In a short essay, explain how global sourcing can contribute significantly to a firm's ability to achieve its strategic goals. Why is "achievement of strategic goals" actually the best rationale for global sourcing?

What will be an ideal response?

The strategic view of global sourcing-called transformational outsourcing-suggests that just as the firm achieves gains in efficiency, productivity, quality, and revenues by leveraging offshore talent, it also obtains the means to turn around failing businesses, speed up innovation, restructure operations, and fund otherwise-unaffordable development projects. Global sourcing allows the firm to free expensive analysts, engineers, and managers from routine tasks to spend more time researching, innovating, managing, and generally undertaking high-value-adding activities that contribute more productively to increasing company performance. In this way, global sourcing becomes a catalyst to overhaul organizational processes and company operations and increase the firm's overall competitive advantages. It allows the firm to achieve large, longer-term strategic goals.
The best rationale for global sourcing is strategic. The vast majority of companies cite cost cutting as the main reason for global sourcing. After the first year, however, most firms encounter diminishing returns in the amount of money saved. Cost cutting is often a distraction from more beneficial, long-term goals such as enhancing the quality of offerings, improving overall productivity, and freeing up knowledge workers and other core resources that can be redeployed to improve long-term performance. To maximize returns, management should examine tasks and activities in each of the firm's value chains and outsource those in which the firm is relatively weak, that offer relatively little value to the bottom line, or that can be performed more effectively by others, yet are not critical to the firm's core competencies.