How can I respond to the following peer post?

Professor and class,

I have really come to enjoy answering these weekly discussion questions that are like this. I imagine myself as a businessman and try to give you an honest answer as if I wanted my business to be as successful as possible and make as much money as possible.

We can relate the topic of outsourcing to our first assignment for this class, Case Study 1. In our case study CJ Industries was outsourcing the bilge pump component from Heavey Pumps. For these examples we can say Heavey Pumps was in Mexico, among the low-cost country sourcing options. I think one of the biggest advantages of this was reducing overhead costs. If a business such as Heavey Pumps specializes in one component, the bilge pump, they have fewer overhead costs than a business that has multiple departments, such as CJ Industries. Thus, CJ Industries can purchase the bilge pump for cheaper than if they were to produce the product themselves and pay all associated costs. Another advantage we discovered in the case study was Heavey Pumps ability to produce high quality products with no issues. That was one of my reasons as to why I would not produce the product in house at CJ Industries and I would continue purchasing from Heavey Pumps, which has proven to be a trusted source. Heavey Pumps understands the manufacturing process and has highly skilled workers to complete production.

Now we can discuss disadvantages of outsourcing to low-cost countries. One of the first disadvantages is that we can relate to the case study is interdependency on another business. In our case study, CJ Industries depended on Heavey Pumps to produce the bilge pump, and when CJ Industries needed to increase production, Heavey Pumps inability may have hindered CJ Industries output of boat engines. Similarly, things like crime, theft, and corruption may affect that relationship with a business that depends upon another business in a low-cost country sourcing option. Other disadvantages that would cost me as a businessman money would be shipping costs as well as local tariffs.

The risks of outsourcing can be mitigated by trade agreements such as the Trans-Pacific Partnership, and potentially the Transatlantic Trade and Investment Partnership. I think these trade agreements set standards in order to facilitate trade and make it easier for countries to conduct international trade. As we read in our readings, I also think organizations like the World Customs Organization which improves the efficiencies and effectiveness of customs administrations, which can reduce theft and crime. Between businesses, risk can be mitigated by setting clear expectations and addressing unsatisfactory performance immediately.