Management, Operations, and Motivation

Management, Operations, and Motivation

Question # 1

Vulnerability of U.S. Manufacturers to Offshore Outsourcing

Offshore outsourcing is the strategy adopted by the U.S manufacturers over the past decade. Manufacturing companies shift their production to such countries having cheap labor force. Taxes are also higher in U.S. in comparison to third world countries; higher taxes cause an increase in production cost, thus making room for offshore outsourcing. Globalization was also a key factor that caused US manufacturers to become vulnerable to offshore outsourcing. The circumstances under which outsourcing arose were discussed by Spencer (2005) and Trefler (2005). Both shed light on the factors behind decisions of US manufacturers to undertake outsourcing. These factors include: reduced international transaction costs from improved technology and globalization; lower foreign costs; and enhanced governance and institutions in foreign destinations for outsourced activities (Spencer, 2005; Trefler, 2005). The Economic Report of President (2004) also discusses the rationale of US manufacturers' vulnerability to offshore outsourcing. The report implies that when production of a good is cheaper abroad, then outsourcing makes more sense rather the production of that good domestically (p. 229).

Question # 2

Operations Management Practices

For U.S.-based companies, a huge opportunity is present to bring back the country to an era of manufacturing growth. Since manufacturing is currently experiencing a genuine transformational period, particularly driven by heightened labor costs in developing countries, increased market volatility, changing demand patterns, and considerable increase in the oil prices (Gordon & Rutt, 2008); therefore, there is a high time for manufacturing companies to opt operations management practices that can help bring manufacturing back to the U.S. Dynamic supply-chain-management capability is among one of operation management practices. A quick response to cost increases, demand changes, and economic and political shifts can lead to a successful manufacturing operation. Tax policy of a country ...