Description
Select one of the four options and write a thorough, economically-based answer to each question. While there is no prescribed minimum length or formatting requirements, the more complete and carefully you answer each of the questions the better your grade.
I need to write two over four option. And each option should be at least 2 pages in separate word file.
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Explanation & Answer
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Running head: OUTSOURCING
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OUTSOURCING
Student's Name
Institutional Affiliation
Course Name
Instructor's Name
Date
OUTSOURCING
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Outsourcing
Every entity aims to have the edge over other firms it's like in their field of operation.
Every firm will always partake in any measures to become or remain the most relevant.
Economic reasons have been observed to be among the main factors that lead several entities to
outsource operations to foreign lands.
Lowering operational costs stands at the helm of economic reasons. By moving basic operations
overseas, companies can save a significant amount of money. Labor costs in most of these
countries are reasonably low due to high unemployment rates or high interest from the locals to
work for foreign firms. The Chevrolet Cruz stands as an example of such firms as it has moved
its operations to Mexico, where it operates at reduced labor expenses (Sandhu et al 2018).
Government incentives coupled with tax relief are another economic factor attracting firms to
move their operations overseas. Some countries have been observed to provide some businessfriendly incentives not found in the country of the original operation. Malaysia is known for
attracting giant firms as its government sponsors a portal that helps investors make business
savings. Lowering taxes such as having a corporate tax at 20% in the U.K lures investors, unlike
that of 35% in the U.S.
Market saturation is a force pushing firms to move overseas. Firms operating in developed
countries are highly affected and thus have to move to countries with less competition and
embark on production just within the potential new market. Some motor manufacturers have
shifted their production lines to countries in Africa where their demand is high.
OUTSOURCING
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Outsourcing will have an impact on American laborers. The low-skilled ones are likely to
be pushed into unemployment while the highly skilled ones will have to be retained. Shifting
operations overseas is coupled with policies such as prioritizing the locals in the low-skilled
operations. Due to the low living standards in these countries, the laborers are cheaper compared
with those in the U.S and thus making the Americans unemployed. For the highly skilled experts,
it is hard to get rid of them. Their expertise is the primary force that gives the company an edge
over the others.
Whether operating locally or overseas, high-skill laborers are expected to offer guidance and
leadership both in designing and production lines. In case the high skilled laborers are sent
overseas, they may be offered better contracts due to hardships they may encounter in their duty.
Hence they are the primary beneficiaries of the companies relocating overseas.
Whenever the cost of production is lowered, the produced component is sold at a reduced
price, maintaining the profit margin (Kotabe & Murray, 2004). High labor costs have always
pushed the costs of production upwards. However, with production being moved overseas where
there is cheap labor for the same quality, the overall production cost is low, thus lowering the
commodity's eventual price. The domestic prices of the commodity may remain reasonably low
due to importation at low prices. There is a likelihood that the shipment fee added to the
production cost is lower than producing the same product at home.
On the contrary, there might be a scarcity of the product at home, thus pushing the prices
upward. The shipment plus another clearance fee of the product added to the production cost
may rise beyond the commodity's regular price. The situation may lead it to be unafforda...