Advantages And Disadvantages Of Global Sourcing

971 Words2 Pages

Outsourcing occurs when products or services are obtained by an outside supplier (Vonderembse & White, 2013). Companies may decide to outsource if it can be obtained less expensively due to specialization or the other company may have proprietary technology that gives them a competitive advantage (Vonderembse & White, 2013). This paper will analyze trade-offs for productivity improvements, discuss both the advantages and disadvantages of global sourcing versus producing in the United States, recommend a low labor cost country based on inputs, trade-offs and global advantages and give an example of a product of the specific country.
II. Productivity Productivity inputs are labor, internally and externally; capital for land, facilities, and equipment; and materials (Vonderembse & White, 2013). The outputs vary based on business type and the products being measured. When improving productivity a company can trade off certain inputs to increase it. Trade-offs of productivity can include trading capital for labor, trading capitals for material or energy, substituting materials for labor, and improving productivity through better maintenance. Trading capital for labor requires a company to increase capital that will cut down labor hours on a specific product. For example in grocery stores people can use self checkout which allows the …show more content…

There strengths include government support for the industry and employees with advanced technical and language skills, specific business knowledge in banking, insurance, and healthcare and steady improvement on skill level (Wright, 2009). China has many inputs ranging from specialization in technology to low labor cost. By outsourcing to china companies are able to increase productivity and profitability for both countries involved (Wright,

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