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Term Paper “Making the Most of Foreign Factories” Jeremy Rochford California State University San Marcos Abstract The article “Making the Most of Foreign Factories”, written by Kasra Ferdows discusses how companies can and should obtain the full potential of their factories abroad. She begins by stating that there are two approaches to manufacturing and a factory’s importance to the company is based on the approach the manager of the factory takes. She also exclaims how she thinks the gap between companies that treat their foreign factories as a source of competitive advantage and those that do not is widening. Next, Ferdows discusses the three current realities of global business. She follows by illustrating the six categories…show more content…
“Powerful suppliers increase the cost of purchased materials.” (Miltenburg). The next force is the bargaining power of buyers. The more options buyers have for a certain product the more power they have. “Powerful customers decrease prices for finished products.” (Miltenburg). The last force is the rivalry among competitors in the industry. “Tough competition decreases prices and increases costs such as marketing and new product research and development.” (Miltenburg). However, in the past couple of years there has been a new trend, bringing manufacturing back to the United States. According to Anne Kates Smith, the Boston Consulting Group predicts a manufacturing renaissance in the United States to be in full gear by the year 2020. There are many reasons for this trend starting with rising wages abroad and high oil prices, which have increased shipping costs dramatically. “Offshoring companies have also encountered hidden costs resulting from long lead times, quality-control issues, and the separation of production from design and engineering teams.” (Smith). Another main attraction to the United States is that the cost of factory powered natural gas is much less in the United States than in other countries. This factory powered natural gas is not only a main component in producing chemicals, but as more companies begin to focus on being socially responsible the demand for such
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