IBM 416 Lecture Notes - Lecture 9: Business Process Outsourcing, Global Sourcing, Corporate Social Responsibility

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Chapter 17 Global Sourcing
What are the definitions, characteristics, and examples of following?
oGlobal sourcing
Procurement of products or services from suppliers located abroad for consumption in the
home country or third country
Involves a contractual relationship between the buyer and the foreign supplier, in which
the performance of a specific value-chain activity is subcontracted to the firm’s own
subsidiary or to an independent supplier
oBusiness process outsourcing (BPO)
Outsourcing of business functions to independent suppliers such as accounting, human
resources functions, It services, and customer service
oBack office activities
Including, internal, upstream business functions such as payroll and billing
oFront office activities
Includes down-stream, customer-related services such as marketing or technical support
oCaptive sourcing
Sourcing from the firm’s own production facilities located abroad. Production is carried
out at a foreign facility that the focal firm fully or partly owns through direct investment
oContract manufacturing
Arrangement in which the focal firm contracts with an independent supplier to
manufacture goods according to well-defined specifications
Ex. Nike, Ikea
oOffshoring
A natural extension of global sourcing, it refers to the relocation of a business process or
entire manufacturing facility to a foreign country
MNEs shift production of goods or processes to foreign countries to enhance their
competitive advantage
Common in the service sector, including banking, software writing, legal services, and
customer service activities
oconfiguration of value-adding activity
oglobal supply chain management
the firms integrated network of sourcing production and distribution organized on a world
scale and located in countries where competitive advantage can be maximized
sourcing from numerous suppliers scattered around the world requires efficient supply-
chain management
othird party logistics provides
providers (3PLs) as well as independent logistics service providers such as FedEx, TNT,
and UPS are useful facilitators
ocorporate social responsibility
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