Which global sourcing arrangement is established in a country with low-cost labor or for producing a product not made in the home country?

The correct arrangement for sourcing in a country with low-cost labor or for producing a product not made in the home country is a wholly owned subsidiary. This type of global sourcing allows a company to have complete control over its operations, including production processes, quality standards, and labor management, within the foreign market. By establishing a wholly owned subsidiary in a country known for its low labor costs, businesses can effectively reduce production costs while maintaining the ability to align operations with their strategic goals.

Additionally, local market knowledge and the ability to respond quickly to market changes are benefits associated with this arrangement. Establishing a wholly owned subsidiary also allows companies to safeguard their proprietary technologies or processes, as they retain full oversight as opposed to potentially sharing operational control with local partners, which would occur in joint ventures.

The other arrangements, while potentially effective in certain contexts, do not provide the same level of control or are aimed at different circumstances, such as forming partnerships or outsourcing specific functions without establishing a deep operational presence. Thus, in this scenario, a wholly owned subsidiary represents the most comprehensive approach for leveraging low-cost production while ensuring control over the business operations.