Question

As a manager of a multinational company, You are looking to source component products from foreign sources due to an advantage in cost acquisition. Among considerations in cost, what other concerns might you have. I'll give you a hint; one concern might be the risk of single country sourcing (advantage is cost, risk might be political problems later) ok, what other concerns must you plan for. Remember, sourcing in the U.S. only has it's risks as well.

Answer 1

Here, being a Manager of a MNC company, I am looking for sourcing component products from foreign sources due to taking advantages in cost acquisition, however, there are several issues with such implementation of sourcing, and these issues are as stated below:

• Sourcing from one country could bring Monopolistic view and company can become much dependent on that suppliers or country of suppliers, it could bring several negative outcomes in the future time.
• Political situations and legal, compliances could be different country to country, hence, MNC company can reduce the cost of component products initially, however, they can face significant loss due to impact of political situations and legal restrictions in the sourcing country.
• Sourcing component items from other country requires extensive planning and scheduling, as it will take much time in production and delivery process. So, company needs to make early planning that will supply the products in stipulated time frame.
• There could be issue of Language as other countries has different preference towards the language, here, information flow could be disrupted and there could be chance of misinformation. Hence, MNC Company needs to transfer any message professionally and review that whether original messages are being sent.
• Another important issue could come here, quality standards may not be met, if any poor quality items are sent to the MNC Company, they will suffer huge loss, and there could be chance of integrating such poor quality input components to the main products. Hence, they need to take necessary steps like checking the component items before leaving sourcing country.