Modular OrganizationsExcept for cor

Modular Organizations
Except for core business activities that they can perform better, faster, and cheaper than others, modular organizations outsource all remaining business activities to outside companies, suppliers, specialists, or consultants. The term modular is used because the business activities purchased from outside companies can be added and dropped as needed, much like adding pieces to a three-dimensional puzzle. Exhibit 8.12 depicts a modular organization in which the company has chosen to keep training, human resources, sales, product design, manufacturing, customer service, research and development, and information technology as core business activities but has outsourced the noncore activities of product distribution, web page design, advertising, payroll, accounting, and packaging.
Modular organization have several advantages. First, because modular organizations pay for outsourced labor, expertise ,or manufacturing capabilities only when needed, they can cost significantly less to run than traditional organizations.