lants are located in regions of this country where manufacturing employees enjoy high earnings. The second problem for Black and Decker involves the fact that most of its plants are quite old and are not capable of producing the same quality of product as could be manufactured in a new facility. A related problem involves the fact that companies such as Makita Power Tools manufacture overseas in facilities that are newer and better maintained meaning that unless Black and Decker takes appropriate action this company will find it increasingly, difficult to compete with competitors' products manufactured overseas.
The company has come to the conclusion that one way to reduce operating costs in order to remain competitive is to outsource production. Outsourcing appears to be a viable option for Black and Decker. The key advantage of outsourcing is that it enables Black and Decker to invest your resources into more profitable activities. An advantage of building new production facilities offshore is to take advantage of low labor rates. Another advantage involves the fact that foreign countries are often less strict about environmental damage caused by the manufacturing process.
One of the big threats is new and formidable competition from China. China is now a member of the WTO and has most favored nation status with the United States. Nevertheless, it is possible that China will one day become a competitor in the U.S. domestic marketplace. Many companies now see outsourcing as being the source of sustainable competitive advantage by Black and Decker -- or by its competitors. Outsourcing is now seen as more than a way to cut production costs. It is a way to improve quality. It also is a way to improve productivity. It is also a way to add additional flexibility to the production process by using more advanced capital equipment making changeovers faster, easier and more economical.
Executive Summary: This Company is sufferin...