3J

• Global sourcing of inputs


  A business acquiring raw materials and resources from overseas suppliers
• Why businesses choose to source inputs globally

  • Obtain resources only available in other countries
  • Minimise expenses by obtaining resources at reduced cost due to lower operating costs, including wages and rent in that country
• Factors to consider when sourcing inputs globally

  • Price of materials and resources differs in each country
  • Delivery costs vary when supplies are travelling different distances between countries
  • Environmental impact used by supplier
  • How suppliers treat and pay their workers and whether they operate in an ethical and socially-responsible manner
  • How the government regulates the import and export of materials and resources, including the use of tariffs and quotas
• Advantages of global sourcing of inputs

  • A business is able to source materials that may not be readily available in its country of operation
  • Higher quality materials can be sourced by a business, allowing a product to better meet customer expectation
  • Greater access to cheaper raw materials and resources from overseas, allowing the business to reduce its costs
  • Negotiate a lower price for its inputs as there is greater competition between overseas suppliers
• Disadvantages of global sourcing of inputs

  • Imports may be affected by government-imposed quotas, limiting the number of supplies a business can import
  • Difficult to communicate with suppliers due to language barriers, potentially leading to miscommunications
  • Different time zones and locations may make it difficult to monitor the activities of suppliers
  • Materials may be damaged during transport
  • If a supplier does not treat its employees in an ethical manner, it may reflect badly on the business's reputation
  • Transporting inputs over large distances can increase a business's carbon footprint and may negatively impact its reputation
  • Delivery may be time-consuming depending on where the supplies are being sent from
  • A business may incur additional expenses through tariffs
  • If resources are damaged during the transportation process, they may need to be discarded, increasing a business's expenses
• effects of address various global considerations

  • cheaper resources and expertise, allowing it to improve its operational efficiency, effectiveness, and competitiveness.
  • businesses must aim to minimise the potential, negative consequences of these global considerations that can arise due to the ethical and social issues associated with them
• What is Tariffs?

  are taxes that must be paid to a government for particular imports and exports.
• What is Quotas?


  are the limitations, in international trade, on the amount of a particular product that can be imported and exported into a country, which are usually set by a government.
• Overseas manufacturing


  A business producing goods outside of the country where its headquarters are located
• Reasons why a business would manufacture its products overseas

  • Produce goods in greater quantities for a lower price
  • Cost of natural, labour, and capital resources are often significantly cheaper
  • Business retains complete control over its operations system and ensures business processes and quality standards are maintained
• Factors to consider when manufacturing goods overseas include upholding ethical and social practices in its country of production
• Advantages of overseas manufacturing

  • Greater access to highly skilled employees who have expertise in production
  • Cheaper labour costs can allow a business to lower its product prices, increasing customer satisfaction and sales
  • Overseas workers are provided with employment and an income, allowing them to support their families
  • Production speeds can be improved through the use of highly skilled and experienced overseas employees
  • Greater access to labour resources, which can reduce business costs
  • Setting up a manufacturing plant overseas may be less costly than establishing and operating a local factory
• Disadvantages of overseas manufacturing

  • Manufactured goods may be damaged during the transport process back to the country of distribution
  • Poor corporate social responsibility practices in the country may reflect badly on the business
  • Members of the local community may resent the business for taking jobs away from the local economy by moving its production overseas
  • Local employees may lose their jobs if a business moves its manufacturing overseas
  • Delivery is time-consuming compared to manufacturing goods in a domestic location
  • Poor communication and language barriers may lead to production and delivery delays
• Global outsourcing


  Transferring specific business activities to an external business in an overseas country
• Factors to consider when outsourcing
• Advantages of global outsourcing

  • Quality of business activities can be improved as the external business may be experts in the area
  • A business can allocate more resources and focus on its own areas of expertise
  • Productivity may increase as the external business has the expertise to complete specified tasks more efficiently
  • The business has more time available to focus on its own areas of expertise, increasing its productivity
  • A business is able to decrease labour costs, as global outsourcing reduces the need for local employees
• Disadvantages of global outsourcing

  • A business has reduced control over some of its activities as they have been transferred to an external business
  • It may be difficult to communicate with external, overseas businesses due to language barriers
  • The quality of the business's outsourced activity may decline if the external business is completing the activities of multiple businesses at once
  • Poor corporate social responsibility practices performed by the external business may reflect badly on the business's reputation
  • Local employees from the business's main operating country are likely to lose their jobs
  • Poor communication and language barriers with the external business may lead to delays
• Global sourcing of inputs

  Acquiring resources and raw materials from overseas suppliers for manufacturing in the business's main country of operation
• Overseas manufacture


  A business's manufacturing phase occurring in a country outside of the business's main headquarters
• Similarities between global sourcing of inputs and global outsourcing

  • Allocate certain business tasks to external businesses
  • Allow the business to reduce operational expenses
• Global outsourcing


  The completion of specific business activities, such as IT services, in a country outside of the business's main headquarters
• Similarities between overseas manufacture and global outsourcing

  • Execution of business activities in a location away from the business's main headquarters
  • Allow the business to reduce operational expenses
• Difference between global sourcing of inputs and global outsourcing

  • Global sourcing of inputs involves acquiring resources and raw materials from overseas suppliers for manufacturing in the business's main country of operation
  • Global outsourcing involves the completion of specific business activities, such as IT services, in a country outside of the business's main headquarters
• Difference between overseas manufacture and global outsourcing

  • A business retains full control of its operations when implementing manufacturing overseas
  • A business that implements global outsourcing retains little control over the transferred activities
• Difference between global sourcing of inputs and oversea manufacturing

  • Global sourcing of inputs involves acquiring resources and raw materials from overseas suppliers for manufacturing in the business’s main country of operation.
  • Overseas manufacture involves a business’s manufacturing phase occurring in a country outside of the business’s main headquarters.
• Difference between Global sourcing of inputs and Global outsourcing

  • Global sourcing of inputs involves acquiring resources and raw materials from overseas suppliers for manufacturing in the business’s main country of operation.
  • Global outsourcing involves the completion of specific business activities, such as IT services, in a country outside of the business’s main headquarters.