Question

1. Differentiate between offshoring, reshoring and nearshoring.
2. Discuss the impact of home market consumer perception and government intervention on reshoring of businesses.

Answer 1

Qn 1

1.Offshoring

It is the relocation of a business process from one country to another.It is the practice of obtaining products or services from another country or relocating production to another country, where cheap labour or other resources available.It helps to minimizes the overall costs.Following are the benefits of offshoring:

a) Cost reduction b) Cheap and skilled labours c) Complete Assistance

d) Better Control e) Streamlines process f) 24*7 Support

g) Tax and other benefits h) Risk reduction i) Concentration on Core business

There are mainly two types of offshoring. They are:

I. Production Offshoring : When a company starts its production unit in a different country, to import the finished goods for selling it in the domestic market.

II. Service Offshoring : When a company setting up its units in other countries to carry out service related operations such as marketing,HR,etc...

2. Reshoring

It is also called Onshoring, Inshoring or Backshoring. It is the process o returnin the production of goods back to the company's original country or domestic country.Following are the beneits of Reshoring:

a) Ensures high quality products b) Helps in increasing  innovation and competitiveness

c) Allows greater control over production process d) Increases employement

2. Nearshoring

It happens when an organisation decides to transfer work to the company that are geographically closer.Following are the factors which makes nearshoring unique over offshoring:

a) Control and Influence b) Common culture and Value

c) the Cost-quality balance d) Lowers customs and duty charges

Qn 2

The impact will be depending upon the type of country to which reshoring is done. For developing countries reshoring means decline in employment.in contrast reshoring creates fewer jobs in developed countries. Both the situations will affect the overall economy. And also we can consider the benefits of reshoring also.