American business models have been known to change throughout time depending on trends in the economy. The main goal of a business it to produce the greatest return on ones investment by cutting costs in whatever areas possible. The most known business model of the twentieth century is outsourcing. Outsourcing has been a very controversial business model which has created great returns for companies, and caused much controversy with American citizens. In business, outsourcing is the act of finding other companies or locations outside of one’s own country to host manufacturing needs. Outsourcing is a lucrative business tactic for American businesses due to the immense regulations that are imposed on businesses in the United States. In most cases when looking for an outsourcing location, companies choose underdeveloped countries where land and labor can be found much cheaper.
Outsourcing is also beneficial for businesses trying to eliminate their competitors’ market share. By lowering labor, operating and overhead costs through outsourcing, businesses are able to maintain or lower their pricing to become more competitive in the American market. By doing so, companies are also able to increase their profit margins
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When a company outsources, they are giving up control of their manufacturing to an outside source. By doing so, they are also allowing the circumstances relating to the company or country they are outsourcing to impact the quality of their product. Outsourcing manufacturing to low-cost labor markets in third-world countries could put countries supply chain at risk, due to political instability. Also due to the civil unrest associated with most third world countries, problems could result with receiving raw materials or shipping finished products