Outsourcing of Manufacturing Unit - MGT 500
Added on 2020-03-07
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Running head: OUTSOURCING OF MANUFACTURING UNIT Outsourcing of Manufacturing UnitName of the StudentName of the UniversityAuthor Note
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1OUTSOURCING OF MANUFACTURING UNITExecutive SummaryIn the contemporary global business market, outsourcing is a matter of utmost importance. Toreduce cost of production and avail less rigid, more productive affordable labour markets,many MNCs, especially those located in the developed countries; outsource a part or wholeof their operations to the comparatively younger, developing economies. The report dealswith one such company, the Raques Food Systems, with offices in the USA and UK. It triesto analyse the prospects of two potential candidates, Malaysia and Mexico identified by thecompany after initial research. Analyzing the benefits and drawbacks of both the candidatecountries, the report, finds Malaysia to be more competent for the company to outsource itsproduction unit.
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2OUTSOURCING OF MANUFACTURING UNITTable of ContentsIntroduction:...............................................................................................................................3Raque Food Systems:.................................................................................................................3Potential Candidates:..................................................................................................................4Malaysia:................................................................................................................................4Mexico:..................................................................................................................................4General Information:..................................................................................................................5Economic Overview:..............................................................................................................5Economic Forecast:................................................................................................................7Infrastructure:.........................................................................................................................8Trade Policies:......................................................................................................................10Cultural Differences and Risks:...........................................................................................11Advantages of moving to Malaysia:........................................................................................11Disadvantages of moving to Mexico:......................................................................................12Discussion:...............................................................................................................................12References:...............................................................................................................................13
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3OUTSOURCING OF MANUFACTURING UNITIntroduction: In contemporary business world, with the advent of Globalization, the term“outsourcing” is becoming a common and significant one. Outsourcing, by a company orindustry, in the broad sense of the term, means relocating or transferring a part or whole oftheir functional activities from the location of their initial operations to some convenientlocation (Primarily offshore) (Morschett, Schramm-Klein and Zentes 2015). Themultinational corporations mainly do this with their headquarters situated mostly indeveloped economies and the relocations are usually done in developing or semi-developedgrowing economies to take advantages of their low cost of production, less rigidity in labourpolicies and growing infrastructure as well as market. This report discussed about one suchmanufacturer, the Raque Food Systems and its potential prospects and problems inoutsourcing its production activities (Oshri, Kotlarsky and Willcocks 2015). Raque Food Systems: Founded as early as in 1975, the Raque Food Systems is one of the pioneers in theindustry of food packaging machineries and is currently a world class manufacturer ofindustrial food packaging machines and a primary supplier of the same, especially to theFrozen Food industries. With offices in the United States of America and in the UnitedKingdom, the Raque Food System now has thirty two manufacturing plants and they shiptheir products all over the world. The company has this unique ability of designing andcustomizing any of its products according to the need if its customers, which addstremendously to their goodwill and reputation in the global market and is a vital reasonbehind the substantial demand of their products worldwide (Raque.com, 2017).
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