prevent wrong insinuations that might lead to deeper problems. Contracting out research and development would expose the company to another firm. Middle managers had to ensure smooth transition of new roles expected from the workers. They need to help the people change their mindsets and look at the bigger picture. Outsourcing also implies that middle managers need to collaborate with their new partner firms and ensure that the conditions of their contract are met. [...]
[...] This process is advantageous as it not only simplifies the company's processes but also its organization. Outsourcing option usually happens when a company decides to simplify their operations and refocus their energies to more crucial aspects of the company. By outsourcing, the firm gets rid of tasks that are not within their field of expertise and enter a contract with a company that is more competent for the job. This gives them the opportunity to concentrate their efforts on what they do best without sacrificing quality of their product. [...]
[...] As a result, the company maintains absolute control of all their designs and intellectual property rights. The engineers work as a team and their “ecosystem” fuels collaboration and innovation. Lipman-Blumen calls Kelner's team a group” of “smart, creative, impassioned individuals totally dedicated to- even in love with-their task” (p. 26). They are the force behind the best electronic projects that established the company's name in the industry. Kelner not only wants to preserve his team but also expand by recruiting the best software engineers to help them produce their latest invention. [...]
[...] Mishandling of their scarce resources could signal the company's financial ruin. Time and money are crucial and Inman is ready to grab the easiest way out of the situation which is outsourcing. Costs The company does not have a software team to handle the job. Furthermore, the company does not have the budget to establish a first class software team. According to Denise Tan's calculations, hiring such people cost a lot. Based on their meeting, hiring the software team Kelner wanted could lead to bankruptcy if they do not meet the eighteen-month schedule and the product fails to be a bestseller. [...]
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