Question

1. What advantages does exporting have over foreign manufacturing?

2. What advantages does foreign manufacturing have over exporting?

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Answer 1

1. The advantages exporting has over foreign manufacturing are:

- easy to set up a manufacturing process in own country as setting up a new manufacturing plant can be expensive.

- More control over the operations as the products are under direct surveillance until the finished product stage and is exported after the final stage

- easy to get resources in the host country as one is familiar with the people, skills, culture of own country. Communication is not a barrier

- cost and time saving as manufacturing can be increased in the items already being manufactured in the host country and exported.

- SCM can be better managed with products under our reach.

- the laws and rules of the foreign country regarding the manufacturing venture can be complicated which need not be followed in exporting finished products.

2. The advantages of foreign manufacturing has over exporting are:

- Becomes cost-efficient if the labour and equipment in the foreign county is cheaper

- exporting can be difficult in case of huge inventory. Mass production in a foreign country is a better option then.

- The supply of products becomes easy and quick which can be fulfilled as per demand.

- the flexibility of operations can help the manufacturer to expand business in the market easily.

- saves from the trade formalities and taxes

- getting local people from foreign county involved can allow manufacturer to leave the operations there on them and focus on other areas of growth and expansion.