Manufacturing Firm Growth Stage And Outsourcing Strategy

With the rapid evolution of economic globalization and digitization of the third industrial revolution coming, outsourcing gets started to become a major strategic weapons in the fierce global competition to obtain new development. Through non-core business outsourcing, enterprises save their own resources and highly focus on core value chain to create more profits; on the other hand, outsourcing business can obtain higher operational efficiency and cost reduction in more specialization way and operation of external economies of scale. Therefore,"the effect of outsourcing on firm performance" is the core issue of outsourcing strategy research. Up to now the study of this problem is mainly based on transaction cost theory, resource-based theory and the theory of the value chain, which are all for the intensity of the impact of outsourcing on firm performance studies, most of the research consider the outsourcing strategy improve business performance and enhance their competitive advantage by reducing transaction costs, integration of resources and concentrate on building their core business capabilities in limited resources. Then, with the outsourcing strategy widely use and various theories of empirical study in depth, the result presents non-deterministic complexity.According to Bain&company (2009) data results, even though outsourcing business today has a very clear trend, but the results of enterprise performance of outsourcing survey brings satisfaction is lower than50%. Most enterprises in the initial reason for outsourcing is to reduce costs and enhance strategic competitiveness, yet more than half of companies are disappointed with their outcomes. It shows that our academic research in addition to previous theory of motivation for outsourcing, outsourcing mechanism, outsourcing results, etc.,, need to further explore the relationship between outsourcing strategy and corporate performance. Gaps and deficiencies in the current outsourcing research, as well as the risks arising from the use of outsourcing and uncertainties, this paper take practical implementation of Chinese manufacturing outsourcing strategy into consideration, standing on the strategic level of outsourcing to explore the role of outsourcing on manufacturing enterprise in different stages of firm growth, and proposed outsourcing strategy may not always give the enterprise, or bring persistently the expected performance. Its impact on business performance depends not only on the specific implementation of the outsourcing strategy, also depends on the implementation of the enterprise growth stage.In this paper, the research mainly carried out through the following part:Literature review and theoretical research:In the second part of the paper, we carefully review the relevant literature, summed up the motivation for outsourcing, outsourcing specific classification,the role of outsourcing strategy in corporate performance theory and so on. Based on the analysis of these theoretical results and building the theoretical foundation and framework of this study, study the interaction between manufacturing company growth stage and outsourcing strategy scientifically.Exploratory Case Study:In this paper, based on existing research, regard Metersbonwe Fashion as a case study to analysis the impact of outsourcing strategy on performance for manufacturing enterprises. Metersbonwe Fashion as a Chinese manufacturing enterprises who is the first one taking outsourcing strategy, creating a new virtual business mode, represent typically. Its representativeness, commonality and particularity provide a scientific basis to the examination of the hypothetical problems. Besides, this paper adopt a new perspective of research, split the influence mechanism into stages, deeply explore each specific stage to assess the strategic role of outsourcing on firm performance, and ultimately get the relationship between outsourcing strategy and business growth stage.Metersbonwe Fashion is the first apparel manufacturing enterprise and so far the most successful companies, who put innovative strategies to develop a virtual profit model in to effect, in the international political, economic, social and other macro environment domestic in China of the20th century. Outsourcing strategy is the most successful decision in the creation of Metersbonwe Fashion from1995and the lack of capital facing increasingly intense competition in the apparel industry, meanwhile, it’s also an important way to get a comparative advantage make full use of their advantages in resources, establish competitive differentiation and building out their own core competitiveness. Metersbonwe Fashion with the help of the others in outsourcing strategy, relying on external resources who has low cost economies and idle resource, transfer the production and sales, integrate supply chain and highly focused on building core business capabilities, apply limited resources to the smiling curve both ends-product design and brand value, at last successful realize fast fashion apparel industry changes in asset-light model.By carrying out outsourcing strategy to shorten the supply chain, improve the efficiency of business processes and strengthen control terminal sales, and other, Metersbonwe Fashion create miracles in Chinese garment industry. But with the success of the enterprise listing and entering the next stage of development, Metersbonwe Fashion began to experience reseller relationship breakdown, inventory difficulties and bottlenecks in the development, in the meanwhile risks and uncertainties of outsourcing strategy come to threat Metersbonwe Fashion, stagnant development make Metersbonwe Fashion abandon outsourcing strategy, turning light to heavy assets mode.In this section, describes the role of outsourcing strategy in corporate performance by analyzing the case, and the initial conceptual framework was further expanded on this account, which start from the assumption proposition, and use the cases to derive general of strict logic rules. Ultimately, conclusion about the specific impact of outsourcing strategies on manufacturing enterprises growth at different stages is:outsourcing strategy has a certain impact on business performance. Moreover, the strategic role of outsourcing on firm performance depends not only on the specific implementation of the outsourcing strategy, specific firm stage of growth is also a key points. This paper argues that outsourcing strategy has a significant positive effect on the initial establishment of manufacturing enterprises and the rapid development stage, so that enterprises can be rapid development in the lack of capital to gain a competitive advantage quickly through external forces and; But after the capital accumulation in the stages before, hidden risks and drawbacks of outsourcing strategy become visible when grow into the mature stage, which has strong impact to the manufacturing enterprise and become obstacles to its development. In this case, the outsourcing strategy for business growth has negative effects.