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 peer-reviewed sources.Note the requirement in this week's discussion forum to support your position with citations from the assigned article or other peer-reviewed sources. Please expand on your position that global sourcing is advantagous to an organization incorporating the elements of your reading that helped to formulate your opinion on this important topic.

Answer 1

Answer: Outsourcing of the operations or purchase of the components at the global offers advantages for the firms. Firstly the outsourcing helps the companies to focus on their core competencies and saves them from the trouble of handling their non core activities. Similarly purchasing the components at the global level enables the companies to take advantage of the availability of a number of options. The global sourcing allows the companies to get best quality supplies at a lower price. When the firms purchase at the global level they can chose from a number of suppliers that are based in different countries. Some nations have comparative advantage over the others because of the factors of production they have. This makes supplies from certain countries better from the others. The companies that purchase their components at the international level look for the suppliers from such countries so that they can get best supplies at lowest prices and save their costing. For example goods in many developing nations are economical from the goods from the developed nations as the labor is cheap in the developing nations. The companies therefore not only source their components from such countries but they also outsource non core operations like call centers in such countries.

References

Kotabe, M., & Murray, J. Y. (2004). Global sourcing strategy and sustainable competitive advantage. Industrial marketing management, 33(1), 7-14.

Arnold, U. (1989). Global sourcing: an indispensable element in worldwide competition. Management International Review, 14-28.