Based on the available options, the best option for Crown Company would be to outsource 100 percent with a contract manufacturer in China. Although this option would be a risk one as some employees in the company claim, it would be the best one because of the following benefits. First, the company would be able to reduce labor costs. By so doing, it would in return reduce the cost of producing trucks thereby offer those trucks at lower prices. Second, the company would be able to concentrate on adding value to the trucks so that they can be appealing to customers (Arrunada, & Vazquez, 2006). In this case, the company would focus its attention on research and development as well as marketing its trucks. If the company was to do this, it would increase its sales. Third, the company would be able to manufacture trucks that would compete effectively with Chinese ones.
However, while executing this option, Crown Company should do the following. First, it should conduct this process carefully by ensuring that it does not outsource parts of its core competence in truck production to contract manufacturer. Second, it should partner with trustworthy contract manufacturer only. Third, it should counter possible disloyalty from contract manufacturer by deepening its loyalty with customers and distributors as it markets trucks that would be produced by contract manufacturer. Fourth, it should look beyond the dangers of the truck market by retaining intellectual property that goes beyond truck business (Arrunada, & Vazquez, 2006).
Although this option would be the best one, it would also be a risk one. In terms of weaknesses, contract manufacturer might opt to produce its own trucks if the exercise would be conducted inefficiently. In addition, in the process of engaging in truck business, there would be possible leakage of intellectual property if Crown Company would not be careful (Arrunada, & Vazquez, 2006). Consequently, the company ought to be careful as it executes this option.
Arrunada, B., & Vazquez, X. (2006). When your contract manufacturer becomes your competitor. Harvard business review, 84(9), 135-142.