Case Detail

Case Summary

DataLink, Inc: Manufacturing Strategy for Cordless Telephones

Case Number: 5-104-031, Year Published: 2004, Revision Date: January 01, 0001

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Authors: Mohanbir Sawhney; Willy Beeck; Timur Colak; Ian Dyson; Eunah Kim; Masahiro Ozaki; Giri Sekhar; Matt Hood

Key Concepts

New Product Development, Manufacturing Strategy, Sourcing Strategy, Operations, Finance, NPV Analysis, Quality, Valuation of Acquisitions

Abstract

DataLink was the largest modem manufacturer in the world. Faced with a slowdown in its core market, it was evaluating a new opportunity in the market for 900 MHZ cordless phones. The company had designed a cordless phone that included a built-in modem, and was considering several alternatives for manufacturing the product. It could manufacture the phone in-house, which would result in the highest quality product but would delay the launch beyond the crucial Christmas selling season. It could outsource manufacturing to an Asian OEM to get to market quicker, but it would run the risk of compromising its stellar reputation for quality. An intermediate option was to outsource components but do final assembly in-house. Finally, the company could buy out an existing player V-Tech, but this company competed in the low-end segment. Students are presented with data on cost, quality, and time-to-market considerations for all four options, and they need to calculate the net present value (NPV) of each option. They also need to weigh qualitative considerations like impact on brand equity, stakeholder reaction, and the motives of the management team members.

Number of Pages: 20

Extended Case Information

Teaching Areas: Manufacturing, Marketing

Geographic: Chicago, IL

Industry: Consumer Electronics

Organization Name: DataLink (an alias)

Organization Department: Manufacturing

Organization Size: Large

Decision Maker Position: Vice President, Telephone Division

Decision Maker Gender: Male

Year of Case: 1995