International Business Management

Contract Manufacturing – Advantages and Disadvantages | International Business Management

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Contract Manufacturing

Contract Manufacturing

The term ‘contract manufacturing’ refers to an international business model in which a company contracts with a local manufacturer in another country to get certain components or goods produced according to its specifications. Contract manufacturing comes in three major forms: 
  • Production of certain components, such as automobile components and shoe uppers. These components can be used to manufacture cars and shoes; 
  • Assembly of components into final products, such as hard drives, motherboards, floppy disk drives, and modem chips in computers;
  •  Complete manufacturing of products, such as garments. 
Local manufacturers produce or assemble the goods according to the technology and management guidelines provided by the foreign company. Local producers make or assemble the goods, which are then delivered to international firms for use in their final products or are sold as finished goods by the international firms under their brand names in other countries, such as the home country and the host country. Today, all major international companies such as Nike, Reebok, Levis and Wrangler have their products or components manufactured in developing countries via contract manufacturing. 

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Features of World Bank – World Bank | International Business Management

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Features of World Bank

Features of World Bank

  • Abolish extreme poverty and hunger

During the period 1990-2004, the number of people living in extreme poverty fell by more than a third. Despite wide variations among regions and countries, the results indicate that the world as a whole can reduce poverty by half. However, poverty in Africa is expected to increase, and most of the 36 countries where 90% of the world’s undernourished children live are in Africa. Only a quarter of countries are on track to achieve the goal of halving undernutrition.

  • Ensure universal primary education

From 80% in 1991 to 88% in 2005, the number of children in developing countries attending school increased. In 2005, 72 million children of primary school age, 57% of whom were girls, were not receiving an education.

  • Encourage gender equality

As women’s labor market participation stalls, more women than men – globally more than 60% – are contributing but unpaid family workers. Women’s economic empowerment and shared growth are the goals of the World Bank Group Gender Action Plan. 

  • Reducing the mortality of children

Survival rates are improving somewhat globally; however, accelerated improvements are most urgently needed in South Asia and Sub-Saharan Africa. There were an estimated 10 million-plus deaths of children under five in 2005; many of these were preventable. 

  • Ensure better maternal health

Every year, nearly half a million women die during pregnancy or childbirth in Sub-Saharan Africa and Asia. Various health care interventions are required to prevent maternal deaths due to a wide variety of causes. 

  • Fight HIV/AIDS, malaria, and other diseases

There has been a decline in the number of new HIV infections and AIDS deaths, but the number of people living with HIV continues to increase. Prevalence is above 15 percent in the eight most affected countries in southern Africa. Globally, treatment has increased, but still meets only 30 percent of needs (with wide differences between countries). There were 1.6 million deaths from AIDS in SubSaharan Africa in 2007. More than 1 million people die each year from malaria, which affects 300 to 500 million people each year. The majority of cases and more than 95 percent of deaths occur in Sub-Saharan Africa. 

  • Promote environmental sustainability

Particularly in regions of biological diversity, which continues to decline, deforestation remains a problem. Energy technology advancements are outpacing the increase in greenhouse gases. 

  • Establish a Global Partnership for Development

Donor countries have reaffirmed their commitment. To match the current rate of core program development, donors must fulfill their pledges. In order to accelerate progress toward the MDGs, the Bank Group is partnering with multilateral and local partners.

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