The Hollow Corporation
MGMT280-01 Final Presentation
Michael Burke, Andrew Nelson, Ken Onyechi, Vinnie Rodriguez
Presentation Summary
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Introduction
Definition
Influences
Outsourcing/Offshoring
Hollow vs. Vertical
Flexibility is Key
Size Matters
Westinghouse
Ikea
Dell, Inc.
Drawbacks
Our Hollow Corporation
Defined:
Firm wherein production of all goods
and services are outsourced to
suppliers.
z Only remaining corporate functions
would be: planning, coordination &
administration
z
Influences/Trends on the Hollow Shift
z
z
z
z
Low-cost manufacturing opportunities in
Far East, Eastern Europe and Mexico
Liberalization 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/offshoring
Easier, quick-money
Outsourcing & Offshoring
z
“White-labeling”
Expanding to financial services
z Applied through Internet
z
# of companies outsourcing in 2004
tripled in two-yr period
z Offshoring expected to account for
80% of outsourcing
z More manual workers becoming whitecollar
z
Buy or Make | Hollow or Vertical
Hollow
-More resources available
-Reduced operating costs
-Simplified costs
-Access to highest expertise
-Greater focus on investment
Vertical
-Broader technological intelligence
-Increased opportunities-knowledge
-Reduced dependency of suppliers
-High volume by internal demand
Benefits-Flexibility is Key
Almost non-existent overhead cost
z Virtual or Hollow Companies enjoy
great Flexibility.
z Easy to change direction according to
demand or market fluctuation.
z Very few actual employees.
z Greater span of branding
z
Size Matters
Most virtual companies try and limit
their total employees to the bare
minimum
z The employees are usually spread
across the country or world
z Meetings usually occur over the
internet or phone
z
Hollow Corporation 1: Westinghouse
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Order Winner
z
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Price
Qualifier
Quality
z Delivery Speed
z
Hollow Corporation 2: Ikea
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Order Winner: Quality
Style
z Durability
z
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Qualifier
Price
z Delivery Speed
z Delivery Reliability
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Hollow Corporation 3: Dell, Inc.
Order Winner: Quality
z Qualifier: Price
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Offshoring of call centers to India
z Currently switching their
manufacturing strategy
z
The Hollow Drawbacks
z
Less control of operations
Less technological/market intelligence
z Less room for technological innovation
z
Focus more on short-term than
strategic direction
z Potentially add to foreign country’s
economy
z Huge dependability on suppliers
z
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