The Concept of Offshore Outsourcing.

You will prepare and submit a term paper on The Concept of Offshore Outsourcing. Your paper should be a minimum of 2000 words in length. The first study under analysis is by Hendee (53-70), who presents a case study of Wal-Mart. The case study is based on a documentary film by the Public Broadcasting Service (PBS), in which the history of Wal-Mart is traced. The highlight of the documentary is that Wal-Mart developed its business strategy based on a low price guarantee over competitors. To maintain this competitive advantage, Wal-Mart turned to the Chinese labor market which provided lower labor cost solutions. When the U.S. government signed the U.S-China Relations Act in 2000, Wal-Mart was able to increase its business process offshoring to China. The firm outcompeted rivals such as K-Mart and Target through accessing cheap products manufactured in China. The offshoring also resulted in the closure of U.S. manufacturing firms whose (more expensive) products could not sell via Wal-Mart. The documentary concludes with an observation that as Wal-Marts profits increase, the job flow towards China increases. The piece of data above captures the themes of interest in the current study perfectly. First, the business sense of outsourcing is realized as Wal-Mart can cut costs and outcompete rivals in the market. However, Wal-Mart’s reliance on goods made in China leads to the loss of jobs in the U.S. as the processes of production cannot be replicated in the same firm in the home market.

Kathawala, Zhang, and Shao’s (185-202) study provide another source of data for the current study. Through undertaking a review of the literature, the scholars present several findings that can be analyzed around the themes of the current study. First, outsourcing is accompanied by definite advantages. These include the reduction of operational costs. reduction of delivery times as products and services are availed within record times. improvement in quality and reliability. increased exposure to global technological advancements. opportunity to utilize resources that are not present in the home market. sufficient flexibility that enables the firm to respond to market conditions. utilization of the available funds for more profitable purposes.

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