Executive Decision Making - Essay Example

 It would be necessary before constructing a contract to determine whether the supplier will want such advances and then weigh this against operational costs of the business model.Furthermore, if the agreement between the supplier and the distributor is not going to be long-lived, contracts may ask for some variety of reimbursement related to the tooling costs to meet the distributor’s demand. This could be non-beneficial for a smaller organization that might be struggling to achieve profit.

Any and all expenses must be considered before seeking foreign sourcing opportunities.If the supplier is chosen will be a partner for a multi-year relationship, then issues of potential pricing must be weighed before making this decision. Costs of manufacturing are influenced by changing labor wage rates and fluctuating prices of raw materials in the global supply chain. It can be difficult to establish an appropriate pricing agreement under a long duration contract as it is not easy to predict what costs will be incurred in the future.

The vendor could, in the future, demand a higher price (which can be rejected by the distributor) which could terminate the contract. This would have disadvantages as it takes time for supplier partners to understand the needs of their client and alter manufacturing to fit distributor needs. Hence, in a price dispute, it could lead to further costs in identifying an alternative supplier.Additionally, product liability is a major concern for companies seeking overseas sourcing. There is a substantial risk that consumers purchasing products made in a foreign nation could have personal injuries as a result of using the foreign-made product or property damage if the product happens to be.