Simon:'You work for a company that makes televisions, don't you John?'
John:'That's right. The fifth largest television manufacturer in the world.'
Simon:'Does your company manufacture all the parts it uses to make a television itself? You know, the electronic components and the screens etc...'
John:'The company used to make all the different parts it uses to make a television in the past. But now, apart from manufacturing the screens and the plastic cases, we purchase all the electronic components used in them from suppliers, other companies which manufacture or produce them.'
Simon:'But why does your company buy the components from suppliers?'
John:'It's basically cheaper than manufacturing them ourselves. So we have contracts with these companies, Legal agreement with them to supply us with parts we need to make our TVs.'
Simon:'So, apart from the electronic components, your company does everything else itself? It assembles all the TVs itself?'
John:'Yeah, unlike many other companies we assemble/put the TVs together in-house. We do it within the company, in our own factories, with our own employees/staff.'
Simon:'And other TV manufacturers don't assemble their televisions themselves? I can see why they would pay third-party companies to do things that they don't specialize in. But I would have thought that assembling TVs is something they would want to do themselves!'
John:'Most don't. They normally outsource the assembly to other companies to do. It sounds strange, but it's cheaper for them to pay another company to do it.'
Simon:'Where I work, they have outsourced some of the important operations as well. Human resources and accounting for the company is now done by an external company.'
John:'I know you work in a web design company. What do you do if you suddenly need more staff to work on a project?'
Simon:'We don't outsource it to another company. Normally, we temporarily contract people or a small company to help us finish it. These external contractors work with us for a couple of weeks or months until the project is done.'
John:'How do you find the external contractors to hire?'
Simon:'A lot of the times, it's people or small companies we know or have worked for us before. But sometimes we use intermediaries to find them. A company who specialise in finding external contractors with the right skills and experience for companies.'
John:'We sometimes use intermediaries at my company when we urgently need some parts or materials. It's easier and quicker for them to put us in contact with the suppliers who have them available than it is for us to do it ourselves. But they do charge a lot for the service they provide.
And if you have a large project, do you hire external contractors to help you do it?'
Simon:'We often hire them. The problem with the web design industry is that sometimes you have a lot of work and other times you have little. So to help us when we are busy, we have a verbal agreement with a couple of other web design companies that we can use some of their staff if they don't need them.'
John:'So you have a contract with them?'
Simon:'No, it's not a contract. It's like a promise. We'll help them if we can and they'll help us if they can.
But on very large projects, we normally have to work together with another company to do it. So, it's a project for both companies. We often do these joint ventures when we are doing a large project in a country we are not based in or we don't have the expertise to do all the project ourselves. So, it's better to partner with a company who does.
Does your company sell its TVs directly to customers?'
John:'No, we don't. We normally sell our products directly to retailers, like electronic stores, supermarkets etc... They order them directly from us. They then sell our televisions to customers.
Does your wife still work for McDonald's?'
Simon:'She doesn't work for McDonald's, she owns a McDonald's restaurant.'
John:'How can she own a McDonald's restaurant?'
Simon:'She owns a franchise of McDonald's. McDonald's like many other restaurant companies (and some retail chains) don't own most of the places which use their name and sell their products. Instead other people or companies both own and run them.'
John:'So how does McDonald's make any money?'
Simon:'The people who own the restaurants both have to pay McDonald's to use their brand name and purchase all the products they sell directly from McDonald's.'