Foreign Factories
Dillon Bentley
6/18/13
Case Report: Foreign Factories
When investing in foreign factories it may be tempting to invest just because of factors that seem obvious such as the potential low wages or low taxes. However good managers realize that investing in foreign factories to obtain knowledge is a very successful strategy. In order to tap global R&D potential, a manager must have the mindset that the knowledge could be anywhere, and sometime is worth the risk of setting up a factories in a high cost area. It is important to realize that R&D is not affected by proximity but strategic placement. Therefore the search for new concepts becomes integrated into company strategy. The role of foreign factors is a strategic matrix. Therefore, there is overlap between roles of factories. Each strategic role of a foreign factory therefore has a certain amount of competence in access to low cost production, skill, knowledge and distance to the market and there is overlap among them. This case emphasizes some of the benefits of offshoring as well. Without the establishment of factories abroad, an industry would never get the chance to learn from other cultures, become more efficient, innovative and therefore more competitive. However, it takes a knowledgeable manager to understand this concept, which is my offshoring gets a bad reputation for sending jobs away from the US. Recall that one reason businesses engage in international business is to acquire resources, these resources can be in the intangible form of knowledge and expertise. Granted, offshore roles are often popular among companies because they are simple and their purpose is to produce at low cost with little R&D and investment. However, a great manager will realize that some offshore foreign factories can be upgraded in their role and moved up the ladder if they are in a strategic location. The location depends on the new roles the factory might take on. For example, a offshore factory
6/18/13
Case Report: Foreign Factories
When investing in foreign factories it may be tempting to invest just because of factors that seem obvious such as the potential low wages or low taxes. However good managers realize that investing in foreign factories to obtain knowledge is a very successful strategy. In order to tap global R&D potential, a manager must have the mindset that the knowledge could be anywhere, and sometime is worth the risk of setting up a factories in a high cost area. It is important to realize that R&D is not affected by proximity but strategic placement. Therefore the search for new concepts becomes integrated into company strategy. The role of foreign factors is a strategic matrix. Therefore, there is overlap between roles of factories. Each strategic role of a foreign factory therefore has a certain amount of competence in access to low cost production, skill, knowledge and distance to the market and there is overlap among them. This case emphasizes some of the benefits of offshoring as well. Without the establishment of factories abroad, an industry would never get the chance to learn from other cultures, become more efficient, innovative and therefore more competitive. However, it takes a knowledgeable manager to understand this concept, which is my offshoring gets a bad reputation for sending jobs away from the US. Recall that one reason businesses engage in international business is to acquire resources, these resources can be in the intangible form of knowledge and expertise. Granted, offshore roles are often popular among companies because they are simple and their purpose is to produce at low cost with little R&D and investment. However, a great manager will realize that some offshore foreign factories can be upgraded in their role and moved up the ladder if they are in a strategic location. The location depends on the new roles the factory might take on. For example, a offshore factory