International value chain

Scale:

XTech is not looking for increases in scale; the decision to structure internationally is being pressed from external stakeholders. Whilst some scale efficiencies may accrue it is scope that is more important to XTech due to the customised, small batch run product the market demands

Efficiency:

XTech appear to have an efficient structure and processes already (its Western rivals cannot match its prices), and moving to production will add in another factor that may decrease certain efficiencies.

Effective linkages:

This appears to be the strategy that XTech is pursuing and in my analysis should. Its value added processes sit firmly at home where its development and technological skills are based around its employees. Its current Asian production adds only 25% of added value and stems from the simple processes of adding metal housings and assembly. Close links are already important in that the shipping of components to Allied and the subsequent input by Allied must be closely coordinated to ensure that the diverse product (customised) is completed to the standards required by XTech and its customers. There are also close link between XTech and its customers, apart from the close relationships it has with some of its major customers, XTech forms part of the customers development cycle, in that it designs and prototypes products for them.