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.