Question

Select a company of your choice. Assume that your firm is considering whether to make a component in-house or to outsource it to an independent foreign supplier. Manufacturing the part in-house will require an investment in specialized assets; quality control and the protection of intellectual property rights are major concerns. The most efficient and reliable suppliers are located in countries whose currencies many foreign exchange analysts expect will appreciate in the next decade; likewise, wage rates in those countries are expected to rise. Discuss the pros and cons of manufacturing the component in-house as opposed to outsourcing it. Should the firm consider foreign direct investment as one of its strategies?

Answer 1

Answer:

The airline company is considering buying the aircraft components in house or outsourcing it from other foreign countries.  

Explanation:

A company can outsource the product manufacturing or can manufacture its own products. The manufacturing of a product in house will be according to the requirements and customization can be done but on the other hand it will require equipment and manufacturing line setup on the site which incurs heavy cost. Buying product from outside will save incurring heavy fixed costs.