Transition to the Knowledge Economy

Numerous old economy companies need to modify their business practices in order to become successful in the knowledge economy (Lefebvre et al. 2013).

For companies to succeed in the new millennium, several corporate values are critical. Speed is important, as time may be more valuable than money. Companies looking for speed may favor the strategy of buying over building. Talents are crucial, as companies compete largely on the capabilities of attracting the best people, empowering them to innovate, and creating an environment that makes the best people want to stay. Market dominance refers to the company's emphasis on long-term market position rather than quarter-to-quarter increments in performance. Customer orientation signals the value placed by the company on tracking the needs of customers and creating supply chains to quickly and reliably satisfy them. Efficiency is a critical corporate value: companies streamline operations using advanced software technologies, such as enterprise integration systems, to adapt to a changing marketplace. Finally, outsourcing represents a preference for the company to farm out noncore activities in order to conserve resources, time, and management attention.

Outsourcing cuts down on a company's investment, shortens it's time to market, and enables it to take advantage of the unique skills and expertise of the supply partners in the production of products and services. For example, Cisco Systems is known to have dropped in-house R&D in favor of buying start-up companies for its technological needs. Companies need to aggressively engage partnerships, form supply alliances, and create networks with domestic and international suppliers of raw materials, subassemblies, semifinished goods, and others to flexibly and speedily make finished products. Outsourcing facilitates mass customization by which product features are steadily modified to meet customers' needs. The major issues involved in outsourcing and in the management of supply chain networks are addressed next (McGrath and Hoole 1992; Venkatesan 1992).

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