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
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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.