La Trobe University

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La Trobe University
Faculty of Law and Management
School of Economics and Finance
Semester 1, 2011

Sustainability in Global Business
ECO1SGB

Tutorial Questions for week beginning 30 May 2011

Review of Key Terms
Global learning| Production|
ISO 9000| Supply chain visibility|
Just-in-time (JIT) systems| Total quality management|
Make-or-buy decisions| Vertical integration|
Minimum efficient scale| Logistics|
In preparation for the short-answer type questions in the final exam, WRITE DOWN YOUR ANSWERS TO THE FOLLOWING: Questions on pages 530-531
1. A firm must decide whether to make a component part in-house or to contract it out to an independent supplier. Manufacturing the part requires a non-recoverable investment in specialised assets. The most efficient suppliers are located in countries with currencies that many foreign exchange analysts expect to appreciate substantially over the next decade. Identify the advantages and disadvantages of (a) manufacturing the component in-house, and (b) outsourcing manufacturing to an independent supplier. Choose an option that you would recommend and give reasons.

I choose a product manufacturing the component in- house, first Control of Quality and Reputation
Making products in-house means that companies are solely responsible for the quality of a product as well as its delivery time. By not relying on an external supplier, a company can ensure it protects its reputation by delivering the quality it wants in the time it desires

Containing Intellectual Property
Intellectual property refers to the creations of the mind, such as designs, inventions and art. Although it's common for companies to require outsourced manufacturers to sign confidentiality agreements to not steal or duplicate any new technology they are producing, each country has its own legal ramifications in regard to intellectual property. Outsourcing the manufacturing of such a product allows others to see the...
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