Answer to Question #231216 in Management for Sukoluhle

Question

Give your opinion about global procurement. Include different cultures in your answer.

Answer 1

Global procurement enables organizations to source from company-internal and company-external suppliers, covering some issues of production and product development  that the sourcing company may have encountered.  This helps to reduce labor costs since getting human resource from outside is cheaper. While this strategy attracts diverse ideas to a firm, it may lead to  hidden costs associated with different cultures and time zones, exposure to financial and political risks in countries with (often) emerging economies, increased risk of the loss of intellectual property, and increased monitoring costs relative to domestic supply.