The Study Of Outsourcing Stratagem By SINO Company

In recent years, China's automobile industry experienced an unprecedented, explosive growth and has become the world's most important automotive markets in the world. With the increasingly hard market competition, corporate management had already transferred from focusing on internal resources to external resources, and this is a trend of economic globalization, information technology and personality of consumer demand. Manufacturing enterprise should seek more effective ways to reduce costs, and enhance their core competitiveness.This paper mainly studies the choice of outsourcing strategy of the products of industry of automobile and its components, and it commences from the basic situation company, introducing the development process of company from its establishment up to now, and change of sales of each year of the company, the change of employees and each year's net profit, it put forth main issues the company facing: along with the increasing of the sales, however, the net profit of the company descends. The reasons of this phenomenon are as following: a) the large investment of company on R&D influenced the profit index; b) the new building and many of the depreciation of equipments influence the profit index; c) the ascension of material cost influence the profit index; d) the falling of the price of product due to falling of the price of car, it influence the profit index; e) the increasing employees cause high cost of human resource, it also influence net profit rate.Then the paper expounds from the whole surrounding of the industry, by application of PEST analysis method and Five-strength analysis method, pointes out that the company is currently facing a favorable macro-environment situation. Through PEST analysis, focus on the political, economic, technology and social impact on the company's external environment. Through Five-strength analysis, the industry exists in the five basic competitive forces: the bargaining power of suppliers, the intensity of competition in the industry, the threat of substitutes, potential entrants and the threat of the buyer's ability. The situation of the five strengths and its comprehensive intensity will lead to changes of the internal economic structure of the industry, and it determines the degree of competition in the industry and the ability of gaining profit of the industry. Through above analysis, we can clearly see the external environment the company faced: China's booming in car industry brings great opportunity to the automotive electrical and electronic industry, for both domestic enterprises and foreign-owned companies. However, due to the development of China's auto industry still in its infancy, and its low-level car types as well as the components it used still occupy a considerable share, while continuing high cost of materials cause the company to face big pressure. Low-level products still having considerable market share makes the company can not ignored development of any low-level product, and the low-level products belong to the low value-added, labor-intensive products, they are larger Challenges to number of company's employee and controlling ability of cost. It is a very good idea to seize this opportunity and try to transfer internal problems into market issues, to find a suitable supplier and gain certain profit rate and large market share through low-cost devotion. Through the identification and development of core competence of the company, it will gather its ability and further improve the company's supply chain. It will make the company more "strong" in the market competition to obtain a comparative advantage and also raise the issue of identification of the company's core competencies.Then the paper start from analyzing company's internal value chain to expound basic methods and principle of value chain analysis, and identify company's core capabilities and raise the methods to identify the core competence of automotive electronics manufacturers. Through analysis, we can clearly see the company's internal value chain theory determines the theory base brought from the company's outsourcing of part of the company's business. Through the identification of company's core competence, it determines business types of outsourcing of non-core competence and non-core manufacturing.Then through the SWOT analysis, this paper summarizes the company's situation and provides the SWOT matrix of the company against the above-mentioned analysis of external circumstance and internal competence, points out the significance brought by outsourcing strategy to the company. Through the analysis of outsourcing by means of linear programming model and DuPont model, and the comparison of the costs of self manufacturing and outsourcing the two type of electric window switches. At the same time, combination of the actual situation, i.e. to consider the productive capacity of enterprises, including enterprises in the normal production capacity and additional overtime hours and overtime. Re-use of operational research on commonly used linear programming model for solving optimization, computer-related operations, to achieve a specific value. This will help companies make the decision whether or not outsourcing, and also be able to determine a specific number of homemade and outsourcing. And use DuPont model to implement analysis of ratio in financial on outsourcing and then analyzes the economic benefits of outsourcing decision-making.This article concludes specific measures for outsourcing. First of all, including the choice of outsourcing provider, as well as issues should be focused; Secondly, after determining the content of sourcing and the supplier, to define the negotiation team and enter into the process of negotiation. Thirdly, how to face and handle the risks arising from the implementation of outsourcing become the necessary measures assuring the effectiveness of outsourcing. Finally, the paper put forth the acceptance plan of the final deliverable of outsourcing.The analysis of this paper not only help SINO company to make decision on outsourcing, but now more and more auto parts enterprises will apply outsourcing in their production process. Therefore, this paper's way and method of analysis have some practical value to many auto parts companies.