1. What was the strategic advantage to Microsoft of outsourcing Xbox production to Flextronics?

The strategic advantage to Microsoft of outsourcing Xbox is to manage manufacturing and logistic capabilities to make the Xbox itself and to manage a global supply change. Flextronics also sells computer hardware and the products represent a much smaller part of the company’s overall revenues. When taking into consideration whether to manufacture the Xbox in house or to outsource, the company chose the latter strategy. Microsoft was able to continue to focus on its core business while allowing another company, Flextronics, which has expertise in managing a global supply chain to control production.

2. What were the risks associated with outsourcing to Flextronics? Did Microsoft mitigate these risks? Do you think Microsoft would have been better off making the Xbox itself?

The risk associated with outsourcing to Flextronics is the company makes the decision to outsource; it gives up control over the production process. Some of the risks also included a suitability, quality, and so on will become the responsibility of another company. Microsoft decided to outsource Xbox production; the company chose to work with Flextronics, which it had a long history with. Microsoft would not have been better off making the Xbox itself because in the long run the jobs can stimulate the economy and its easier to control a plant when you’re watching it grow.

3. How did Flextronics’ industrial park strategy enable the company to respond to national changes in relative factor costs?

Under Flextronics’ industrial park strategy, key suppliers were required to establish their operations near a Flextronics assembly plant in low-cost locations near the customer’s end market. Strategy enabled the company to tightly manage its own supply chain, reduce the chances of supply