Gps Chip Maker
Why do people say it’s cheaper to outsource production in components of most products even cars like GM?
Why do GPS makers GM Ford etc. etc. buy the components chips, engines, etc. etc. for their products and then assemble them? Even some of these products have American made components and they still outsource a lot of production on the components WHY? Wouldn’t it be cheaper to manufacture it all yourself since nobody would be making a profit off you?
Econ 101: specialization, esp. labor, leads directly to expansion (economic growth, “profits”).
If you take a task and break into smaller parts and give them to someone who can learn to do them very, very well, you will always end up with “more” than if you let everyone try to do a little bit of everything.
A rare case of economic theory and research in complete agreement
To give you a simple, but true example: If I can average $100 per hour doing what I do for a living, does it make sense for me to stop doing what I do to mow my lawn? Not if I can pay someone LESS than $100 per hour to mow my lawn — net of costs, I come out ahead.
The piece you are missing is that you (a person, a company, a country…) should concentrate on doing what pays you the MOST to do it. Anything else will distract you from earning the maximum you are capable of earning. To continue my example, if I can pay someone $40 an hour to mow my lawn, I would actually be loosing $60 by doing it myself (not “saving” $40).
If you look that your own choices for America’s Most Successful companies over the last 50 years, I wil bet you will find that most of them don’t actually “make” much of anything….They have specialized in areas far afield of traditional production and our country is much, much wealthier for it.
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