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Off Shoring, Case Study Example

Pages: 1

Words: 253

Case Study

My position on off shoring is a positive since it is always beneficial to the company that decides to do off shoring. The benefits of off shoring are evident when a company increases it profit margins. From the perspective, of a country providing off shoring, it is beneficial to the economy as it creates employment and expands the infrastructure in that country. The low labor factor did not guarantee success in off shoring, and the challenges included factors such as the enforceability of contracts and intellectual rights, political stability, infrastructure and language and labor skills.

There is no guarantee that the total cost of manufacturing a product offshore is lower than manufacturing it domestically. There are other factors this despite the low labor costs offshore meant to reduce the total product. There are other indirect materials, and services required that might end up raising the total manufacturing cost higher. The trend will, however, not stop as firms continue to find more economically efficient ways of production that reduces the cost of manufacturing and increases the profit margins. The trend will continue despite the green movement and the issues of carbon trading.

Despite the supply and cost perspective being more advantageous in producing domestically firms will continue to offshore since in off shoring they are always expanding their market boundaries and penetration, the companies might be aiming for the long term benefits of off shoring. There is no worry in off shoring to lower cost countries since this step ensures that the profitability and economic efficiency of companies elevated, and the markets expanded. Off shoring has affected people in the U.S as they lost their jobs in off shored companies.

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