Causes and Effects of Importing Goods from Foreign Manufacturers

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Causes and effects of importing from foreign manufacturers Introduction Sourcing of goods from foreign manufacturers has been increasing over the years and it has been noted to have increased by about 101% over the 10-year period between 1997 and 2007. The value of imported goods runs in the trillions of dollars every year with about 42% of the imports coming from China and the others from other Asian countries such as Malaysia, Thailand, etc. ADDIN EN.CITE Johnson20101608(Johnson & Bade, 2010)160816086Johnson, T.E.Bade, D.L.Export/Import Procedures and Documentation2010New YorkAmacom9780814415504http://books.google.co.ke/books?id=OpqUoEMTB2wC( HYPERLINK l "_ENREF_1" o "Johnson, 2010 #1608" Johnson & Bade, 2010). With the economy getting worse every day, companies are finding themselves in a tight spot where they need to source materials from countries with lower inputs while at the same time passing these cost savings to the customer enabling the companies to gain competitive advantage by becoming cost leaders. Major cause Cutting costs is the major reason why companies source products from foreign manufacturers. These foreign countries tend to have workers who are willing to do the same amount of work for a lesser salary than the American employee. This allows the company to save a lot in terms of labor costs especially in the labor-intensive production processes. In addition to the salaries being low, there are also fewer fringe benefits such as medical cover,

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