Asst Reply:

The first thing that comes to mind when I think of outsourcing is clothing. How many clothing brand out there have manufacturing plants in their own country of origin? I$\text{'}$m willing to bet that a majority of these companies today at most have a storefront. "Nike has no manufacturing plants of its own but chooses to outsource the work to contractors in the Philippines, Vietnam, China, Indonesia, and Taiwan." $($Gallimore$,2021)$ The reason why companies do this is because the labor cost of making a shoe in these countries is only a fraction of what it would be if manufacturing was done in say America. In America you may make $$15$ an hour working at an entry level factory job, while in China you may be making $$30$ a day.

This massive cut in labor costs drastically reduces company overhead which can create value for both the consumer and the company. The company can use a portion of those savings to increase dividends and make their stock more attractive, while also keeping stakeholders happy. The company can also pass a portion of those savings to the consumer by cutting the price of the product, and this has the extra benefit of making your product all that much more competitive.

christopher