strategy+business Winter 2013 : Page 23

essay technology of the 20th century, such companies exploited their manufacturing prow-ess and resulting scale economies to serve the global market. Midway through the 20th cen-tury, the application of scale econo-mies to shipping helped drive the current paradigm of extensive global manufacturing. In 1956, truck-ing entrepreneur Malcom McLean purchased a shipping company to pursue his idea of standardizing in-termodal shipping containers. He realized that global supply chains could be leveraged more effi ciently if truck trailers could be loaded onto ships and unloaded without empty-ing the containers and repacking the contents. Container ships allowed manufacturers to take advantage of low-cost labor in developing mar-kets by cost-effectively shipping the goods back to developed markets. We see all these concepts at work today. For example, Foxconn, a leading contract manufacturer of consumer electronics in Shen-zhen, China, combines scale and labor cost advantages by employing hundreds of thousands of work-ers at more than a dozen factories crammed into a three square kilo-meter complex known as Foxconn City. And pursuit of scale economies continues in shipping with Maersk Group’s launch in July 2013 of the largest container ship to date, which can carry 18,000 containers. Like the experience curve, scale economies vary for different types of products, affecting the signifi -cance of labor costs. Consider Intel’s semiconductor chips, which contin-ue to follow the “law” predicted by the company’s cofounder. A “wafer fab,” which manufactures the initial silicon chip, costs billions of dollars to build, and most of these plants are located in developed countries innovation @ work TM 7R'R WLQJ 2ŦVL WHF OLH QWPHH WK3H WH U &RQIH UH QF HF DOOZL DPH *UDKDPŐVVRF FH UJ 7UDQVIRUPP\ W H J\ OH DGH UVKLSVW UD WITH A SCHEDULE LIKE YOURS, WHERE DO YOU FIND THE TIME TO GET AHEAD? Stay on the cutting edge with programs designed with your busy schedule in mind. t'MFYJCMFQSPHSBNEFTJHO t0WFSUXP&#0e;EBZBOE XFFL&#0e;MPOHDPVSTFT t&YFDVUJWFDFSUJmDBUFT t4FOJPS.*54MPBOGBDVMUZ t-FBEJOH&#0e;FEHFSFTFBSDI Upcoming programs include: March 6–7 March 13–14 March 17–19 March 20–21 March 31–April 2 April 1–2 April 3–4 Future of Manufacturing Building, Leading, and Sustaining the Innovative Organization Understanding Global Markets Strategy in a Global World Strategies for Sustainable Business Implementing Improvement Strategies Strategic Marketing for the Technical Executive Join the My 4MPBO&YFD&E$PNNVOJUZt5BLFB$PVSTFt&BSOBO&YFDVUJWF$FSUJmDBUF executive.mit.edu/sb

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