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Chapter 13: Exporting and Global
Sourcing, Global sourcing;
buying…
-
- Global sourcing;
buying products and services from suppliers abroad.
- Offshoring;
Firm relocating its business process and manufacturing overseas.
- Reshoring;
Returning process back to home country, i.e. they flopped
- Nearshoring;
relocation of business process to neighbouring countries, often share a boarder with home country. AMERICA and Mexico
2 important decision with global souring;
- Outsource or nah;
Firms keep in mind what is core to their business activities in-house and should outsource the rest to prevent IP theft
- Where should the value adding activities be located;
The firm locates the VC activities where they get the best competitive advantage for the least amount of investments
Benefits of Global sourcing;
- Cost efficiency,
firms use cheaper labour abroad, to gain more profit.
- Ability to Achieve strat goals(5)
- F,
not allocating to the small stuff to focus on the major stuff, bigger picture
- A
Get the most qualified people
- I
Get specialized suppliers, for better productivity
- B
they See offshoring as a compian for outdated company operation.
- similar to a cabinet reshuffle, out with the old in with the new.
- A
Sourcing circumvents protectionism,
Risks of global sourcing,
- L;
you save more in the short run incur more cost in the long run
- W;
The laws dont protect IP, and can barely enforce those laws, happens in bRIC
- I;
Firms pay less and get worse labour/production
- R;
Local firms steal IP, creating future rivals
- E;
Global sourcing leaves employees caught in the cross fire of employers and clients, reducing commitment
Go offshore for the right reasons;
- firms mustn't go offshore just to cut costs.
they go for long-term goals, like improving quality and improving productivity
- Max returns by outsourcing non critical core competencies
Get Employees;
management needs to gain support
- Disaffected mid managers may undermine projects, and the objectives set by outsourcing
- management should try gain support; from mid managers and employees, to relocate laid-off employees and selecting foreign
Choose carefully between influential or transactional op with external suppliers
Managers must be careful as to what they Value chains they decide to outsource
Choose supplier carefully;
- Suppliers may betray or embarrass you
- Managers must do their due diligence and then monitor to see how they perform
Emphasizes communications and collab with suppliers;
- Global sourcing fails cause buyers and suppliers spend little time getting acquainted
- Clarify expectations
- close collab, allows suppliers to use knowledge to come up with ideas
- Strong relationships create a moral contract, between the focal firm and suppliers
Safeguard interests;
the main firm must take action to protect their interest;
- Suppliers dont require PR for firm
- evelvates commitments