Question

Differentiate between contract manufacturing and setting up wholly owned production subsidiary abroad.

Answer 1

Answer:

Differentiate between contract manufacturing and setting up wholly owned production subsidiary abroad :  

CONTRACT MANUFACTURING :  

(1) Contract manufacturing means a joint venture in which company contracts manufacturers in foreign market to goods produced as per its guidance.  

(2) It is suitable for small and medium sized firms.

(3) There is less government intervention in such type of business.

SETTING UP WHOLLY OWNED PRODUCTION SUBSIDIARY ABROAD :  

(1) The company which has the full control over the operation of overseas business is called setting up wholly owned production subsidiary abroad.

(2) it is suitable for large size firms.

(3) There is more government intervention in this type of companies.

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Answer 2

Contract manufacturing refers to a type of international business where a firm enters into a contract with one or a few local manufacturers in foreign countries to get certain components or goods produced as per its specifications while in a wholly owned subsidiary the parent company acquires full control over the ...