Subcontracting in Electronics-A Case Study of Keltron

This paper is an attempt to understand the logical basis for subcontracting in electronics with the help of a case study of Keltron TV. At the firm level, the 'make-buy' decision is a function of technology and conditions of profitability. The author makes an attempt to assess the calculus whether to vertically integrate or subcontract to small firms as also the inducements that have made small firms enter into contractual ties with Keltron. The subcontractors development has been found to be a function of the terms and conditions set, how they have been actually implemented or violated and their capabilities in overcoming their own labour, product, process and market specificities /inflexibilities. Although the subcontracting relationship appears to be based on mutual interests, it is largely unsymbiotic as far as the subcontractors are concerned. The relationship has been found to be ultimately beneficial to Keltron.