Advantages And Disadvantages Of Subcontracting

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Selecting a company to subcontract to is a very complex decision-making process. Initially, direct and indirect factors need to be considered because they significantly direct outcomes. Factors that might decidedly affect the company are cost, export tax, location and quality expertise. Indirect factors may be the factory’s regulations and its working conditions. Often times some elements may clash. Then, companies need to make sacrifices on aspects that have less prominence. These disadvantages are generally seen as costs of the decision making. Moreover, occurred externalities to third parties outside the corporation should not be overlooked. Finally, a decision should be made based on the benefits that outweigh the costs. On the surface, there are no direct disadvantages by subcontracting in Mexico. Their labor fee and lenient environmental policies are far more desirable from an operational point-of-view. Conversely, the benefit of cheap labor costs can be a drawback since they can be perceived as exploitation. Corporations are typically held liable on how they produce their products. Hence producing in regions with poor conditions might risk putting the business in a less desirable light. Furthermore, due to their size and reputation, multinationals are ordinarily more vulnerable to criticism. Major firms can hardly withstand negative publicity associated with bad practices. Thus, even if the disadvantage of producing in Mexico is only indirect, it could still be a substantial negative factor in terms of the company’s reputation. Nonetheless, due to the nature of large size multinational companies, they should undoubtedly be able to overcome those negative perceptions by several methods. First, they may administer their o... ... middle of paper ... ...rom https://www.continuetolearn.uiowa.edu/laborctr/child_labor/about/causes.html Lozaday, C. (2014, July 17). Multinationals, Wages, and Working Conditions in Developing Countries. Retrieved from http://www.nber.org/digest/oct03/w9669.html Mojonnier, T. (2012, February 17). When Child Labor is Ethical. Retrieved from http://businesstheory.com/child-labor-ethical/ Duhigg , C & Wingfield, N. (2012, February 13). Apple Asks Outside Group to Inspect Factories. Retrieved from http://bits.blogs.nytimes.com/2012/02/13/apple-announces-independent-factory-inspections/?_php=true&_type=blogs&scp=1&sq=apple%20in%20shift&st=cse&_r=0 Sweatshops. (n.d). Retrieved from https://www.mtholyoke.edu/~nshah/fashioncrimes/Sweatshops.html Wazir, B. (2001, May 20). Nike Accused of Tolerating Sweatshops. Retrieved from http://www.theguardian.com/world/2001/may/20/burhanwazir.theobserver

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