Question: Please analyze this and ask an open - ended or direct question at the end. Thank you in advance! Organizations outsource to Low - Cost
Please analyze this and ask an openended or direct question at the end. Thank you in advance!
Organizations outsource to LowCost Countries LCCS for one reason... saving money! Sourcing from LCCS comes with many advantages not only for businesses but also for investments in underdeveloped countries' economies. Businesses can boost gross profits by using a producer who can manufacture a similar or nearsimilar parts in countries such as Mexico, Thailand, and India just to name a few, that require much fewer investments in production costs as well as lowered taxes and cheaper facility leases. Not to mention, the cost of labor in LCCS compared to the United States is considerably less which also can be a disadvantage to an organization's brand and reputation. For instance, Nike has come under scrutiny several times during its business lifespan for using "sweatshops" to produce their sneakers and then sell them in the United States. These unethical business practices cannot only tarnish consumer's views on a brand but also lead to a consumer boycott. Another disadvantage of outsourcing to a lowcost country is the effect on the management and supplier relations. Due to distant communication and differences in time, there is potential for management to become unaware of any supply or manufacturing issues that an outsourced facility may be dealing with. On the other hand, by staying on top of supplier evaluations as well as outside risks such as extreme weather complications or potential health hazardous outbreaks, organizations can minimize risks by monitoring and responding to facility risks and outside risks that could lead to disruptions in the supply chain. Also, organizations need to implement and always have a backup plan such as another supplier.
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