International Sourcing Strategy

September 1974

Columbia Journal of World Business;Fall74, Vol. 9 Issue 3, p71

Academic Journal

Article

In recent years, increasing numbers of U.S. companies have added a new dimension to multinational corporate strategy. The new wave of foreign investment focuses on manufacturing in sourcing plants overseas in order to supply finished products or components for the firm's U.S. and world-wide production and marketing network. In the past decade, a surprising number of less-developed countries (LDCs) have demonstrated a new capacity to export labor-intensive manufacture at competitive prices to markets in the United States and other advanced countries. Faced with this new competition from low-cost imports, many U.S. firms reacted by calling for higher tariffs or for quota protection. It may seem the height of folly for U.S. corporations to direct new investments to the less-developed countries. In recent years many LDCs have shown increasing hostility toward MNCs, nationalizing some operations and placing new restrictions on others. In light of these developments, considerations of political risk might seem to dictate a veto on new investments in the LDCs.

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