Answer to Question #102807 in Management for SHAHRUL AZMIN MD TAUHID

Question

Koninklijke Philips NV has faced criticism for relocating much of its product design and manufacturing to China, with some observers warning that political upheaval or an economic downturn in China would result in a very costly slowdown in Philips’ core business activities.

Imagine you are the head of a successful Australian-based information technology company that has offshored your customer service department to India. Many of your Indian support engineers are also capable web developers who could significantly reduce your labour costs by taking over certain product development responsibilities.

Would you consider moving product development to India? Explain your answer.

Answer 1

I would consider moving my product development to India. One of the most obvious reasons is to minimize the cost of production and increase profit margins in the process. The primary reason for moving production, however, would be to establish a presence in India. Considering the fact that India is one of the countries with the highest population of people, it will be a strategic business decision to consider of the potential growth, the company, would be exposed to, in the event that it captures Indian information technology market share. Consequently, in as much as, moving to India will present local criticism, it is in the best interest of the company and its Australian clientele because. It will be possible for the company to reduce the unit cost of the services because of the growth in market share and reduced production costs much to the advantage of the long-term clients.