MBA6221 Module 9 Strategic Sourcing Module

Flashcards covering key concepts related to global supply chain pricing and sourcing strategies.

Global Supply Chain Pricing

The process and strategies for determining the prices of goods and services throughout global supply chains.

Outsourcing

The practice of obtaining goods or services from an external supplier instead of producing them in-house.

In-sourcing

The process of performing a function within the company instead of relying on outside suppliers.

Offshoring

The relocation of a business process or manufacturing to another country to reduce costs.

Vertical Integration

A strategy where a company owns or controls its supply chain processes from production to distribution.

Labor Arbitrage

The practice of outsourcing production to countries with a lower labor cost to save on expenses.

Value Density

The ratio of the value of a product to its weight or size, which influences tradability and transportation costs.

Supplier Development

The process of improving and fostering relationships with suppliers to increase their performance and capability.

Coordination Costs

Expenses incurred in managing relationships with external suppliers, including communication and oversight.

Transaction Cost Economics

A theory that analyzes the costs associated with economic transactions, including governance and coordination costs.

Diverse Product Strategy

A strategy that involves offering a variety of products to meet different consumer needs.

Strategic Sourcing

An approach to procurement that involves analyzing the entire value chain and making decisions based on long-term value, not just immediate cost reduction.

Demand Risk Management

The practices used to mitigate risks associated with fluctuations in consumer demand.

Location Economies

The economic advantages that a particular geographical location offers to a business or industry.

Internal Sourcing

The practice of producing goods or services within the company rather than buying from outside suppliers.

Raw Material Cost

The expense associated with the basic inputs required for production.

Quality Control

The processes implemented to ensure that the products meet certain standards of quality.

Why are resource-based view (RBV) and transaction cost economics (TCE) key theories for explaining firm existence?

RBV explains that firms exist to leverage unique resources for competitive advantage, while TCE indicates that firms exist to minimize transaction costs associated with market exchanges.

How do RBV and TCE relate to determining firm boundaries?

RBV suggests that firms expand boundaries to utilize and develop unique resources effectively, whereas TCE asserts that firms choose their boundaries to reduce costs by either internalizing or outsourcing transactions based on efficiency.

What is the primary focus of transaction cost economics in relation to firm boundaries?

Transaction cost economics focuses on minimizing the costs of transactions, thereby indicating whether activities should be conducted within the firm or through market exchanges.

What does the resource-based view emphasize regarding firm capabilities?

The resource-based view emphasizes a firm’s internal capabilities and resources as critical for sustaining competitive advantage and thus influencing decisions about firm boundaries.