Global Factors

Global Factors

Global sourcing: finding suppliers who have cheaper, better quality products and more advanced technology, wherever they are in the world.

Benefits of global sourcing

Challenges of global sourcing

· Cost advantages

· Access to new technologies

· Advantages of expertise and labour specialisation

· Access to other resources

· Ability to operate over more hours of the day

· Possible relocation of aspects of operations

· Increased cost of logistics, storage, distribution

· Managing different regulatory conditions between nations

· Increasing complexity of overall operations


Economies of scale – the cost advantages gained from producing on a larger scale.

  • As the scale of business grows, the cost per unit decreases.
  • This means profitability can increase.

Scanning and learning : learning best practice from internal and external sources.

  • Continuously scan the global business environment to learn best practice from around the world. This can allow for continuous improvement.

Research and Development

  • R&D helps businesses to create leading edge technologies, and to create innovative products and solutions.
  • Finding out what consumers want and researching and responding with a product or service that meets their needs.
  • The government encourages R&D with grants and tax advantages.


Extract from Business Studies Stage 6 Syllabus. © 2010 Board of Studies NSW.