ECON Business Strategy

Jun 17th, 2015
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The University of Texas at Arlington
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Offshoring is the outsourcing of manufacturing or other business processes to some other country for the purpose of saving costs e.g. decreasing labor cost and increasing productivity and in return gaining higher profits.

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ECON Business StrategyStudent NameInstructor NameCourse IDPart 1Offshoring is the outsourcing of manufacturing or other business processes to some other country for the purpose of saving costs e.g. decreasing labor cost and increasing productivity and in return gaining higher profits. Cost savings can be done through lower wages and saving of cost for maintenance of business premises and operating equipment e.g. furniture, inventory etc. This will also decrease the operating cost and repair and maintenance of equipment. Offeshouring manufacturing will results in higher productivity which will generate higher profits to distribute among shareholders and paying high dividends.There are also many problems of outsourcing manufacturing. There will be difficulties with deliveries which will take long days to deliver on seas. This will generate undependable delays: delays in manufacturing due to shortage of raw material, customs clearance delays, weather uncertainties etc. This will propel the company to invest in additional stock to meet the overdue effects which will decrease their savings and will results in lower profits. It will pose negative impact on balance sheet. These late deliveries will also generate bad reputation among customers who have to wait for long time and poor deliveries. This can result in their switching to some other suppliers and hence will decrease your customer's base.As you are getting the services of lower paid labor there is much po

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