Sourcing and Shoring

Topics: Emerging markets, Developed country, Developing country Pages: 37 (7101 words) Published: October 12, 2014
Studieretningsprojekt
Sourcing & Shoring

Marketing | A-level | Michael Pedersen
International Economics | A-level | Ingvar Hansson
7. February 14

Christopher Nørgaard Haslund

Abstract

This paper examines different terms and factors influencing decisions on sourcing and shoring different business functions. Outsourcing caused the term of insourcing, and offshoring resulted in onshoring. However, onshoring is sometimes called inshoring, and insourcing is sometimes named "backsourcing." Insourcing may be done by "onshoring", "offshoring" or just "near-shoring." Insourcing represent certain work to the same company, but in another country in the case of offshoring. If accomplished on same continent, it will be the case of onshoring. And if accomplished in same country, it is the case of near-shoring. By examining these various terms in association with globalisation, the emerging countries and the desire for growth in the western world, studies indicate that offshoring is undergoing a slight turnaround, or at least, some want to see that happening. This might be answer for the everlasting desire for growth, after the financial crisis.

1. Introduction
The economic globalisation and its increasing economic integration and dependence between nations, is a topic that is discussed everyday in the media, at home, school and in the government. The continuous globalisation of our economics confronts challenges for businesses worldwide. The increased fragmentation of the value-chain, which has resulted in out- and insouring of business functions, is one of the central issues in the globalisation process. International souring has created a large amount of attention in media over the last decade, due to the its perceived impacts on domestic employment. But the debate in the media has left companies struggling to adjust to the controversial issues; people are losing jobs1. But is it only companies that need to adjust to the issues? Or do ordinary citizens also have to address the issue of cheap product and the throw-away-society? Some argue that in order to stay competitive on the market, companies must be more cost-focused and thereby produce as cheap products as possible.2 This corresponds to fact that outsourcing almost always is related to the low-cost countries, which means that there is some conceptual confusion in the area of sourcing. Outsourcing in not the right term to use, when referring to jobs leaving the country. When functions are leaving the country, the right term to use is offshoring. And when functions are offshored, they are able to either outsourced or insourced. Intense debates among economists, some of which correspond to the topic of free trade, sees international sourcing as benefiting, both the origin- and destination country through free trade, It provides jobs to the host-country and it lower costs of goods in the origin country. And thereby make both sides see increased gross domestic product (GDP). On the other hand, companies are facing the critique of leaving many workers with out a job. Some argue that sourcing functions to developing countries will decrease the end quality and thereby equalizing the saved costs on a longer term. This paper will be focusing on the factors influencing the sourcing decisions and look into current developments in the global economy, which might affect the reverse affect of souring. At last, a discussion of new attractive countries in international sourcing will be provided in order to paint a picture for the future. 2. Method

The paper is based upon a thorough and critically examinations of material, for the purpose of creating a development process in sourcing and shoring. This development process will assist in explaining and understanding the purpose of shoring and sourcing. The foundation will be broad ensemble between marketing and international economics. Different theories are used to set the explanatory framework, and...
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