Case Study

International Business

Working Conditions in a Chinese Factory

Columbia College

Brenda Harper

January 20, 2014

Working Conditions in a Chinese Factory

Question One

The benefits and shortcomings of outsourcing to developing countries are mostly concerned with the cost factor, technology factor and the cash factor. Outsourcing is one of the practices exercised by various organizations, especially the manufacturing companies to minimize costs by transferring a portion of their work to other outside suppliers rather than completing the task in the firm. There are third advantages of outsourcing to developing countries. The first benefit of outsourcing to developing countries is the availability of cheaper manpower in the developing countries. Manpower and labor are one of the vital resources of any entity and manpower is a constant resource which comes at high costs. Developing countries have a relatively less cost to the organization, both in the varied costs and fixed costs. The second advantage is the freeing of resources. Buying decisions, reduce the associated resources and time to manufacture the component, the subassembly and the final assembly. The resources are freed thereby availing funds to be put into use elsewhere in the company. The third advantage is that it reduces the operating costs (Mclvor, 2005). With less materials being made internally, the processes needed in the associated support and the process technology are reduced. Operations management and the control tasks which accompany manufacturing processes are significantly reduced.

There are two shortcomings of outsourcing to developing countries. The first shortcoming is the lack of capability control of the firm. There is a very big possibility that the firm will lose their control of several key capabilities. Certain dimensions such as delivery speed, delivery reliability and quality performance are integrated with the systems and process of...