GEB 3375 exam 3 chapter 17

contract manufacturing

is an arrangement in which the focal firm contracts with an independent supplier to manufacture products according to well-defined specifications.

activities in a firm are more/less likely to be outsourced

r&d design - low manufacturing -high marketing - low sale- high customer services- high

why companies outsource

should it be conducted in-house or by an independent supplier is it part of their core competence or that involve the use of valuable intellectual property.

what happens when US company sources from another that currency's appreciates

stengthen

offshoring

to the relocation of a business process or entire manufacturing facility to a foreign country Common in the service sector, including banking, software writing, legal services, and customer service activities.

front office activity /back office activities example

FO =marketing or technical support BO = payroll and billing

major challenges for companies and global sourcing

Lower-than-expected cost savings Environmental factors Weak legal environment Overreliance on suppliers Risk of creating competitors Erosion of morale and commitment (home country employees)

business process outsourcing (BPO)

Outsourcing of business functions to independent suppliers such as accounting, human resource functions, IT services, and customer service.

global sourcing refers to

Procurement of selected products or services from independent suppliers or company-owned subsidiaries located abroad to be used in home country

outsourcing

Procurement of selected value-adding activities, including production of intermediate goods or finished products, from external independent suppliers.

captive sourcing

Sourcing from the firm's own production facilities located abroad.

why global sourcing is so easy (drivers)

Technological advances Low cost to internationalize Entrepreneurship and rapid economic transformation in emerging market countries

why India is popular for offshoring

big population , strong english language skills, well educated

reasons for global sourcing

cost efficiency

what happens when US company sources from another that currency's depreciates

weaken