Most tangible Least tangible WHY MANUFACTURE ABROAD? (Ferdows) Reduce direct and indirect costs Reduce capital costs Reduce taxes Reduce logistics costs Overcome tariff barriers Provide better customer service Spread foreign exchange risks Build alternative supply sources Preempt potential competitors Learn from local suppliers Learn from foreign customers Learn from competitors
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Most tangible Least tangible WHY MANUFACTURE ABROAD? (Ferdows) Reduce direct and indirect costs Reduce capital costs Reduce taxes Reduce logistics costs.
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Most tangible
Least tangible
WHY MANUFACTURE ABROAD? (Ferdows)
Reduce direct and indirect costsReduce capital costsReduce taxesReduce logistics costsOvercome tariff barriersProvide better customer serviceSpread foreign exchange risksBuild alternative supply sourcesPreempt potential competitorsLearn from local suppliersLearn from foreign customersLearn from competitorsLearn from foreign research centersAttract talent globally
Types of Overseas Investments
•market-oriented production– where?– Notion of typical evolutionary
sequence
•Supply-oriented production
–natural resource industries
•cost-oriented production– a relatively recent category
– encouraged by developments in transportation and production technology
– increased attraction of other factors like labor
But, we need to remember
• differences in industry mix• differences in labor productivity• differences in labor militancy and
controllability may be as important as costs
Erica Schoenberger American transnational production in Western