As we know, companies often send production offshore to garner cost savings but there are many costs and
risks associated with offshoring production. Even Fortune 500 companies have made big mistakes by sending
production overseas. Goel, Moussavi, and Srivatsan (2008) and Wheatley (2009) noted organizations have
increasingly found the cost advantage of cheap labor does not offset the additional costs incurred in an
offshore venture. So companies enamored of cheaper labor often justify moving production without really
understanding the additional costs of the venture.
As offshoring is usually a strategic decision made at higher levels of management, lower levels in supply chain
may not even be part of the decision. They are just left to deal with the results. How might a company address
this situation to help make the decision to stay or move offshore?
Sample Solution
