“From Globalization to Regionalization: The Evolution of Business Location Decisions in Europe”

Abstract

Background: Recent crises like the COVID-19, war and political instability have disrupted global supply networks, exposing serious flaws that could cause firms to shut down. High shipping costs and supply chain disruption delays—which can extend for months at a time—have been significant contributors to business failures. A growing number of European businesses are considering reshoring their operations back home. Businesses are beginning to reconsider where to locate their manufacturing facilities and begin to recognize the benefits of having operations closer to the market and in their own nation. All things considered; reshoring is a long-term choice with numerous variables to be considered. Purpose of thesis: The purpose of this thesis is to make recommendations regarding location decisions for improving supply chain resilience in the face of uncertainty. Through the application of strategic decision-making in location selection (such as reshoring or offshoring), businesses can reduce the risks connected to global interdependence. A strategy that includes supply chain risks, trends and the other motivating factors is needed to strengthen supply chains. Businesses may create more adaptable and durable supply chains and better navigate upcoming disruptions by implementing these strategies. Method: A comprehensive literature analysis and a qualitative case study consisting of articles, press releases, and websites of several European companies were created to address the research questions. The selection of the companies was based on several factors, including their supplier chain, manufacturing plant in their home country, and prior production location selections. The gathered information was summarized, discussed, and analyzed based on the research. Conclusion: The research concludes a variety of drivers that might influence a company’s’ decision regarding its location. The findings indicate that while offshoring offers cost advantages, it comes with macro-economic risks and uncertainties. Reshoring, on the other hand, appeals to risk-averse businesses in an uncertain global environment since it offers stability and compliance advantages. The study further demonstrates that while reshoring can increase supply chain resilience, its efficacy is constrained since numerous variables interact to predict resilience in the equation. Reshoring is often chosen by European enterprises when dealing with legal obligations and supply chain disruptions; however, decisions still need to be made in accordance with organizational and industry requirements.