Logitech Corporation

Logitech is a multi-billion dollar company that sells computer peripherals to people all over the world. It all started in 1974 when two men, Daniel Borel and Pierluigi Zappacosta, met and became friends at Stanford University in California. They teamed up with Giacomo Marini, received funding and started working with software development. On October 2nd, 1981, the three utilised their funding and founded Logitech’s first office in Apples, Switzerland.

Later that year, Logitech worked with the Swiss Federal Institute of Technology and released their first mouse, the P4. As the competition grew, Logitech needed to find more ways to make money. So they opened a factory in Suzhou, China to increase production. Later on, Logitech started to manufacture many other devices such as the FotoMan, a digital camera, the AudioMan, a speaker microphone, the WingMan, a joystick for gaming and WebMan, a web cam.

In 2004, Logitech opened a new factory in Suzhou to meet up with all the demands for computer accessories. In 2008, Logitech announced that it had sold its one billionth computer mouse.

Logitech buys the ABS plastic, circuit boards and ink from other suppliers. Many things like the circuit boards are custom ordered to match their product. Then they assemble everything in their factories, making them a secondary industry. Logitech has deals with many companies like HP that sell their products with their computers. Logitech has an online store where customers can buy their products. But most of their computer gadgets are sold in large retailer stores like Futureshop and Bestbuy, in addition to small electronic stores. So I think they are somewhat a tertiary industry as well.

Location

Logitech chose to build their largest factory in Suzhou, China. It currently produces 50% of all Logitech products. There are several reasons why Logitech chose this location.

The first reason is labour costs. Suzhou is a fairly large city with a population of about 6 million, so there is no shortage of workers. The labour cost in China is minuscule compared to countries like the US. A study showed that the average Chinese factory worker only earned about 65¢ an hour. The average US factory worker earned a whopping $21! (All figures in US$) That’s over 30 times the amount a Chinese worker earns. So the longer the factory stays alive, the more Logitech is saving.

Next, they considered transportation costs. There are many interconnecting canals around the Suzhou and Shanghai area that lead ships to the Pacific Ocean. The factory is located only a few hundred meters away from one, so Logitech can easily load their products onto large cargo ships to be shipped away. This way, the cost of transportation gets cut down because there is no need to hire truck drivers. ©The factory is also located very close to the sea, only about 200km away, so the ships have less distance to travel, also reducing costs.

Land prices were also a factor in determining the location of the factory. Land in the nearby city of Shanghai is very expensive, just like all large cities in China. The average price was about $250 US per square meter when the factory was built. The cost for their current factory size, 200m x 800m, would have been around $40 million US. For nearby Suzhou, the price would have been at most ¼th of what it would have cost for Shanghai. So instead of $40 mil, the maximum price Logitech could have paid is closer to just $10 mil.

Raw materials were another big factor for figuring out the factory’s location. There are many petroleum refineries around the area, which means the factory would have a lot of plastic at lower costs (plastic comes from refined petroleum). The cost to purchase the plastic would be less too because the refinery company would charge less transportation fees.

Logitech is the world leaders in computer mice. They sold the world’s first smart mouse. The hardware in the mouse allows the computer to communicate with the mouse, unlike previous models that only allowed the mouse to send signals to the computer. Being able to receive info, the smart mouse can tell when a computer is shut down and turn itself off to safe battery. Along with that, it is equipped with forward and back, email, chat and sound adjustment buttons. The software that it comes with allows the consumer to change the functions of any button. It also lead the way with its ergonomic design that inspired the Logitech MX Revolution, currently the world’s best retailed computer mouse (in my and many experts’ opinions).

The body of the MX610 is made from plastic. The plastic is made by refined petroleum. The petroleum gets refined into ethane, propane, fuel for cars and many other things. The ethane and propane get superheated and become ethylene and propylene. Ethylene and propylene are then mixed with many additives and cooled to hardened plastic. The plastic is fed into a pelletizer and shredded into small pellets. This process is done at separate refineries.

Logitech makes their mice by first assembling the circuit board to meet the requirements for the type of mouse they are producing, in this case the MX610. In a different section of the factory, the ABS plastic they ordered from the refinery is injection moulded into the shape of the mouse, there are many pieces. Small parts like the scroll wheel, laser and lights are pre-ordered from other manufacturers. The circuit board, buttons, lights and other accessories are aligned and either screwed or snapped together by machine. The mice then get treated with layers of protective coating. The feet, or little plastic pads on the bottom, are glued on. Finally, icons and the logo are printed onto the mouse. During the whole process, each mouse goes through many quality control checks.

If the mouse is a smart mouse, such as this one, Logitech makes a special software program so consumers can program the mouse buttons.

The mice and other accessories are distributed by ships that take the busy highway of canals and exits through the Yangtze River delta. From there, the ships either take a straight route to the Americas or follows China’s border south to southern China, the rest of Asia or Europe. Computer mouse are in very high demand because computer are becoming more and more involved in our lives. We need computer accessories like keyboards and speakers to get the most out of our computers.

Logitech’s products are important to the economy because it provides accessories for computers. Computers are used everywhere and are the foundations of all large companies. Without computers, large businesses simply wouldn’t exist. So Logitech helps make computing easier and more comfortable for everyone.

The company itself creates jobs for labour workers, professional design engineers and computer technicians. They currently have almost 10 000 employees. As the company expands, there is definitely going to be an increase in workers, giving jobs for more people.