Best Practice to ODM Outsourcing: A thesis based on GN Netcom’s outsourcing of Jabra products

Karar Musa & Julie Siezing

Student thesis: Master thesis


Over the last decades there has been an increase in outsourcing activities. It started off as outsourcing of standardized parts, but now also include value-adding activities such as new product development and R&D. In today’s electronics industry innovation tasks are carried out by various value chain participants, such as Original Equipment Manufacturers (OEMs) and Original Design Manufacturers (ODMs). This thesis focuses on outsourcing to ODM suppliers. Based on a single case study of the Danish Company GN Netcom, the thesis investigates the research question of how GN Netcom can optimize its ODM outsourcing. In order to answer the research question, the thesis seeks to create a best practice to ODM outsourcing. In creating the best practice literature within the fields of ODM outsourcing, new product development and R&D outsourcing, as well as integration, have been taken into account. Based on 7 frameworks a thesis model has been created to analyze the empirical data obtained at GN Netcom. This model also serves as a base, together with the case of GN Netcom, for the best practice. It was found that there were several gaps between theory and practice, however, due to the small sample size, it is difficult to determine if the findings are generalizable to other companies outsourcing to ODMs in the electronics industry. However, it is believed that several of the issues are generalizable and a best practice to ODM outsourcing can constitute of the following topics:  Outsourcing to ODM can be driven by cost, knowledge or both factors at the same time  There are pains and gains related to outsourcing of R&D activities e.g. increasing managerial attention towards supervising external projects and the risk of over outsourcing.  Firms outsourcing to ODMs needs to be aware of issues specific to the ODM industry such as high product similarity, ODMs can become dependent on OEMs, quality defects and ODMs competing with OEMs by introducing their own brand.  The relation to ODM is rarely managed though arm’s length transactions or full integration. As complexity increases it calls for closer collaboration between the ODM and OEM. Yet, the relation rarely ends up in full integration.  Outsourcing of low-complexity products can be placed at a strategic supplier in order to reduce cost.

EducationsMSc in International Business, (Graduate Programme) Final Thesis
Publication date2013
Number of pages191