Question

What are the advantages and disadvantages for the domestic production facilities of moving production abroad?(400 WORDS

Answer 1

Advantages for the domestic production facilities of moving production abroad:

1. It can be cheaper for the company to move abroad in it's bid of cost-cutting measures and be efficient. Companies move their production bases in areas where wages are cheaper and supplies are high number to reap the benefits of large scale labour and resources.
2. Depending on what and where is your target market, producing abroad might actually make shipping easier than distributing it from a home country.
3. Some businesses require skills or labor which may only be available in only few countries. When you relocate your production facilities because because other manufacturers have clustered, you enjoy the benefits of trained manufacturing workforce and suppliers who are well-versed with conditions aware of how to produce goods.
4. Moving your production facilities abroad allows a company to produced goods in very large volumes. This leads to the economies of scale.
5. Overseas manufacturing gives your company international presence and makes it more global in it's pursuit.

Disadvantages for the domestic production facilities of moving production abroad:

1. In the garb of it's cost cutting measures the company will actually end up compromising on quality which in turn will result in lost sales.
2. Can face backlash from the home country because jobs which were being created in the home country will be lost.
3. Cultural barriers may be very complex to deal with if you are novice to international business which is further complicated by language barriers.
4. When products intended for domestic sale are manufactured overseas, shipping costs becoming proliferate which defeats the original purpose of overseas manufacturing.