Balagny clothing company Outsources production

Balagny Clothing Company Outsources Production
Name
Institution
Problem statement
Increasing turbulent economy and globalization have pushed manufacturing abroad for numerous industries. United States firms have been affected by this tendency, outsourcing to aid stay profitable and competitive (Kenly, 2012). The United States apparel manufacturing is intensely affected. Nevertheless, there are prospects for national and local producers to bung up some unexploited needs. Balagny clothing company is one of these companies. The firm would like to remain competitive in the market and at the same time reduce the costs of production. The company decides to outsource production in China since the average hourly wage is only $1.18 compared to the United States which is $8.65. The great difference in wages encourages the company to close down manufacturing in the United States to reap the benefits of cheap labor abroad. However, the company’s decision seems to hurt its success in the long run.
Analysis of relevant information
Outsourcing is constricting with a dissimilar individual or company to perform a particular capacity. Practically every business outsources somehow. Ordinarily, the subcontracted ability is acknowledged not dogged to the industry. A protection firm, for instance, could outsource its defense and arrange processes to companies that labor in this kind of work is observing that they aren’t identified with strategic or protection to the industry. The outside companies that are supplying the outsourcing facilities are third-gathering providers, or as they’re regularly termed, until suppliers.

Outsourcing has got advantages. At the start, outsourcing raises a sequence for firms to cut costs and also to reduce the burden of a large workforce (Bucki, 2008). Balagny clothing company decided to outsource their production targeting to reap the expected advantages such as increased efficiency, focus on core areas, save on technology and infrastructure, better and faster services, time zone advantage, and access to cheap skilled resources.
The transition of the company from the United States to China took close to two years and was ready to enjoy the perceived advantages. However, though some of the factors that influenced the company to relocate to China were obvious, the company began to experience other problems. The company had to slash its wholesale prices to remain competitive. However, the Chinese production facilities altered the clothing product to match their production. The change wasn’t received well by clients as they began to complain that the feel and fit of the clothes were different. The alteration of the products is indeed a drawback for the company’s business. In any business, the primary objective and goal are to satisfy customers always. The signs of dissatisfaction mean that the company is likely to lose its customers shortly.
Again, Balagny experienced inconveniences as far as transport of the products is concerned leading to a fewer sales. When the company sales are less, it makes little money and therefore it is likely to incur losses. The complexity of transport and inventory increased the cost of the transactions and therefore the company could not reap the anticipated profits after the relocation. All options like setting up a manufacturing subsidiary in Mexico as suggested by William Duncan was also expensive for the company, and therefore that could not be a solution to save the company’s future. Therefore, the Balagny’s CEO felt that the company’s future is doomed and hence actions to save it were inevitable. Meaning, the expected profits were never realized, and the situation was likely to worsen.
Recommendations
Based on the challenges that Balagny is facing after relocating to China need an urgent solution to save the company from collapsing or losing its clients. The company needs to keep its domestic operations. Despite the high expenses in the United States, the company will be able to manage the customer base and ensure that there is a reliable transport and dispatch system in place. However, the company should continue outsourcing. But the company should outsource another company that is flexible and ready to adjust the design of the products based on the client’s preference.
Implications for the company if my recommendations are followed
If the company follows this recommendation and keep the domestic operations, it will be able to appropriately respond and work on factors that limit it from making good profits. But relocating and establishing the company outside the country will bring about challenges that are beyond the company’s control. The company will be able to access the clients, get their views on the products and make the necessary changes. The outsourced company must be flexible to implement all designs that the Balagny requires hence satisfying clients. By doing so, the company will enjoy a vast customer base thus making huge profits. Eventually, the Balagny clothing company will grow strong and succeed in future. In other words, the future of the company can get guaranteed by the establishment of the domestic operations.
Conclusion
In conclusion, any business in the globe executes its operations aiming at making profits and securing its future. The Balagny clothing company is also among the companies that intend to make profits and therefore it’s looking for the best option. However, when a chosen option seems to fail, an alternative is inevitable. Thus, the company’s relocation to China doesn’t help realize its objectives and hence the need to keep their domestic operations.
ReferencesBucki, J. (2008, November 11). Ways Outsourcing Can Improve Your Business. Retrieved February 5, 2018, from https://www.thebalance.com/top-outsourcing-advantages-2533765
Kenly, A. (2012, October 16). Apparel Manufacturing Outsourcing: Trends and Opportunities in the US. Retrieved February 5, 2018, from http://viewpoints.io/entry/apparel-manufacturing-outsourcing-recent-trends-and-opportunities-in-the-us