Globalization And Outsourcing

By Author: Henry Ford
Total Articles: 189
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One consequence of globalization is that it has forced organizations to outsource some of their business activities to save on costs of doing business. The effects for outsourcing have been dramatic leading to workers being laid off. In addition, outsourcing has caused professional workers especially in poor countries to settle for jobs with meager payments especially from offshore outsourcing. Ray (2006) argues that being unemployed the workers are no longer able to contribute to the economy and this affects them on a personal level due to the withdrawn purchasing power.
Indeed, due to cheap labor offered by the companies accepting the global assignments, workers continue to be exploited and safety standards are overlooked. In addition, outsourcing of jobs leads to reduction of wages for workers and this has translated to their low standards of living.
In essence, companies and enterprises that outsource their services are able to be more efficient and productive. As a matter of fact, they continue being economically viable by producing goods using fewer resources. The companies and enterprises are not only getting ...
... cheap labor but are also getting more qualified workers who give better and more quality services. However, Brian (2006) argues that even though the costs of the salary to the workers goes down this may not necessary translate to decrease in operational costs due to the many hidden costs the company foots afterwards.
In conclusion, it is worth noting that the company no longer gets quality service and loyalty from its workers due to job insecurity. The employees in avoiding layoffs jump to new offers and this proves costly to the Company due to the cost of hiring and training of new workers.

Part 2
According to Grey (2007) companies continue outsourcing in order to remain competitive on pricing by cutting on salary costs. In order to remain competitive Companies continue to outsource their services and this has had serious economic draw backs especially in countries like America. Similarly, companies are not spared even though they tend to over-estimate and miscalculate the benefits of outsourcing. As a matter of fact, with the companies trying to reduce on the operational costs they overlook on the logistics expenses which eat on any gains at long run.
Besides leading to layoff of workers due to outsourcing, companies also loose on time due to delays and lack of coordination between workers in different locations and time zones. Looking at the above argument outsourcing does not seem really to be the solution to due the complications involved and the negative effects it causes to the home economic. But what is the solution to outsourcing?
In-sourcing is the solution to layoffs and dislocations occasioned by outsourcing of services. In-sourcing involves providing of the services onsite with full service from the company workers (Jane, 2006). The outsourcing in essence leads to massive lay offs while the in- sourcing maintains on jobs while ensuring the services are delivered.
There has always been an argument by economists that outsourcing creates 1.5 jobs for any job outsourced and brings more growth to the economy, enabling the nation to maintain its relevance to global competition. However, these claims remain to be proved, but it is evident that with loss of jobs and lack of willingness by people to get education on skilled courses the nation is directly loosing as a result of ills of outsourcing. However, a compromised sound solution to outsourcing remains to be realized with countries fearing on the negative effects of protectionism.
Part 3
In nineteen nineties the Ford Company decided to globalize its operation focusing on E-business. The company incorporated technology in various locations of operation and tailoring products according to individual markets but the venture was not without challenges. For instance, the approach to doing business in Argentina needed a different approach to what the management was used to back in Michigan. The web technology was incorporated in managing the brand of Ford and enabling the dealers to offer more quality customer services. By 1994 massive expansion had been made to increase production of vehicles in Argentina (Applegate, Montealegre, Berasategui, Etchard et al, 2003). However, a few years later an economic contraction occurred that saw the vibrant market shrink.
The Ford Company continued to use the web technology improving on marketing despite the economic recession. It is worth noting that when the Ford company Argentinean subsidiary was making strides with its e-plan the parent company with its products recall and quality problems. The company was left in a desperate situation as it still relied on funds from its parent company for its internet initiatives. Indeed the company was faced with a big problem on focus and diversification. The e- business initiatives in Argentina direly needed to balance on global and local goals. In addition, another depression occurred in 2002 that saw the Argentinean subsidiary loose millions of dollars.
Whereas an estimated one and a half million people actively used the internet resource in 2001, the venture in the Argentinean had not produced any profits and had not increased on market share (Applegate, Montealegre, Berasategui, Etchard et al, 2003). The technology though had positive results as it improved on logistics, distribution, production and more brand awareness. In customizing the global operational strategy into the Argentinean market the Argentinean subsidiary focus on web technology but lost focus on product improvement with the management unsure whether any new initiatives could deliver on any positive change for the Company.
Part 4
It is worth noting that that there are no universal management systems that exists due to the cultural diversities in different nations. Companies need to appreciate the local culture wherever they go to do business in the world. In our case, a merger between Coco technology in USA and Loco Euro has resulted into some American workers being transferred to Madrid in Spain. This has led to a mixture of Spanish and American workers in the Company who have different cultural backgrounds. More so, Mr. S.B Oxley, VP human resource, has been transferred to Madrid on a short notice to oversee the human resource department. He is concerned over the dissatisfaction of the employees in different departments and as the Senior Manager in Madrid’s HR we hereby study the cultural differences brought by the merger while trying to find the solution for the manager.
In studying the effects of globalization, cultural issues, ethical and business operations differences we need to understand some terms which are relevant to this report. Consequently, in understanding this topic better there are a number of terms that need to be defined. The long term orientation (LTO) is a measure of preservation of values and other traditional commitments (Hofstede, 1993). The other measure is individualism (IDV) which gauges how a society values the inter-personal bonds and family ties. As a matter of fact, societies with high rate of individualism have loose bonds, tend to be self reliant and lack the feature of collectivism. The next term worthy defining is uncertainty avoidance index (UAI). It is a measure of how a society is able to tolerate other people’s ideas and opinions besides adherence to rules and regulations. In masculine countries (MAS) women tend to be aggressive in adapting to a male dominated society. The last term is power distance index (PDI). It gauges the level of acceptance of inequality in a society by the discriminated groups. Low levels of PDI is indicative of an almost or an equal society. We now answer some questions which will allow us to study our case better.

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