As talked about in class many times, we all know that Apple outsources the production of their phones and does not do it in house. Blackberry is soon to follow suit, also focusing on software as Apple has been doing. This can provide many benefits to the company that can lead to increased sales and a cut in production prices, but it also comes with a risk.
In an article I read on Phys.org Outsource, the author explains how and why Blackberry has decided to outsource the production of its phones. "BlackBerry, which a decade ago was among the world's largest smartphone makers, has seen its global market share slip to less than one percent as Apple and Android devices have dominated." (Phys.org) I get the feeling that Blackberry is taking a good hard look at their business model and trying to pick apart the pieces that are leading them to their immanent failure. One of their moves is to bring outsourcing into the equation by enlisting Indonesia to complete that task.
Blackberry doubled their software revenue in the last year which leads me to believe that that is why they want to make software the main focus of the company. Although, the risk associated with outsourcing the production can include a greater number of defects in the product or less skilled workers completing the good, they still feel that it is a necessary risk to take. This will be in the form of a contract and will surely reduce production costs across the board freeing up more money for factors such as research and development.
On the other hand, this can have a negative viewpoint from a lot of Americans because they will see it as jobs going overseas. We know from class that this is a very complicated issue and doesn't just consist of a "lose a job here, gain a job overseas" approach. In the end, the company has to do what they believe is relevant in order to survive in a competitive market in which they are bringing up the rear. If the company goes out of business a lot more jobs would be lost including to those in the production plants.
I found this article interesting as well. Being a marketing/finance major, is it possible to succeed with a change to Blackberry's business model? On an economic point of view, in the long run, is it more beneficial for Blackberry to focus on software manufacturing even with more defects? Also, do you think that they will let some manufacturing workers go, to increase their software/technology working infrastructure?
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