First of all, the concept of global sourcing will be defined. The economic environment of the last decades is characterized by globalization. Faster transport solutions, the internet, and better communication devices brought people together, regardless the geographic distance between them. Global sourcing is a procurement strategy which seeks and implements a supply and manufacturing plan that enables the company to reach the highest cost efficiency. Companies can do this by swapping the local suppliers with ones from other countries or regions, by moving the production facilities elsewhere or by outsourcing it. This XXXXXXXX does come with a set XX XXXXX or challenges. XXX XXXXXXXX XXX can XX XXXXXX the XXXXXXXX XXXXXX. This XXXXX that XX XXX XXXXXXX or XXXXXXX will fall XXXX a crisis, XXX loss XXX XXXXXX will XX XXXXXXXXXXX XX XXXXX companies XXX XXXXXXXXX. XXX XXXXXXX, if the X.S car market XXXX XXXXXX XXXX XXXXX sale drops, the car component XXXXXXXXX and XXX production XXXXXXXXXX from other XXXXXXXXX XXXX also suffer. XXXXXXX a car XXXXXXX in XXX U.S will probably XXXXXXX a chain XXXXXXXX in XXX whole global XXXX XXXXXXXX. XXXXXXX, the snowball effect XXX XXXX XXXX the reverse way (XXXXXXX, Huws, 2009). XXXXXX describing XXX next XXXX risks or XXXXXXXXXX, a distinction should XX made between XXXXXX XXXXXXXX and international XXXXXXXXXX. XXXXXX XXXXXXXX does not limit XX buying a product or a XXXXXXX from another XXXXXX. XXXXXXXXXXXXX XXXXXXXXXX is XXX XXXXX exchanging XXXXX XXX services in the international XXXXXX. When involved in XXXXXX XXXXXXXX, XXXXXXXXX should XXXXXXXXX XXXXX XXXXX and XXXX their XXXXXXXXX XXXXXXXXXXX. XXX of the XXXXXXXX XXXXXXXXXX XXXX XXXXXXXX XXXXX XXXXXX XX XXXXXXX. Cultural differences XXX XXXX or XXXXXXX XXXXXXXX. Some XXXXXXXX have a great XXXXXXX XXX XXXXXXXXXXXX and efficiency while XXXXX XXXXXXXX XXXX a great concern for quality and XXXXXXXXXX. Besides the culturally XXXXXXXX, companies should XXXXXXXX on XXX local XXXXXXXXX XXX XXXXXXXX environment. Corrupt government officials or XXXXXXXX XXXXXXXXXXX XXX put an end XX XXXXXX XXXXXXXX partnerships. XX XXX cultural XXX political XXXXXXX are not a real challenge anymore, the XXXXXXXX XXXXXXXX should avoid XXXXXXX XXXX their own trap. The XXXXXXXX purpose XX each company is XX be profitable. On XXX XXXX XXX profitability, business organizations will sometimes XXXXXX an obsession XXX low prices XXX cost reduction. XXXXXXX, the lowest price XX not always XXX best price. The XXXXXX price XXXXXXXX can XXXX XXXX great quality and XXXXXXX XXXXX (XXXXX, 2003). This is why XXX business partnerships XXXXXX XXXX beyond XXX XXXXXXX XXXXX of XXX deal. XXXX XXX XXXX will involve companies from two or XXXX XXXXXXXXX, XXX XXXXX environment of XXXX XXX increase XXX XXXX XX XXX XXXXXXXX. This XX the fifth and XXX XXXX XXXXXXXXX risk in XXX long run. Any XXXXXX in XXXXXXXXXXX XXX impact the XXXXX XXXX. For example, XX the XXXXXXXX Union XXXX XXXXXXXX XXXXXXXXXX XXX vehicle pollution standards, the European car XXXXXXXXXXXXX XXXX XXXX to keep on adapting their business plan, XXXX an XXXXXX on all their suppliers XXX customers. XXX XXXXXX XXXXXXXX XXXXXXX XXX XXXXXXX these XXXXXXXXXX XX XXXXXXX in mind a XXX XXXXXX rules. XXX first XXX XX XXXX in a global economy, everything is XXXXXXXXX. Something affecting a XXXXXXXX partner or a XXXXXXX similar market will eventually XXXXXX XXX local XXX. XXXX, XXXXX XXXXXXX for the business XXXXXXXXXXXXX created by global sourcing, XXXXXXXX should XXXXXX a XXX XX time in understanding XXX culture XX the XXX XXXXXXXX XXXXXXXX. XX XXX next XXXXX, XXX XXXXXX sourcing XXXXXXX should XXXX sure that the political XXXXXXXXXXX in XXX foreign country XXXXX the opportunity was XXXXXXXXXX is XXXXXX XXXXXX. XX the same XXXX, XXX XXXXXXX XXXXXX ask XXX legal XXXXXXXX to analyze XXX XXXXX implications XX the new XXXX. At last XXX XXX least, the manager should XXXXXXXXX XXXXXXX a XXXX-benefit analysis and XXX XX the XXXX price does not come XXXX hidden costs or XXXXX. XXXXX dealing XXXX XXXXX challenges, XXX business will experience three advantages XXXX improved XXXXXXXXXXXXX, more XXXXXXXXX available XX XXXXX XX the XXXX XXXXXXXX and a XXXXXX flexibility. The improved profitability XXXXX from the costs XXXXXXX with outsourcing or XXXXXX XXX XXXXXXXXXX in countries with XXXXX wages or cheaper raw XXXXXXXXX. Also, XXXX XXXX XXX XXXX reduce XXXXXXXXX costs. XXX XXXXXXX, some European XXX manufacturers XXXXXX XXXXXXXXXX facilities in XXX XXXXXX States in order to XXXXXX the transport costs that they XXXXX XXXXXXXX XXX to XXXXXXXXX the vehicles from the European assembly XXXXX. XXXX global XXXXXXXX, companies XXX XXXXX XX XXXXX XXXX XXXXXXXX XXX leave the production XXXXXXX XX specialized units. For XXXXXXX, XXXXX sells XXXXXXXXXXX XXXXXXX having XXX manufacturing XXXX. The XXXXXXX XX focusing XX marketing XXX product XXXXXXXXXXX. This XXXXX XXXX XXXXXX Apple XX XXXXXXXX or XXXXXX its production output without XXXXXXXX XXXXX XXXXXX new XXXXXXXXX or investing in new XXXXXXXXXX equipment.
References:
Frahm. S, (2003), XXXXXX Sourcing: Levels XXX risks, XXXXXX XXXXX Resource Cooperative, published XX Mar 19, XXXXXXXXXXXXX XXXX scm.ncsu.edu/scm-XXXXXXXX/XXXXXXX/global-XXXXXXXX-levels-and-risks
XXXXXXX, M., &XXX; Huws, X. (XXXX). XXX XXXXXXXX Effect: XXXXXX XXXXXXXX XX an XXXXXXXXXXX of XXXXXXXX Globalization. Journal Of Architectural & Planning Research, 26(X), 327-342.
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