BA 447 day 12 Agenda –Film on Wal-Mart (PBS, Frontline) –Discuss chapters 5, 6, 7, 8 Insights from Wal-Mart film Major points of each chapter Are there conflicting information? How can we resolve these? –Summary of issues (my opinion)

Ch 5: America and Free Trade Focus of this chapter is whether outsourcing/offshoring is good or bad for the country. His views are obvious Global view –US receives outsourced jobs from other countries, e.g. services –Outsourcing is a global phenomenon: lots of jobs from different countries looking for lower cost locations

Offshoring Does it result in net loss of jobs? –Claim: 3.3m jobs lost to outsourcing, over several years –Jobs may also be created in the sense of company remaining competitive, other jobs becoming more practical –Jobs may also be lost because of productivity improvements, e.g. reengineering, rightsizing –Scale: there are 150 million jobs in US economy and it creates a couple million jobs a month

Chapter 5 Benefits of offshoring to a US company? –Retain competitiveness in US and foreign markets –Flexibility –Differentiation –Long-term survival Benefits/harm to society? –Cheaper goods –Lost jobs –Foreign exchange

Chapter 6 What is America’s source of competitive advantage? –Industrial/scientific base –Individual ambition, drive –Universities –Immigrants Are these advantages being eroded?

Chapter 7 & 8 Quiet crisis? –The gap between the knowledge base relative to rest of the world is narrowing What is the challenge?

In-class Friedman: countries like China will consume US products if they are not already doing so. Wal-Mart film: the Clinton administration assumed that China would provide a market for US produced goods. However because the disparity of income, the US ended up to be a net importer of Chinese-made goods. Resolve

Summary of issues There seems to be a focus on India and China as far as outsourcing is concerned. Other countries, what do they do? Political risk and doing business in these developing countries. Governance and corruption: are these countries truly democracies? what rules apply? how can we understand these? Role of multinationals (American, Taiwanese, Korean, Japanese, UK, etc.)

Issues (continued) WTO: major agreement among trading partners to facilitate trade. –Product or raw material affected by tariff reduction discussions – positive or negative Managing expatriate managers: problems of managing managers from different countries Energy and Crude oil outlook and implications on trade and movement of products

Issues (continued) Political risk in general: provide an example of activists; who are they; what do they want; how can they affect a business? Terrorism, religion, and politics Live 8 and Africa: what do we know about the continent and what does it mean to doing business there? Role of multinationals (American and other nationalities) in opening up (China)

Broader issues Changing geopolitical roles of the US and developing countries like China Increasing role of a country’s economy and its link to global business in political decisions

Issues - continued Will a developing country like China be a net importer of US goods or will it always be a net exporter to the US? Show how other industries have actually been moving from low-wage and “friendly” location to another since the 1950s. What challenges, opportunities do large Chinese or Indian firms pose to US firms? (Pick one, for example, in automobiles.)

Issues - continued Supply chain management by global companies imply that outsourcing is not merely a US versus the world issue. Explain. Is outsourcing good or bad for America? Increasing role of a country’s economy and its link to global business in political decisions

Issues - continued How can we spot an opportunity or a risk among many developing countries? –What reforms –Political climate –Etc. Role of aid agencies, e.g. US Agency for International Development, and international financial institutions, e.g. the World Bank) in development. What do these provide a global company?

Issues - continued What does governance mean? How can we use literature in this area to assess risks in countries our companies operate in? Forms of corruption and how do these affect global business. Some examples. Poverty, corruption, and terrorism – how can a global company understand the relationship among these three within the context of major countries they operate in.

Issues - continued Environment related issues –Global warming –Ecology related – preserve ___ –Renewable energy sources –Health related – safe drugs, sufficient drugs, etc.

Issues - continued Understand an “activist” organization currently on the heels of your company. –What is the issue? –What does the activist organization want? –What are its methods? –Who are its allies –How can the global company respond?