Logitech Case Study

In: Business and Management

Submitted By dodgeram
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Logitech was founded by three people during 1981 in Apples, Switzerland. The company now generates annual sales of more than 1 billion dollars, most from products such as mice, keyboards, and low-cost video cameras that cost under $100. Logitech made its name as a technological innovator in the highly competitive business of personal computer peripherals. What has made Logitech so successful is how the company has configured its global value chain to lower production costs while maintaining the value of those assets that lead to differentiation. Logitech does basic R&D work primarily software programming Switzerland where it has 200 employees. The company is still legally Swiss, but the corporate headquarters are in Fremont, California, close to many of America’s high-technology enterprises, where it has 450 employees. Some R&D work (again, primarily software programming) is also carried out in Fremont. Most significantly, though, Fremont is the headquarters for the company’s global marketing, finance, and logistics operations. The ergonomic design of Logitech’s products- their look and feel – is done in Ireland by an outside design firm. Most of the Logitech’s products are manufactured in Asia. Logitech’s expansion into Asian manufacturing began in the late 1980s when it opened a factory in Taiwan to attract customers such as Apple. Logitech not only needed the capacity to produce at high volume and low cost, but it also had to offer a better designed product. The solution: manufacture in Taiwan. Cost was a factor in the decision, but it was not as significant as might be expected, since direct labor accounted for only 7% of the cost of Logitech’s mouse. Taiwan offered a well-developed supply base for parts, qualified people, and a rapidly expanding local computer industry. After the Apple contract, Logitech’s other OEM business started being served from…...

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