Challenges and Advantages of Off-Shoring in Multinational Companies
Added on 2020-10-22
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International andComparative HumanResource
TABLE OF CONTENTSINTRODUCTION...........................................................................................................................1ESSAY.............................................................................................................................................1Advantages and disadvantages of off-shoring for an MNE...................................................1Main challenges that face by MNE's in their management of overseas operation.................3CONCLUSION................................................................................................................................8REFERENCES................................................................................................................................9
INTRODUCTIONInternational human resource management is practise which is regulated in multinationalcompanies across national borders where company is established (Levy and Reiche, 2018) Mainwork human resource management in multinational companies is to generate culture awarenessand also to respond quickly in different environment. Motive to establish human resourcemanagement in international business is to motivate employee regarding collaboration of workeven if they are not working in same workplace. In this present report, chosen organisation isGoogle which is a multinational company doing business across the world. This present reportcovers main challenges faced by MNE's in their management of oversees business andadvantage, disadvantage of off-shoring for an MNE's.ESSAYAdvantages and disadvantages of off-shoring for an MNEMNE's do off-shoring to get product and services from another country which means tore-locate company's business in another country. It means that company still producing its goodsand services in home country but now they are also generating goods and services in anothercountry too. Main reason of doing outsourcing is to get production of goods and services in bestchap rates as possible. Main key reasons of doing offshoring are:Cost- if company finds that parts which are used in production of goods and service areavailable in cheaper rate from another country then company will do off-shoring to get the bestproduct in cheaper rate as possible (Pla-Barber et al., 2018.) Tax and Tariffs- if company wants to take some relief from tax and tariffs they will dooff-shoring. Many loopholes are provided in some countries regarding tax and tariffs by whichcompany will able to save their cost and will import products from countries in a fair price.Control- company choose to off-shore when they find that production of some goods andservices are so important that if supplier will not able to deliver that in time then company hasfaced huge loss therefore, they do off-shoring under which some products and services theygenerate from other countries to achieve target market.These are the points which shows MNC's motive to do off-shoring in company. Advantages ofdoing off-shoring.Reduces cost of operations- MNE companies in its operation do off-shoring just toreduce cost of operations. But that external agency is separate entity, they are responsible for1
their own operations. External agencies work is get the job done in proper time by hiring externalagency MNE's will able to reduce their cost of operations in an effective manner. Improves productivity- company by doing outsourcing or off-shoring will able toimprove more their productivity by focusing on company's core functions. This ensurescompany's revenue generating program because by doing off-shoring company will able tomaintain their goods and services which helps them to generate higher amount of revenue(Hummels, Munch and Xiang, 2018.)In this company tie-up with different external departmentsand under which they provide them certain time limits in which effective production can begenerated from that external departments.Increase flexibility- in this company will able to generate higher amount of production incompany. Off-shoring provides goods and production of company in proper time by whichcompany can able to maintain their flexibility in different time zones. This flexibility in goodsand services makes company to generate higher amount of revenue which improves company'soverall profitability in business market.Opportunity to acquire specialized skills or equipments- company does not have allspecialized skills or equipments in every region where companies are established. Therefore,company needs to do off-shoring by which they will able to generate their products and servicesfrom another branch of country which improve their overall revenue and profitability in businessmarket (Pla-Barber, Linares and Ghauri, 2018). As they are multi-national companies, they haveto supply their products in all branches so that customers will get satisfied and company overallperformance gets fulfilled. These are the advantages by which company will able to off-shoring to improve theiroverall supply of goods and services by which their revenue gets increased.Disadvantages of doing off-shoring in MNE's:Cultural and social differences- as MNE's has their business across the nations by thisthey need to make adjustments in companies regarding certain cultural and social practises fromwhich they import their products and services. For example- if company imports some parts oftheir goods and services with India then company has to develop understanding of spiritualbeliefs and therefore dates of work schedule may create conflicts (Alam and Butt, 2018).Communication problems- this was the major problem which every company has toface. Different regions of the world have different language, and this creates problems to2
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