As noted in this chapter, because of global competition, companies have become increasingly focused on reducing costs. To reduce costs and remain competitive, many companies are turning to outsourcing. Outsourcing means hiring an outside supplier to provide elements of a product or service rather than producing them internally.
Suppose you are the managing partner in a CPA firm with 30 full-time staff. Larger firms in your community have begun to outsource basic tax-return preparation work to India. Should you outsource your basic tax-return work to India as well? You estimate that you would have to lay off six staff members if you outsource the work. The basic arguments for and against are as follows.
YES: The wages paid to Indian accountants are very low relative to U.S. wages. You will not be able to compete unless you outsource.
NO: Tax-return data is highly sensitive. Many customers will be upset to learn that their data is being emailed around the world.
Instructions
Write a response indicating your position regarding this situation. Provide support for your view.
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Managerial Accounting: Tools for Business Decision Making
- Many outsourced jobs have resulted in offshoring jobs, rather than using domestic outsourcing. If a U.S. company wants to offshore a service like customer service, for example, what are some of their considerations? In your answer, address offshoring disadvantages as compared with domestic outsourcing.arrow_forwardAs a result of increasing global competition, companies have become increasingly focused on reducing costs. To reduce costs and remain competitive, many companies are turning to outsourcing. Outsourcing means hiring an outside supplier to provide elements of a product or service rather than producing them internally.arrow_forward"Companies with labor incentive manufacturing processes are most likely to benefit from sending manufacturing operations overseas because the bulk of potential cost savings relate to labor costs".Question: Prepare an analysis showing whether a product line or other business segment should be added or dropped. Note: Samsung Electronics Co. Ltd. (Samsung Electronics)arrow_forward
- Which of the following statements is TRUE? A. Technological change is one of the ongoing challenges that characterize the current business landscape. B. A global company can be headquartered anywhere, but usually, most of its employees come from the organization's home country. C. In today's world, planning is a top-down function in which top executives establish business plans and tell others to implement them. D. Globalization has reduced the need for innovation by equalizing production costs.arrow_forwardWhich statements are TRUE? 1. Minimum wage laws check the problem of purchasing power of income and solve income inequality. 2. In developing countries, demographic transition was slower than in developed countries. 3. Rural-urban migration can be prevented primarily through provision of free education. 4. Agglomeration refers to the coming together of firms whose products are correlated in a location thus allowing for the coming together of their workers. 5. Prisoner’s Dilemma takes place when the actions taken by one firm gives the incentives for other agents to take similar action.arrow_forwardThe company eHarbour is expanding and needs to hire new employees for new software development in other regions, but the company is having a hard time finding good employees to fill positions. In your role as a paralegal or legal assistant working for eHarbour, discuss what type of visa programs exist to allow foreign workers to fill specialty occupations. Discuss what types of positions at eHarbour could qualify for the visa program. Discuss the advantages and disadvantages of sponsoring a visa program for employees. How can bringing in employees born outside the United States add value to the company? What can current employees and the owners of eHarbour do to make foreign employees feel included?arrow_forward
- Bulldogs Inc. wants to enter the global market. Which one may not be the reason in such decision?  Production efficiency in other countries may result to economies and synergies that are favorable to the company To seek technologies not yet present in the home country To broaden market and increase shareholder value Essential materials and labor rates may be more expensive in other countriesarrow_forward"Companies with labor incentive manufacturing processes are most likely to benefit from sending manufacturing operations overseas because the bulk of potential cost savings relate to labor costs".Question: Identify relevant and irrelevant costs and benefits in a decision. (Note: Samsung Manufacturing)arrow_forwardWhich of the following is NOT a reason why companies move into international operations?  a. To better serve their primary customers.   b. To take advantage of lower production costs in regions where labor costs are relatively low.   c. To increase their inventory levels.   d. Because important raw materials are located abroad.   e. To develop new markets for the firm's products.arrow_forward
- XYZcompany (US Based) is facing resistance in their growth as it has high sales cost structure. what should be done within the company in order to drive change in the region?arrow_forwardManagement accounting guidelines.  For each of the following items, identify which of the management accounting guidelines applies: cost–benefit approach, behavioral and technical considerations, or different costs for different purposes. Analyzing whether to keep the billing function within an organization or outsource it. Deciding to give bonuses for superior performance to the employees in a Japanese subsidiary and extra vacation time to the employees in a Swedish subsidiary. Including costs of all the value-chain functions before deciding to launch a new product, but including only its manufacturing costs in determining its inventory valuation. Considering the desirability of hiring an additional salesperson. Giving each salesperson the compensation option of choosing either a low salary and a high-percentage sales commission or a high salary and a low-percentage sales commission. Selecting the costlier computer system after considering two systems. Installing a participatory…arrow_forwardSelect a manufacturing organization (Toyota Motors) for justifying "Companies with labor incentive manufacturing processes are most likely to benefit from sending manufacturing operations overseas because the bulk of potential cost savings relate to labor costs". Identify relevant and irrelevant costs and benefits in a decision. Prepare an analysis showing whether a product line or other business segment should be added or dropped. Determine the value of obtaining the constrained resources. (Note-MANUFACTURING ORGANIZATION- Toyota motors)arrow_forward
- Principles of Accounting Volume 2AccountingISBN:9781947172609Author:OpenStaxPublisher:OpenStax College