Titan: The Outsourcing Journey
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Case Details:
Case Code : OPER016
Case Length : 11 Pages
Period : 1999 - 2002
Organization : TITAN
Pub Date : 2002
Teaching Note : Available
Countries : India
Industry : Watch manufacturing
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Please note:
This case study was compiled from published sources, and is intended to be used as a basis for class discussion. It is not intended to illustrate either effective or ineffective handling of a management situation. Nor is it a primary information source.
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Excerpts
About Outsourcing
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Simply put, outsourcing means getting those things done outside that were
hitherto provided for internally. According to the Outsourcing Institute,
"Outsourcing is nothing less than a basic redefinition of the organization.
Outsourcing suggests an organization focussed on a few, well-chosen core
competencies supported by long-term outside relationships for many of its other
activities and resources."
An organization can outsource many functions of its day to day operations -
manufacturing, marketing, human resources management, information technology
services to name a few. It is thus a type of make-or-buy decision, wherein
typically an earlier 'make' decision is altered to a 'buy' decision.
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Earlier, when competitive pressure on companies was not very severe, cost
management in manufacturing usually resulted in backward integration and
gaining ownership of a large range of manufacturing and subassembly
facilities...
Outsourcing at Titan
Titan's entry into the clock segment in the mid 1990s failed badly because
its clocks could not face the competition from cheaper imports from China.
Moreover, the design of Titan's clocks was also found to be faulty.
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To correct
these problems, the company decided to stop manufacturing clocks,
instead it decided to import them from Hong Kong. The only input in this
'virtual manufacturing ' setup from Titan's side was in the form of
design, branding and distribution. The company converted its clock plant
into a plastic watch-manufacturing unit to make alarm and travel
watches. Outsourcing activities were further strengthened in the next
few years due to the problems Titan was facing with the gray market.
The gray market has always accounted for a substantial part of the
Indian watch industry (Refer Table IV)... |
The Future
Dash proved to be a runaway success for Titan with 50,000 watches being sold
within the first two months of its launch. The Fastrack range grew by almost
100% in terms of volume and it established itself as the largest youth brand in
the country. The line was extended to the digital watch market with Fastrack
Digital, positioned on the fashion platform. According to company sources, the
success of these two watches was due to the fact that they were outsourced...
Exhibits
Exhibit I: Titan - Product Profile
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