geog; eya notes - · pdf filecreated by myrth 405 ‘13 trend: in recent years,...

Click here to load reader

Post on 30-Jan-2018

214 views

Category:

Documents

1 download

Embed Size (px)

TRANSCRIPT

  • CreatedbyMyrth40513

    OUTSOURCING & the

    Global Industrial Shift Transition from developing to developed

    & its impacts FOCUS:ImpactsofOutsourcingRelationshipbetweenGIS&OutsourcingESSENTIALQUESTIONS:Howwouldtheglobaleconomicmapinthe21stCenturybereshapedbytheglobalindustrialshift(GIS)inthisageofglobalization?Willglobal industrialshiftbringaboutamoreequitabledistributionof incomeornarrowthegapsinthelevelofdevelopmentintheworld?Globalshiftsineconomicactivityproduceevenhigherlevelsofdevelopmentthroughouttheworldtoalargeextent,withtheconditionthatwealthandprofitdistributionisensured,aswellasabalancebestruckbetweeneconomicidealsandtheneedsofpeoplefromamoralandsocialstandpoint.ENDURINGUNDERSTANDING:OutsourcingwillcreategrowthopportunitiesforLEDCsasMEDCs(traditionalkeyglobaleconomies)strivetomaintainacompetitiveadvantageinthisageofglobalizationLeadtoelevatedstatus/prestigeofemergingeconomies(eg.China,India)IPOInput:Resources,AgentsGovernment,MNCstoprovidecapital&expertiseProcess:Manufacturing,ProcessingOutsourcing/OffshoringTakingonaglobalperspectiveOutput:Developmentgoals(IncreaseSOL/QOL)Intermediategoal:IncreaseprofitIndustrialRevolution(18th/19thCentury)Majorchangesinindustries,developmentoflargescalemanufacturing(fromcottageindustries)NorthAmerica&EuropehighlyindustrialisedDevelopmentofMEDCs(peopleenjoyhighstandardofliving)IR&GIS:ShiftinindustriesfromMEDCstoLEDCsresultedindeindustrializationofsomeregionsofMEDCsPhenomenon:GLOBALINDUSTRIALSHIFTTrendoftransferenceGlobalrelocationoflargescalemanufacturingindustriesfromMEDCstoNICs/NIEsCausedachangeintypesofindustrieslocatedindifferentcountriesRestructuringofsocietyasawhole

  • CreatedbyMyrth40513TREND:Inrecentyears,manufacturinginNICshasincreased,whereasmanufacturinginMEDCshasandisstilldecreasing.Inthelastfewdecades,manycountriesthathavetraditionallyreliedonagriculturehaveseenamassivegrowthintheirmanufacturingindustries(NICs)ThishasledtoarapidincreaseofdeindustrialisationinMEDCs(Eg.UK)wherethisisalonghistoryofmanufacturinggoods(Eg.CarsmanufacturedinUK,Germanyfordecades)Practice:OUTSOURCING(byMNCs)Practicewhereincompaniesreducecostsbycontractinganytask,operation,joborprocesstoathirdpartyinsteadofperformingitinternallyforasignificantperiodoftimeCanbewithinnationalboundariesFunctionbeingoutsourcedisconsiderednoncoretobusiness(periphery)toincreasecomparativecost

    Divisionofpartsinsupplychain Eg.LEDCsManufacturing&assembly,MEDCsR&D

    MaximizecomparativeadvantagethroughspecializationCostcuttingmeasurewhereproductsaremadeinpoorercountriesforrichernationswhohavegreaterspendingpoweranddisposableincomeOUTSOURCING GIS:OutsourcingtriggeredGIS,GISisareflectionofmassoutsourcingbyMNCsovertimeOffshoring:ForeignOutsourcingRelocationbyacompanyofabusinessfromonecountrytoanotherUsuallyanoperationalprocessDEFINITIONSNewlyIndustrialisedCountries(NICs/NIEs):DevelopingcountrieswheremanufacturingindustrieshavegrownrapidlyLeapsineconomicdevelopment(Eg.India,China&Brazil)Industrialisation:ThedevelopmentofindustryonanextensivescaleDeindustrialisation:OccursinPostIndustrialsocietiesamountofindustrialisationinacountrydecreases.TransitionfromamanufacturingbasedeconomytoaservicebasedeconomyEastAsianTigers:4earlytigersHK,Taiwan,SouthKorea&SporeEmergentsChina,India,Thailand,Vietnam,Malaysia,IndonesiaRELATEDTRENDSININDUSTRYIncreaseinglobalaffluencedriveshigherconsumptionandconsequentlyproductionacrosstheworldMassivelevelsofoverseasproductionsatiatinghighdemandgloballySiteofmanufacturinghubsnearertoemergingmarketstoextendglobalreachNeedtomaintaincompetitiveadvantageintheageofglobalizationfreermarkets&stretchprofitmarginIncreaseddrivefordevelopmentinLEDCsInviteMNCsin(outsourcing)toboosteconomicdevelopmentSubsequentlyuseprofitstoincreaseSOL&QOL

  • CreatedbyMyrth40513

    Rise of Multinational Corporations (MNCs) Roleinmanufacturingtoday:Keydriverofoutsourcing/offshoringKeyglobalplayers,dominateinternationalmarketsPrimemotivationalforcesbehindglobalizationaregianteconomiesoftheworld(MEDCs&MNCs)

    Increasinglypowerfulpartofourglobalsociety Mergeandacquireeachotherformlargerentities,dominateinternational

    marketplace Exertshapinginfluenceoneconaswellassoc&culwellbeingbothpositive&

    negativeonmanystakeholdershomecountryandoutsourcingdestinationBusinessesthatmanageproduction/deliverservicesinmorethanonecountryOwnedbyrich,monopolizingcompaniesCharacteristics:Abletocoordinate&controlprocesses&transactionswithinproductionnetworksFlexibilityinswitchingresources&operationsbetweenlocationsHasitsheadquartersinonecountry(placeoforigin)buthasoperationsinarangeofdifferentcountries

    Why do MNCs outsource? ReasonsforrelocationoffactoriesfromMEDCstoNICs1LowerCost,HigherProfitCostpressuresdriveMNCstolowcostdestinationsAttractivenessofLEDCs/NICsasareasoflowercostofproductionMinimumwageislowerthaninNICsMNCswillgainmoreprofit1.1LaxerHealth&SafetyRegulationsCostSaving:Companydoesnotneedtopayouttobetterworkingconditions1.2ConsistentWorkAttendanceProhibitionofstrikesNICsforbidworkersfromstrikingoverpoorwagesandworkingconditionsConsistentworkersattendance2.IncreasedProductionRateInNICs,rulesregardingworkinghoursarevirtuallynonexistentMoreproductionhoursandahigherrateofproducinggoodsCompanyruns24/hduetodifferenttimezones3.TaxIncentivesandTaxfreeZonesReducestheamountoftaxespaidbytheTNCIncreasethecompaniesprofit.4.LargeConsumerMarketinNICsDuetolargepopulationExpansionofmarketsize&accessExpansionofindustry

  • CreatedbyMyrth405134.1InternationalPublicity&BrandingExtendinfluence5.AllowRecruitingonIrregularBasisWhenusageofserviceisunpredictableInhousestaffisnoteconomicallyviableJobsthatarenotroutinebound;onlynecessaryforparticularneedsinparticularseason6.EnhanceStrategicFocusSpecialisationtomaintaincompetitiveedgeinglobaleconomyEVIDENCE:Companiesthatoutsourcereduceadministrativetasksbymorethanhalf,increasestrategicfocusby40%Pursueexcellenceincorecompetencies(Eg.Innovation),outsourcesecondaryfunctions(Eg.Administration)7.ReduceRiskFactorsDiversifymanufacturingprocesses(Eg.Naturalhazards,workersstrike,wars)DecreaseinstabilityEVIDENCE:ToyotamanufacturescarsinothercountriesduetoearthquakesinJapan

    STAKEHOLDERS MEDCs LEDCs

    1. MNCs(supragovt) 1.Employees2. Employees 2.Consumers Professionals(Whitecollar) Risingmiddleclass Labourers(Bluecollar) 3.GovernmentCore(competency)vsPeripheral(processing)tasks3. Government

    LEDCs/NICs + SOCIAL: MNCs enhance the wellbeing of society of both MEDCs and LEDCs Stakeholder:Employees

    1. Jobcreation Principle:Halfaloafbetterthannone ProvidesemploymentforcitizensofLEDCs Peopleliveinpoverty,lowwagejobspreferredtonone Otherwise,maybeemployedininformalsectorTurntovices

    EVIDENCE:LEDCslikeIndiawelcomeoutsourcingbyMNCstoprovideemploymentfortheirpeople

    2. Betterwages&increaseddisposableincomeIncreaseSOLforcitizensofLEDCsRisingmiddleclassconsumers

  • CreatedbyMyrth40513Localeconomygrows

    EVIDENCE:AveragepersonalincomeinChinain1978wasmeagre,butcurrentlyisUS$2000annually,IndianMicrosoftsoftwareengineerearns$11000,IndiasGDPis$500

    3. Spurcitizenstoupgradethemselves&developskillsAccesstonewtechnologyencouragespeopletolearnnewskillsets4.ImprovedaccesstohealthcareandcleanwaterProvisionofadequatemedicalcareLoweredriskofinfectionImprovedlifeexpectancy

    + SOCIAL Stakeholder:Government

    1. Development&Improvementofinfrastructure UtilizationofprofitsAllowsforhigherefficiencyinLEDCsParticularlyinIT/transportinfrastructure

    LEDCs/NICs - SOCIAL: MNCs disrupt econ aspect destroy soc/cul fabric of MNCs & NIEs Stakeholder:Employees

    1.PoorWorkingConditionsViolationofhumanrightsSweatshopconditions:workersworkforlongextendedhoursundersubstandardfactoryconditionsLabourexploitationInfringementonworkers&humanrightsImpactQOLnegatively

    EVIDENCE: ApplessupplyfirmsinChina,workershavediedfromworkplacehazards Labourrightsgroupsclaimthat18workershavetriedtokillthemselvesat

    Foxconnplants Foxconnworkersaretoworkfor10hoursadaywithouttoiletbreaksandare

    notallowedtotalktooneanother,orriskfacingafine Theoverallbasicwageissolow,comparedtothelocalcostofliving,workers

    havenochoicebuttoworkmorehoursthanthelegallimit,sometimes11hoursperday,sevendaysaweek,essentiallystandinginplacealldayexceptfortwoshortmealbreaks

    GarmentfactoryinBangladesh:Factoryworkerscanwork20hourswith1hourofsleep

    80%ofworkersarewomenaged1625lockedinfactoriesundersweatshopconditions

  • CreatedbyMyrth405132. LabourExploitation MNCsofferlowwages(starvationwages)tolocalstoobtaincheaplabour Meagreincome,belowfairwageCannotmeetdecentSOLUrbanpovertyprevalent Manyliveinghettos ChildrenexploitedasfreelabourNICs:Absenceoflawstoprotectthemfromchildlabour

    EVIDENCE: FoxconnworkersmakeonlyUS$1.78anhour CHILDLABOURallegationsleviedagainstNikeinCambodiaandNikeinthe

    1990s InLEDCs,approx250milchildrenaged514forcedtowork Workerssubjecttolonghours,lowpay,compromisedsafety,verbal/physical

    abuse

    3. Health&SafetyCompromised Inadequatehealth&safetymeasuresbyirresponsibleMNCsIndustrialaccidents/healthproblemsamongworkers

    EVIDENCE:ApplessupplyfirmsinChina:workersreportedhazardousworkingenvironments,suchasmetaldustfillingtheairatonefacility Stakeholder:Government,Citizens

    1. PerpetuateExistenceofSquatterSettlements Poorworkersbuildhomesillegallyneartheirplaceofwork SpringupnearMNCfactories2. OverwhelmedInfrastructure Increaseinurbanization Governmentunequipped/unpreparedtodealwithmassindustrializationUltimatelydecreaseinSOL/QOL Hugeinflationinland&housingpricesinurbanareasHitscommonmanhard

    EVIDENCE:InIndia,suddeninfluxofcompanies&jobsintourbanareas(Bangalore,NewDelhissuburbs)hasoverwhelmedexistingpoorinfrastructure,leadingtoimpossiblycongestedroads,water&electricityshortages

    POINT: Poverty may not be alleviate