Question

Please Use your keyboard (Don't use handwriting)

MGT 322

I need new and unique answers, please. (Use your own words, don't copy and paste)

Critical Thinking

In today’s highly competitive, extremely variable and really dynamic environment, many firms are seeking solutions. Supply chain management becomes more sophisticated and the difference between what firms want to achieve and what they can do in-house continues to grow, firms begin to realize that doing the right thing becomes more interesting than doing everything. Accordingly, they are becoming better focused and more specialized by outsourcing and offshoring activities that are far from their core businesses. In many cases firms decide to outsource this function in whole or in part to agents or third party logistics firms.

Using this concept of offshoring and outsourcing answer the following questions by taking any Saudi Local company or any Multinational company.

Question:

1. On what ground companies choose developing countries location for offshoring? Use examples. (Mention the country and decisive factors)
2. Assess the reasons for using third party logistics service in Saudi Arabia? Using examples, Explain

_______________

please complete my answer to be long answer I need new and unique answers, please. (Use your own words, don't copy and paste)

The multinational companies like Apple choose the developing companies for offshoring because companies like Apple rely on China for the assembling and manufacture of its iPhones. The Apple company chose China because the labor charges are less in comparison to the developing countries. Therefore, if the manufacturing and production units are stationed in China, the cost of manufacturing is reduced to a great extent.

The main reason for the usage of third party logistics in Saudi Arabia is the reduce the operational costs and emphasize on the delivery of the finished products promptly. Some of the important players that are operating in Saudi Arabia include Saudi Logistics and CEVA Logistics AG. These third-party logistics players are differentiated based on the end-user, services, and mode of transport.

Answer 1

Why companies choose offshoring can be understand in a way to gain the competitive advantage. If the cost of production and operation is low in a remote location due to cheap resourses, easy finance, favourable government policies like sop or other tax benifits in long run near to the market etc. If we take example of Apple it has opted for manufacturing base in china due to following resaons

• Near or close to the market ( Asian countries like China, India and UAE are huge market for Apple products,so the logistics become easy)
• Cheap labour (both technical and non technical) and other supports for manufacturing- The labour rate in this part of the world is low in China, India as compared to countries Like USA , this gives an advantage to keep the product cost low and profit high.
• Availability of raw material and OEM and support technologies- many metals used in the phone and packaging and components manufactured and software providers are located in China and India.
• Local government supports- Many countries especially developing economies provide helps and tax benifits to MNCs like APPLE as they provide manufacturing or assembly facility land at reduced or subsidised rate/ lease rentals because such actions supports local economy and generates employment opportunities and create thousands of jobs to local people. This further translates in generating indirect employment also to ventors, transport services,housing,banking etc. and so have an overall positive impact on local country's economy.

Further, as far as outsourcing a function goes, that is also a strategic move in order to remain core competant.If we take example of Apple only then we understand the core competance of the company is product design, unparallel security features, exceptional customer service and research for new product development and marketing. So functions like logistics are outsourced to companies who have logistics or supplychain is in their core. Moreover, Local supplychain companies for examples DHL,GATI in India or Saudi Logistics oe CEVA in UAE have done considerable inverstment in setting up ware houses in wide geographies multiple locations even in smaller towns suburban to cater custmers in a shortest available time frame. These integration helps companies like apple to distribute and deliver it products quickly to the markets.

Here we need to understand one factor that online sales or sales from e commerce platform like Amazon, Alibaba, Flipcart are picking up and Apple sees a huge growth from these platform. Choosing a supply chain partners who can deliver the product to Ecommerce companies or collaborate with the supply chain companies to deliver customers product in quickes possible time is a competitive strength Apple will achieve.So having a right logistic partner can help companies like Apple to focus more on its core area and be more viable in operations.

This outsourcing helps a company to gain better efficiency in value chain ( Retail sales ) and supply chain also.

If you like this answer please upvote..this will motivate me to answer further..Thanks