Microsoft - Outsourcing for XboxBackgroundMicrosoft, since its inception, has been known for its software, particularly its Windows platform. He changed the way we use computers and, through his software, made the computer easy to use and very efficient. Microsoft, however, does not want to specialize only in the software department. They have thus expanded their excellence into other sectors such as games, music and hardware. ProblemWhen Microsoft entered the video game console market, it faced a dilemma: whether to produce the Xbox itself or outsource it to a third-party company. Microsoft ultimately chose to outsource manufacturing to Flextronics. Flextronics' "industrial park" strategy is what allowed it to manage its own supply chain, making Xbox production more efficient and cost-effective. They also had factories around the world, which were all under the centralized information system, as they could move production from one country to another as needed for optimal profitability.Analysis1. What is the strategic advantage for Microsoft in outsourcing Xbox manufacturing to Flextronics? Microsoft has a lot to gain from outsourcing Xbox manufacturing to Flextronics. Microsoft's core competency is making software, not hardware. So, according to the law of comparative advantage, it is better for Microsoft to let someone, who is good at making hardware, make Xbox. Flextronics not only offers its own hardware expertise, but also its own network of connections around the world which reduces production costs, thus making the market value of Xbox lower and more affordable. Thanks to Microsoft's web-based information system, they are able to share information with Flextro... middle of paper... for Xbox and thus Flextronics can modify its production schedule to meet such demands in the same also in real time . Communication ensures that the entire process is carefully monitored by both parties, so that there is closer coordination and efficiency to minimize inventories, avoid shortages and develop a balance between supply and demand. Conclusion Microsoft made a wise decision by choosing to outsource the production of the Xbox to Flextronics. They are not as competent at making Xbox components as they are at building the software. Flextronics, on the other hand, is a fairly large company with ample funds and experience in manufacturing hardware, such as Xbox. They have the experience and logistics to produce efficiently and economically, while maintaining the level of quality required by Microsoft as a well-known brand.