Dynapower's Global Sourcing Strategy

The assignment analyzes Dynapower's current high product pricing and suggests implementing a Low-Cost Country Sourcing (LCCS) strategy. It emphasizes the need to consider cultural and social differences, employee expertise evaluation, and quality maintenance while implementing LCCS in different countries. The analysis concludes that LCCS can significantly reduce production costs and enable Dynapower to offer more competitive prices.

Electronics Company in Vermont

TABLE OF CONTENTS
INTRODUCTION...........................................................................................................................1
MAIN BODY...................................................................................................................................1
1. Advantages and disadvantages different types of global sourcing and identify areas in
organisation that may benefit from a form of sourcing and how global sourcing could impact
existing issues..............................................................................................................................1
2. Description of the in-house management and discussing qualifications and characteristics to
be sought when recruiting and hiring international management team......................................2
3. Describing solutions to overcome cultural and ethical concerns and negotiating cultural
conflicts.......................................................................................................................................4
4. Evaluating communication and decision-making and identifying managerial philosophies
and the technology for keeping remote employees in a loop......................................................4
5. Evaluating whether globalization of production and expansion can improve competitive
advantage while reducing costs...................................................................................................5
6. Summary of recommendations...............................................................................................6
CONCLUSION................................................................................................................................6
REFERENCES................................................................................................................................8

INTRODUCTION
Globalization has paved the way for free flow of goods across countries. Sourcing is one
of the integral part of globalization which is useful for company for enhancing production at
lower costs. Present report deals with Dynapower, an electronics company in Vermont which is
facing with lower customer base as goods are priced high. Advantages and disadvantages of
different types of global sourcing will be discussed. In-house management will be discussed
along with qualifications and characteristics of employees to be sought when hiring them.
Cultural and ethical concerns will be ascertained. Managerial philosophies for keeping remote
workers in a loop will be enumerated. Moreover, globalization benefits for improving
competitive advantage will be evaluated. Lastly recommendations will be provided to CEO to
understand benefits, risks, and changes necessary to company.
MAIN BODY
1. Advantages and disadvantages different types of global sourcing and identify areas in
organisation that may benefit from a form of sourcing and how global sourcing could
impact existing issues
The different types of global sourcing along with their advantages and disadvantages are
as follows-
Low-cost country sourcing (LCCS)-
It is quite effective sourcing strategy in which organisation sources materials from low-
cost countries where production and labour costs are lower.
Advantages
 It cuts down operating expenses for production.
 Improve in manufacturing capacity and logistics benefits (Lasserre, 2017).
Disadvantages
 Financial and political risks in relation to emerging economies. Labour issues due to fewer wages
Offshore outsourcing-
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It is a practice to hire external organisation for performing business functions other than
the one where actual products are manufactured.
Advantages
 Cheaper labour costs and enhanced output.
 Freedom to concentrate on important business concerns
Disadvantages
 Security issues increases up to a high extent.
 Cultural and social differences (Kakabadse and Kakabadse, 2017).
Areas where company could benefit and specific countries that may serve as source of
materials
It can be ascertained that LCCS will be quite helpful for company to get benefit. This is
because by outsourcing to low-cost countries (LCC), labour expenses can be overcome. The
source of materials, labour and components can be gathered from Eastern European nations,
Brazil, China, Indonesia, Philippines, Russia and India are resource-rich countries. Dynapower
can derive more electronic manufacturing by outsourcing to Philippines as labour costs are low
in the country and adequate expertise is available. Another source is that company may benefit is
improve in logistics functions.
Impact on existing issues
Global sourcing impacts existing issues with pricing, production and competition. It can
be analysed that business may be able to attain efficiency in the best manner possible. It is
evident from the fact that by sourcing work to Philippines or other LCC, production can be
improved and also price of products can be controlled in a better manner. This will overcome
issue of firm's products which are 'priced-out' could be easily overcome (Willcocks, 2018). On
the other hand, for remaining competitive, market share will also be increased, thereby, sourcing
would be fruitful. Moreover, production can be improved as cheaper labour costs are incurred.
2. Description of the in-house management and discussing qualifications and characteristics to be
sought when recruiting and hiring international management team
Describing in-house management
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In-house management is termed as conducting activity or an operation within
organisation and not relying on outsourcing. It is required that global workforce should be
handled in a better manner. For accomplishing efficiency, company's assets, liabilities and
employees are needed to perform outsourcing activities (Kannothra, Manning and Haigh, 2018).
This includes hiring outside assistance from other business, for performing activities instead of
using internal assets or employees.
Qualifications needed for recruiting and hiring international management team
 It is required that High school diploma and college degree must be possessed by
candidates having recognition internationally.
 The experience in particular job role must be present along with relevant course degree.
For example, applicant of HR managerial post in overseas must have HR degree or must
be of HR background or should have international exposure.
 It is further required that knowledge of employment laws should also be known to
managerial candidates so that they may be well-equipped with conditions.
Characteristics needed for recruiting and hiring employees
 Cultural competence is one of crucial characteristics' recruiter should search in for.
Cultural differences among customers and employees should be known so that these
differences may not hamper firm's reputation in market. Thus, employees may easily
serve customers.
 Writing skills should be present in employees. However, with technological
advancement, widening gap prevails in fundamental skills (Hiring Internationally? Look
For These 10 Skills in Your Candidates, 2017) but it is a basic requirement.
 Critical thinking must be possessed by candidates which count for technical skills in the
workplace.
 Another characteristic that must have in candidate is ability to freely communicate with
employees in effective manner and also maintain healthy working relations.
 To work in collaboration with the team and superiors is another vital characteristic which
must be present in employees.
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3. Describing solutions to overcome cultural and ethical concerns and negotiating cultural
conflicts
The cultural and ethical concerns carries immense importance to company and it is
required that business should maintain in a better manner. The solutions to overcome these
concerns are as follows-
 It is required that ethical dilemmas must be accounted for where more than one 'right'
answer prevails and management is under toughest situation to make decision. Some
elements acceptable in one country may be unacceptable in other country for cultural
reasons. For example, low wages may be considered as unethical in developed nations.
However, developing countries accept low wages if they encourage investment and
improvise living standards (Deresky, 2017). Thus, ethical concerns must be known
beforehand so that ethical dilemmas may not occur.
 Another solution to ethical and cultural concern is that make out balanced approach. This
means either to stick with norms acceptable at home (ethical imperialism) or embrace
foreign nation's norms (cultural relativism). Incorporating both strategies are not
trustworthy and thus, it is required to adopt balanced approach for making way out of
contradicts situations. Difference of opinions will be resolved with solution.
 Respecting local traditions where company is working must be made. Relations will be
formed faster and deepen trust will be accomplished (Tips to Better Manage Cross-
Cultural Ethical Issues, 2017). Goodwill can help to effectively tackle much-sensitive
ethical dilemmas. Cultural gaps will be resolved with this solution.
The cultural conflicts may arise in the company which is required to be resolved. If not
resolved, entire atmosphere in organisation suffers up to a high extent. Management has to
analyse real problem existing among employees so that proper solution can be attained. If proper
solution cannot be arrived at, then, negotiation shall be applied which will help in resolving issue
in a better manner.
4. Evaluating communication and decision-making and identifying managerial philosophies and
the technology for keeping remote employees in a loop
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The managerial philosophies and technology for keeping remote workers in a loop are as
follows-
 Video conferencing is a technology whereby far distance individuals can be contacted
through and discussions can be made between peers and superiors quite comfortably.
Connecting virtually through related mediums help to track tasks and deliverables in
another country for measuring performance.
 Goal-setting must be incorporated in appropriate manner with proper communication,
metrics etc (Ivanov, Tsipoulanidis and Schönberger, 2017). With proper goal-setting,
remote employees may be able to remain in loop with company's operational activities.
 Another managerial philosophy is implementing communication plan for ensuring
smooth flow of communication with remote workers can be achieved with ease. Online
group chats, VPN (Virtual Private Network) and cloud-based technology is leading the
way in recent times. Scheduled visits to workplace by remote workers could be planned
as well.
 The virtual teams have large talent pool from which greater efficiency can be attained.
Moreover, it can also be said that management gets simple on-boarding of employees.
Devising appropriate workforce plan will help company to retain workers which provides
higher productivity in remote locations (Kara and Fırat, 2018). Thus, with the help of it,
remote workers will be in a loop.
 The managerial philosophy connected is that remote workers should be known formal
and informal news. The social interaction in the workplace is utmost important for many
individuals. They feel once they are out of sight of their office-based colleagues, they are
no longer in the loop. Thus, it is required to keep them intact with company and social
groups by which they feel, they are not left alone.
Communication with remote workers are required so that they may be able to attain
satisfaction that they are in a loop with management team. Communication and decision-making
by management helps remote workers to get more productive and remain in a loop with firm.
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5. Evaluating whether globalization of production and expansion can improve competitive
advantage while reducing costs
The globalization is one of the important part in meeting out international trade is
possible. Free trade between countries can be done for exchanging goods and resources in a
better manner. Countries such as Philippines, India, China and other low-cost countries which
can specialise in manufacturing goods in which they have a competitive advantage of particular
manufacturing of goods. The electronics company located in Vermont i.e. Dynapower can easily
outsource to which it may be able to attain higher production and goods which are priced high
can be reduced. The competitive advantage can be improved and customers can be sold
electronic goods with ease.
The operational efficiency can be enhanced because of sourcing production to LCC
countries. It is a fruitful element for company as higher level of production can be accomplished
but keeping cost of products low. This means that there is tremendous importance of outsourcing
work to LCC countries where they may be produce or assemble electronic components with
higher specialisation and that too at low costs. Components, materials and cheaper labour are
three crucial factors for company so that business may be able to attain higher production and
satisfy demands of customers. Furthermore, customers diverted to rivalries can be revert back to
firm. Thus, it can be evaluated that globalization of production can improve competitive
advantage while reducing costs.
6. Summary of recommendations
Hereby it can be recommended that global sourcing has become quite useful for firms
and major companies are effectively relying on the same. Dynapower should insist on usage of
LCCS type of sourcing as assembling, components can be effectively attained by outsourcing to
low-cost countries. Production of electronic goods may be upscaled in effective manner, thereby
prices could be reduced. It is recommended to use this type of sourcing for maximising
production and minimising cost of production. On the contrary, risk to organisation also prevails
as developing economies might have bad political climate which might affect company up to a
major extent.
Another risk is that labour costs have been rising across Asia as people are willing to pay
hefty premium for products they avail and thus, it causes cost of production to increase at a rapid
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rate. The changes should be adopted by company such as to make proper evaluation of the
country and employees who will be able to attain work with desired expertise. Quality of work is
of major focus despite of rise in costs. Furthermore, changes such as cultural and social
differences need to be adopted by Dynapower so that communication gap and lesser productivity
may not prevail.
CONCLUSION
Hereby it can be concluded that sourcing is providing greater efficiency to multinational
firms in which same type of work is done on high cost. However, it can be done by incurring low
costs in other countries. Dynapower can easily implement LCCS sourcing so that higher
production at low costs can be done. This will help to implement lower prices for products which
are currently priced high.
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REFERENCES
Books and Journals
Deresky, H., 2017. International management: Managing across borders and cultures. Pearson
Education India.
Ivanov, D., Tsipoulanidis, A. and Schönberger, J., 2017. Global supply chain and operations
management. A Decision-Oriented Introduction to the Creation of Value.
Kakabadse, A. and Kakabadse, N., 2017. Global IT Sourcing: Analysis, Developments and Best-
Practice Considerations. InGlobal Outsourcing Strategies (pp. 73-88). Routledge.
Kannothra, C.G., Manning, S. and Haigh, N., 2018. How hybrids manage growth and social–
business tensions in global supply chains: The case of impact sourcing. Journal of Business
Ethics. 148(2). pp.271-290.
Kara, M. E. and Fırat, S.Ü.O., 2018. Sustainability, risk, and business intelligence in supply
chains. In Global Business Expansion: Concepts, Methodologies, Tools, and
Applications(pp. 1424-1461). IGI Global.
Lasserre, P., 2017. Global strategic management. Macmillan International Higher Education.
Willcocks, L. P., 2018. Global business management foundations. SB Publishing.
Online
Hiring Internationally? Look For These 10 Skills in Your Candidates, 2017 [Online]. Available
Through: <https://www.currencyfair.com/blog/hiring-internationally-10-vital-skills/>.
Tips to Better Manage Cross-Cultural Ethical Issues, 2018 [Online]. Available Through:
<https://hbrascend.org/topics/tips-to-better-manage-cross-cultural-ethical-issues/>.
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