Cost Saving Strategy Through Modularization: Identifying the Best Practice

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Now, utilization of modularization of product and service is aimed for the realization of the cost saving product development. Modularization enables reuse of parts and components and results in a series of scale economies. In order to benefit from technological modularization, firms need to be equipped with a package of strategies of how to prepare for a certain business platform tailored to specific consumers with proper specifications; firms have to figure out organizational design; firms have to embrace partnering strategy and management capability for integrating each module into competitive product or service by settling well-conceived interface.In the case of E-learning, firms' early adoption of modularization strategy has never brought about market success and proper profits. The situation is derived partly from the industry' early growth stage typified by the unstable user needs for service specifications. In the industry, technologically excellent firms trying to introduce modularization of learning contents tend to fail the E-learning business: few successful firms pay little attention to the technological modular strategy. They put their focus on the management or organizational strategies firstly aiming to integrate related modules for their business interests by way of collaborating best partners with clearly articulated business interface. Gaining bargaining power becomes indispensable for firms' sustaining integration among various business modules. Also in construction business in this study, we find that firms putting their business emphasis on technological modularization tend to fail: few successful firms also in this industry tend approach modularization from organizational or managerial aspect and realize cost saving from firms' overall business strategy.