Another Discussion Question

Discussion Board Scenario: You work as an analyst in the planning unit of a firm with international operations. From time to time, you might be called to a meeting to discuss certain aspects of international business. As you state your responses to the Discussion Board questions, assume that you are in a formal, management discussion. Your manager has asked that you state your sources when citing facts or important concepts, for good order.

Question 2: Your firm must decide whether to make a component part in-house or to contract it out to an independent supplier. Manufacturing the part requires a nonrecoverable investment in specialized assets. The most efficient suppliers are located in countries with currencies that many foreign exchange analysts expect to appreciate substantially over the next decade. What are the pros and cons of (a) manufacturing the component in-house and (b) outsourcing manufacturing to an independent supplier? Which option would you recommend? Why?