International Business "Countertrade Denotes a Thesis

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DQ3. (a). The pros of manufacturing in-house lie in the firm's greater control over the design and manufacturing of the component part, the firm's ability to protect the uniqueness of this new technology, and the ability to guarantee the timeliness of the production of this critical part, without worrying about shipping difficulties, carelessness on the part of the outsourced firm, or strikes. (b) Outsourcing allows for selecting a low-cost location and finding a favorable currency exchange, greater flexibility to discontinue the component's use if it becomes obsolete in light of improvements in technology, avoiding a non-recoverable investment, and creating a potentially beneficial relationship with another nation.

DQ4. Efficient logistics functions like just- in- time (JIT) inventory systems have been key to the success of Japanese firms. These "economize on inventory holding costs by having materials arrive at a manufacturing plant just in time to enter the production process and not before. The major cost saving comes from speeding up inventory turnover. This reduces inventory holding costs, such as warehousing and storage costs.

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It means the company can reduce the amount of working capital it needs to finance inventory, freeing capital for other uses or lowering the total capital requirements of the enterprise" (466). New technology and communication such as electronic data exchange and "web-based information systems play a crucial role in modern materials management. By tracking component parts as they make their way across the globe toward an assembly plant, information systems enable a firm to optimize its production scheduling according to when components are expected to arrive" (467). Good logistics planning allow for 'lean' manufacturing, which is especially critical when serving the needs of a wide and diverse consumer base, on an international scale. There may be wide swings in demand seasonally, changes in regulations because of politics, or shifts in different demand segments. Just-in-time manufacturing and other approaches to make sure demand and inventory are closely matched become even more vital to success,….....

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