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Outsourcing - the quality of the goods and leave the...

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Dalsania 1 Akash Dalsania Reeves 9 September 2010 Outsourcing Out sourcing is a key topic in today’s businesses. In china the idea is that one firm is responsible for the business and management while another firm produces its goods. Why? Because this way the managing firm can focus more on management since that’s more important and leave the product making up to another firm. This idea is similar to the idea of comparative advantage. If one firm can manage really well and another firm can make the goods quickly and more efficiently then the two firms should collude and form a strategic alliance. Now the firm that is managing gets the goods faster and possibly for a cheaper price and has more time to find buyers and manage the goods. Also this helps the firm that produces goods as well because now that firm can focus on
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Unformatted text preview: the quality of the goods and leave the managing up to another firm. In china however the economy is rising and causing the cost of labor to now rise. If it continues to rise then buyers, in the long term, will move from China and go to other countries like Mexico as the article states. Mexico will have a lesser cost of labor so the final goods in Mexico, as a result, will be a lot cheaper. Dalsania 2 Flannery, By Russell. "Key China Electronics Outsourcing Hub Faces Rising Costs, Assertive Labor - Russell Flannery - China Wealth - Forbes." Forbes . 27 Aug. 2010. Web. 08 Sept. 2010. <http://blogs.forbes.com/russellflannery/2010/08/27/key-china-electronics-outsourcing-hub-faces-rising-costs-assertive-labor/>....
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