Contract Manufacturing – Advantages and Disadvantages | International Business Management

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

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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Turnkey Project – Entering Into Foreign Market | International Business

Turnkey Project

Turnkey Project

Turnkey projects meaning

Turnkey Project is one of the strategies (mode) of entering into the foreign market by the firm. In a Turnkey Project, the firm agrees to design, construct, train personnel and startup turnkey plants for the foreign client. After the project is completed by the firm, it is handed to the foreign client .With the use of Turnkey Strategy, the firm transfers’ process technology to the foreign countries.Turnkey projects are those that are designed, developed, and equipped by a company. Upon becoming ready to operate, it is turned over to the buyer. Turnkey projects are of course built for the cost agreed upon in the contract by the company developing them. Turnkey projects are designed, fabricated, installed, supported aftermarket and technical serviced by the company.

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Will Leontief Paradox Ever Die? -Wassily Leontief | Theories of International Trade

Leontief Paradox

Leontief Paradox | Wassily Leontief | Heckscher-Ohlin Theory | Theories of International Trade In International economics, “The Heckscher-Ohlin theory” is considered to be one of the most influential theoretical concepts. Since the theory makes a few simplifying assumptions, it is preferred over Ricardo’s Theory by most economists. The theory has been subjected to many empirical … Read more

Starbucks Analysis – Competitive Analysis, SWOT Analysis, and Marketing Mix

Starbucks Analysis

Starbucks analysis |Starbucks SWOT Analysis | SWOT Analysis of Starbucks |Starbucks Competitive Analysis |Starbucks marketing mix | Starbucks competitors   Starbucks Background and Starbucks History Starbucks Company is one of the leading American multinational Coffee Company which was founded in 1971 in Seattle, Washington as a single coffee shop. The key people behind the formation … Read more

Absolute Advantage Vs Comparative Advantage – Difference Between Absolute and Comparative Advantage | International Business

Absolute Advantage Vs Comparative Advantage

Absolute Advantage Vs Comparative Advantage

Absolute advantage and comparative advantage are two important concepts in international trade that largely influence how and why nations devote limited resources to the production of particular goods. They describe the basic economic benefits that countries get from trading with one another. Absolute advantage is a condition in which a country can produce particular goods at a lower cost in comparison to another country. On the other hand, comparative advantage is a condition in which a country produces particular goods at a lower opportunity cost in comparison to other countries.

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Monopolistic Advantage Theory – FDI Based Theories | International Business

Monopolistic Advantage Theory

Monopolistic Advantage Theory

Monopolistic advantage theory, first proposed by S. H. Hymer in his doctoral thesis and later expanded by C. P. Kindleberger. Monopolistic advantage theory states that the reasons multinational corporations (MNCs) are able to compete successfully against local firms. It is a microeconomic theory that makes the firm the center, as well as the cause, of the international movement of capital and goods.

The theory elucidates why firms choose to internationalize their operations. Typically, MNCs are at a disadvantage compared to local firms because they have to cope with liabilities of foreignness, lack of local know-how, high cost of acquiring this knowledge in other countries, etc.

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