The potential for nearshoring offshored productions for European businesses
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School of Business | Bachelor's thesis
(Mikkeli) Bachelor’s Program in International Business
AbstractObjectives The main objectives of this study were to analyze the potential for nearshoring productions for European businesses, compare the cost of production in three different geographical regions, determine what criteria are important for four different industries, and determine which nearshoring location suits each industry. Summary Offshoring production has been the most common cost-reducing strategy in the past, as collectively, labour costs, transportation costs, and raw materials costs were cheaper compared to the cost of production within the home country. However, the nearshoring strategy has recently been gaining attention, with offshoring strategies facing issues. To examine whether nearshoring is a recommended option for European businesses, different geographical regions’ production costs were compared, followed by an analysis of whether nearshoring suits different industries. Conclusions There is a potential for nearshoring each production industry to Europe or North Africa, which is part of the Mediterranean region. The four industries, textiles, electronics, automotive, and agricultural industries, can be nearshored to either Eastern Europe or North Africa. These areas offer relatively low costing labour that is educated and trainable. These regions provide advantages over offshoring locations, such as lower transportation costs, delivery time, and better communication. Each nearshoring region also offers its own benefits for different industries over offshoring locations.
Thesis advisorSimek, Patrick
globalization, offshoring, nearshoring, productions, cost reduction, industries