business question 73

Please provide at least 150 word reponse

A major recent trend has been the dispersion of the value chains of multinational corporations across different countries; that is, the various activities that constitute the value chain of a firm are now spread across several countries and continents. Such dispersion of value occurs mainly through increasing offshoring and outsourcing.

Outsourcing occurs when a firm decides to utilize other firms to perform value-creating activities that were previously performed in-house. It may be a new activity that the firm is perfectly capable of doing but chooses to have someone else perform for cost or quality reasons. Outsourcing can be to either a domestic or foreign firm.

Offshoring takes place when a firm decides to shift an activity that they were performing in a domestic location to a foreign location.

Often, offshoring and outsourcing go together; that is, a firm may outsource an activity to a foreign supplier, thereby causing the work to be offshored as well.

What are your thoughts on Outsourcing and Offshoring?

Dess, G. G., Lumpkin, G.T., & Eisner, A. B. (2014). Strategic Management: Text and Cases (7th ed.). Retrieved from http://highered.mheducation.com/sites/007786252x/information_center_view0/index.html.

 

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