We talk about off shoring and its impact on individual careers, organizations and national economies. A UC Irvine study analyzed the iPod, asking where the 451 parts that go into it are made and who makes them. IPods are assembled in Asia by companies you have probably never heard of, but Apple is the big winner. Most value is added by companies with brand names that conceive of products and do user-interface and engineering design, marketing, distribution and sales. Those involved in manufacturing and assembly add less value.
UC Berkeley professor Hal Varian discusses the report in this New York Times article. (This is a very good article, but I would not mention and link to it while the Times charged a subscription fee).
Do you think US firms will have the same advantage as Apple does today in the future? Why?
Wednesday, September 26, 2007
Off shoring -- who are the big winners?
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Of course, the big winner is who markets the product to the end user. The important part is who owns the product or service because it ultimately does not matter who or where is made. The offshoring companies do not own the product or service, so they cannot market it themselves.
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