In this chapter the background and problem definition is described, that forms the basis for this research. There after the purpose, aim and research questions. Subsequently the literature review and research strategy taken to solve the research questions is given.
Finally findings, discussion and conclusion are presented.
This research examines two sourcing strategies for Swedish apparel companies. When China is getting increasingly expensive to operate in, isn’t there a closer favourable option for Swedish apparel companies to manufacture their garments? The research seeks to investigate the two sourcing strategies nearshoring vs. offshoring, and if nearshoring could be more favourable option. It compares the two biggest countries of apparel manufacturing to Sweden, Turkey and China.
The research takes a Swedish apparel company perspective: China is 6378 km and seven times zones away from Sweden, isn’t there a more closer ideal option, now when china is getting more expensive? Today textile is the second biggest trade between Sweden and China which represents 8, 3 billon SEK (Handel Sverige – Kina, 2013). Should Swedish apparel companies rethink and nearshore? Or is offshore to China still the most favourable option to offshore? Turkey is the nearshore option for this research. Turkey is a favourable choice because of its cheap labor force and because its proximity to Sweden. Turkey is also the nearshore choice since it is the second biggest trade partner with Sweden with apparel (SCB: s, 2013).
It is an applied research that describes that is designed to apply to the findings and solving the specific problem. It uses a quantitative approach with surveys and secondary data to come to a conclusion.
1.1 Background
Today China i...
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...ing is the processes of the company to other companies that are situated in a foreign country, and most likely have a different language and culture. Offshore outsourcing has benefits such as higher cost savings and access to highly skilled labor.
Nearshore outsourcing means sourcing service activities to a foreign, lower-wage country that is relatively close in distance and time zone. Nearshoring is a way of outsourcing in which an activity is placed to countries that are geographically nearer than offshore locations, they could also have similar cultural background as the outsourcing country and offering lower level of wages comparing to home market. The company anticipates benefiting from one or more of the following constructs of proximity: economic, geographic, temporal, historical, linguistic, cultural, and political or linkages (Goda Kvedaravičienė, 2008).
Globalisation is a growing phenomenon that is the result of various developments in the global environment, each of which merits an individual analysis of its social impacts. For the purpose of this analysis, the focus will be placed upon arguably its most controversial aspect, offshore outsourcing. Offshore outsourcing, or offshoring, is becoming an increasingly common business practice as a result of a combination of the recent technological advancements in the areas of transportation and communication, and the increased competitiveness of the business world. From the perspective of firms, tapping into cheap labor from less developed countries is a very logical business decision to reduce costs and maximize profits. This has not only motivated businesses to engage in offshoring, it has sometimes been critical to their survival in fiercely competitive environments.
The Global Apparel Manufacturing industry contains men’s, women’s, and children’s apparel. This industry includes manufacturers that purchase fabrics and make fabrics themselves with certain facilities. The key economic drivers of this industry are GDP of BRIC nations, Global per capita income, GDP, World price of cotton, and Global population. The industries that supply Global Apparel Manufacturing are Global Agriculture, Hunting, Forestry, and Fishing. The Demand Industries that feed off of Global Apparel Manufacturing are Global Wholesale and Retail Trade, Global Department Stores, and General Merchandise Stores. The main activities of the Global Apparel Manufacturing industry are winter clothes
The research questions being proposed in this paper include but are not limited the following
Off-shoring is the establishment of business operations outside national boundaries. The process of moving business outside these boundaries is to garner an advantage either through tax breaks, lower wages, lower transportation cost and/or relaxed regulations ("Offshore definition," 2014). Many firms either branch out as a horizontal multinational or vertical multinational. Horizontal multinational’s produce the same good or services as abroad. This foreign direct investment (FDI) is done to strategically place production closer to the target market. Doing this provides advantages surrounding transportation cost while enhancing learning associated with local needs. A vertical multinational is one that fragments a portion of its good to take advantage of lower cost (i.e. cheap labor). Markusen and Maskus found horizontal multinational replaces trade whereas, a vertical multinational positively correlates with trade (Markusen & Maskus, 2001).
In many cases outsourcing has proven to be beneficial for businesses. It can help a business’s management by allowing executives to focus on the core structure of the firm rather than every specific element. Production, manufacturing, or additional servic...
The aim of this paper is to explore and critically analysing two research articles. The critical analysis will explain the importance of the study, evaluate design and research method used in those articles. To identify any gaps it will provide the literature review in those researches and possibility for the new study. The project plan, for the possible research will be developed on a potential gaps and the essay will finish with the conclusion.
This report will analyse and evaluate the Swedish firm, H&M, in its resource base and in its existing networks and relationships, focusing on diverse aspects such as horizontal and vertical business networks and collaborations. It will analyse and evaluate also the Argentinian apparel market and industry, since H&M would like to enter this market, which is in the Southern Hemisphere for the first time (Kenna & McLaughlin 2010).
No matter how big or small a business is, a business is able to outsource services that they could not do profitable on their own. Outsourcing is shifting all of the costs — accounting costs, including personnel, plus the risk of failure and the responsibility for action — to the third party. In return for assuming costs, the third party benefits by controlling the operation (Coughlan 167). This is the basic definition of outsourcing. Outsourcing has been around since the beginning of time.
The organization has had to ensure that it has retail stores in many countries globally and website options in more than 100 countries. The company further enhances access of online stores in more than 37 countries which is accessible all the time and people are able to access the services regardless of their location. Globalization further affects the organization in the sense of international market management which requires it to engage in strictly global decision making. The organization’s production networks have been geared to enhancing global competition (Lüsted, 2012) .The Company is further good when it comes to seizing the opportunities available in global market. For the organization to find efficient as well as cheap means of production, it has to bargain hard so as to allow its contractors to have low profits. This mostly is consequential to the suppliers cutting corners with the use of cheap
In conclusion, while selecting articles to use for this research, these particular articles proved to be very useful. They both met the criterion for the purpose of research information, as well as having current information on the topics.
The objective of this paper is to examine how the development of a textile industry contributes to economic growth in the global economy. Because textile manufacturing is a labor-intensive industry, developing countries are able to utilize their labor surplus to enter the market and begin the process of building an industrial economy. Emerging economies then look outward to develop an export strategy based on their comparative advantage in labor costs.
After establishing the research problem and what results are wanted, it will define how it will find the answers. Research is a form of collection and interpretation of information that will form the basis of finding answers to questions. The research uses theories and methods that h...
This gives businesses and companies the ability to save money. When the businesses and companies save money, that ultimately means the consumers will also save money. The word offshore means some distance from the shore. According to Blinder “Offshoring, by contrast, means moving jobs out of the country, whether or not they leave the company” (20). To better understand the meaning of offshore outsourcing, we can say that it is the process where the companies provide jobs to foreign countries.
Offshoring has become a big factor in the global economy. Many companies have opened customer service centers in different countries due to the savings. Clothing companies moved their manufacturing plants to other countries due to the cost of labor. Major stores in the US, for example, Wal-Mart, brings in most of their products from other countries to save money and pass that savings onto the consumer. Capitalism in the US has recently helped the global economy, the benefits of the Americans in the world’s marketplace is seen in the return of money to the rest of the world.
From this case study the analyses are made on the following questions asked. The Questions that are asked are following: