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Arab Open University
Faculty of Business Studies
Business Functions in Context I
B203A - Second Semester 2016-17
Tutor Marked Assessment
Being Cheap is our specialty

Hon Hai Precision Industry is sometimes called the biggest company you have never hear of. Yet it is one of the world's largest contract electronics manufacturers who produce many of the world's computer, consumer electronics and communications products for customers such as Apple, Dell, Nokia and Sony. Since it was founded in 1974, the company's growth has been phenomenal. It is now the world's biggest contract manufacturer for the electronics industry. Why? Because it can make these products cheaper than its rivals. In fact, the company is known for having an obsession with cutting its costs. Unlike some of its rivals, it has no imposing headquarters. The company is run from a five- storey concrete factory in a grimy suburb of Taipei and its annual meeting is held in the staff canteen.
‘Doing anything else would be spending your money. Cheap is our specialty', says chairman Terry Gow , and he is regarded as having made Hon Hai the most effective company in his industry at controlling costs.
The extra business this has brought has enabled the company to achieve economies of scale above those of its competitors. It has also expanded into making more of the components that go into its products than its competitors. Perhaps most significantly, Hon Hai has moved much of its manufacturing into China and other low-cost areas with plants in South-East Asia, Eastern Europe and Latin America. In China alone, it employs 100,000 people, and with wages rates as low as one-fifth of those in Taiwan many of Hon Hai's competitors have also shifted their production into China.
Slack. N., Stuart, C., and Robert, J. (2010) Operations Management. Harlow, England: Financial Times Prentice Hall.

Discussion Question s

Question 1 (300 words, 30 marks)
Identify the various ways in which Hon Hai has kept its costs low.
Question 2 (200 words, 30 marks)
How easy will it be for Hon Hai's competitors to copy the way it has kept its low costs.
Question 3 ( 4 00 words, 4 0 marks)
Explain the five performance objectives of operation. Discuss the effect of the four objectives on the cost objective. Support your answer with relevant examples.

General instructions for students:

This TMA should be written by students individually.
TMA weight: 20% of total course grade.
Cut-off date: Check LMS
Plagiarism: It's imperative that you write your answer using your own words. Plagiarism will be penalized depending on its severity and according to AOU plagiarism policy.
Format: you are expected to write your answer in an essay format: introduction, body paragraph(s) and a conclusion. Failing to do so could result in the deduction of up to 4 marks from your total TMA mark.
Word count: your answer is expected to be w ithin the specified word count range. Not adhering to specified word count could result in the deduction of up to 4 marks of your total TMA mark.
Referencing: You are expected to use the Harvard referencing style for in-text referencing and list of reference at the end. Failing to do so could result in the deduction of up to 4 marks of your total TMA mark.
E-library: You are expected to use E-library sources to support your answers. A minimum of 3 sources is required. Failing to do so could result in the deduction of up to 4 marks of your total TMA mark.