External and Internal Analysis of Foxconn - 3425 Words

External and Internal Analysis of Foxconn Introduction Foxconn, or Hon Hai Precision Industry Co, was founded 37 years ago in Taiwan by Terry Gou. The company initially started as a local computer component manufacturer. Over the past decades, Foxconn had been continuously growing to become the world’s largest electronic components manufacturers with the consolidated revenue of 59.32 billion US dollars in 2010. As the largest electronic manufactures, Foxconn provides electronic components to major electronic devices manufacturers across the world. Its clients include Apple, Amazon, Sony, Nintendo, Microsoft, Dell and HP. Since 2011, Foxconn has been expanding its operations in Brazil to increase its supply of Apple products. It has also†¦show more content†¦The industry utilizes a robot-focused manufacturing process to enhance product quality and shorten production time. This robot-focused manufacturing process requires manufacturers to invest large capital expenditures before initiating production. As a result, manufacturers experience high fixed costs, high exit and high entry barrier. Since the products are relatively indifferent to the customers, customers could easily substitute one manufacturer’s product with that of another manufacturer’s at the same cost. This attracts a large number of competitors to enter the industry and compete for market share. Entry Barriers: High * High economies of scale * Large capital investments * Existing firm possession of resources that are difficult to duplicate in the short term such as favorable locations and political contracts * A past history of aggressive retaliation * Access to cheap labor Economy of scale is a way for manufacturers to gain competitive advantage and to minimize the average cost. Foxconn and its competitors maximize the benefit of economies of scale by increasing its production. The favorable locations and political contracts also provide cost advantages. These political and favorable locations advantages are hard for new competitors to duplicate in a short period of time. Moreover, Foxconn and its competitors will initiate a retaliation to drive new entrants out of business. ForShow MoreRelatedManaging Organisational Change at Foxconn’s Factories in Contemporary China4629 Words   |  19 Pagescorporate structure is urgent. In 2010, a series of tragedies among workers at Foxconn in China has again proved the necessities to initiate fundamental changes in accordance to the new social and economical conditions in China. A total of 12 deaths and 2 suicide attempts pointed out severe issues of Foxconn’s policies and management style, and has triggered a number of nationwide protests against the company (Luk, 2010). 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