Offshoring And Outsouring (section 18)

Question 1

Definition - Offshoring

Answer 1

When a business locates one or more of its departments overseas

Question 2

Why might a business use offshoring

Answer 2

Moving to emerging economies (BRIC) for cheaper labour

Improve customer service

Question 3

Definition - Reshoring

Answer 3

This is when the business moves all of the departments back into the original country

Question 4

Why might a business use reshoring

Answer 4

Increase quality- the products can be monitored in the manufacturing process, and managers will have more control

Distribution cheaper- because they aren’t having to export the products over seas.

Better reputation- some customers might not like the business to use the labour of staff from overseas as they are treated poorly,

Question 5

What specific skills do emerging economies have

Answer 5

Brazil- lots of cheap skilled labour, businesses will often move their manufacturing department here to take advantage of this. However they mainly focus on the volume of the products produced, rather then the quality

R

India- specialises in communication and IT services, so they can offer competitive prices. Businesses will take advantage of this and move their customer service department in India

China- low-cost labour. Attracts lots of research and development departments due to the low costs.

Question 6

Definition- Outsourcing

Answer 6

When a business has one or more of its activities carried out by another business.