Question

Does global sourcing, either relocation of operations or purchase of components globally, offer an advantage or disadvantage to an organization? Support your position with citations

Answer 1

The global sourcing, either relocation of operations or purchase of components globally, offers an advantage to the firm. Here's how:

1. Right supplier: The global sourcing give the firm an avenue to chose the right supplier among the pool of potential suppliers. This helps in trade making each party better off with suitable characteristics being matched.

2. Right location: The right location such as a suitable location, cheap labor, fewer regulations, and good infrastructure saves a lot of costs to the firm and boosts efficiency.

3. Effective management: The management of global sourcing is better than local management as many favorable factors make it a better investment like cheap labor, low regulations etc.

4. Higher capacity: In such a favorable scenario, the capacity of the firm increases and they can produce more with less operational cost with a competitive position in the market.

5. Quality: The quality of goods produced through global sourcing is better as some places are known for competitive advantage like India for a cheap and good quality of labor and Japan for the quality of process management.