Nike provides technical specifications to a subcontractor or local manufacturer for its products. What is this arrangement called and what are its major benefits and drawbacks

Explanation:

The defined process is Contract manufacturing agreement .

Contract manufacturing agreement is a process where a client agrees with a manufacturer to design , manufacture according to specified requirements and deliver these goods which the client intends to integrate into his own final products.

Major benefits

It offers expertise skills in the process of production

Cost saving in capital , labor and other costs related to production, budgets are better managed and profit increases

It also gives time to focus on other business related activities

Drawback

Poor manufacturer might be engaged if research was not properly done before engagement . leading to bad products and bad reputation in the market

There is also a risk of potential delay in delivery

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