It’s December 2000. You are to make a presentation to the Ericsson Board of Directors outlining the pros and cons of outsourcing to Flextronics and making a recommendation on whether or not to do it.
Questions to think about: (a) What are the pros and cons of outsourcing relative to keeping production in-house? (b) What are the pros and cons of outsourcing relative to exiting the business altogether? (c) Does Flextronics’ role pose a long-term risk to Ericsson? (d) Although Ericsson’s arrangement with Flextronics is the most ambitious to date, others in the industry are also turning to outsourcing. Why do you think they are doing so now, rather than earlier in the “life cycle” of wireless phones?