1 By Adriana Cedeno And Sonia Luna Global Production

2 Objectives Objectives What is outsourcing? What is outsourcing? History of outsourcing History of outsourcing Who is outsourcing? Who is outsourcing? What is outsourced? What is outsourced? Jobs outsourced Jobs outsourced Leading exporters and importers Leading exporters and importers Benefits and the costs of outsourcing Benefits and the costs of outsourcing Socioeconomic implications for the developing nations Socioeconomic implications for the developing nations The Debate The Debate

3 What is outsourcing? Is a technique used by companies to increase efficiency and effectiveness Is a technique used by companies to increase efficiency and effectiveness

4 History of outsourcing

5 Who is outsourcing? Multinational Corporations Multinational Corporations Ex. Ex. Coca Cola Coca Cola Texas instrument Texas instrument Boeing Boeing

6 What is Outsourced? Anything in the value chain: Equipment, raw materials, parts, technology, people, and functional areas such as (R&D, sales, marketing, finance, accounting, etc.) Anything in the value chain: Equipment, raw materials, parts, technology, people, and functional areas such as (R&D, sales, marketing, finance, accounting, etc.)

7 Jobs Outsourced Computer Programmers Computer Programmers Pharmacy Technicians Pharmacy Technicians Telephone Operators Telephone Operators Billing and posting clerks and machine operators Billing and posting clerks and machine operators Computer Operators Computer Operators Data Entry Data Entry Word Processors and Typists Word Processors and Typists Tax Preparers Tax Preparers Medical Transcriptions Medical Transcriptions

8 Imports and Exports By Country

9 Benefits of outsourcing Lower production cost Lower production cost Economies of scale Economies of scale Economies of scope Economies of scope Specialization Specialization Increase sales and revenues Increase sales and revenues Greater capabilities (ex. R&D) Greater capabilities (ex. R&D) Market expansion Market expansion Innovation Innovation No time constrains No time constrains

10 Costs of outsourcing Quality decreases Quality decreases Legal and Ethics Legal and Ethics Transaction costs Transaction costs Managerial issues Managerial issues Cultural differences Cultural differences Political and business uncertainties Political and business uncertainties Copy right infringements Copy right infringements

11 Socioeconomic Implications for the Developing Nations

12 The Debate Imported technology crowds out local technology and investment Imported technology crowds out local technology and investment Labor Abuses Labor Abuses Environmental degradations Environmental degradations Corruption Corruption FDI’s capital is used in speculative attacks FDI’s capital is used in speculative attacks MNC’s relocate to lower-cost production zones MNC’s relocate to lower-cost production zones

13 The Debate cont. Pollution and dumping of waste and toxic materials Pollution and dumping of waste and toxic materials Issues surrounding intellectual property rights: Issues surrounding intellectual property rights: Protecting the interest of MNC’s vs. developing nationsProtecting the interest of MNC’s vs. developing nations Transfer of million of dollars of monopoly profits by MNC’s out of the countryTransfer of million of dollars of monopoly profits by MNC’s out of the country Patent rights in agricultural biotechnologyPatent rights in agricultural biotechnology Patent rights in pharmaceuticalsPatent rights in pharmaceuticals

14 The Benefits of Outsourcing FDI’s offer benefits of capital formation FDI’s offer benefits of capital formation DC’s can exploit competitive advantage DC’s can exploit competitive advantage Provides for open networks Provides for open networks It helps bridge the ties to novel information/knowledge acquisitionIt helps bridge the ties to novel information/knowledge acquisition Helps bridge ties among nationsHelps bridge ties among nations Technology transfer Technology transfer No need for DC to invest and researchNo need for DC to invest and research Learning by doing process improve productivity & efficiencyLearning by doing process improve productivity & efficiency Potential for economic growth Potential for economic growth It fosters economic development -improving lives It fosters economic development -improving lives

15 Concluding thoughts There is no turning back the clock to globalization There is no turning back the clock to globalization Outsourcing is part of the globalization Outsourcing is part of the globalization It can help DC’s and increases their potential It can help DC’s and increases their potential It can help these nations get out of poverty It can help these nations get out of poverty The benefits outweigh the trade offs The benefits outweigh the trade offs How can MNC’s help balance these trade offs? How can MNC’s help balance these trade offs? Continuing to act environmentallyContinuing to act environmentally Continuing to be socially responsibleContinuing to be socially responsible Continuing to adhere to universal business ethicsContinuing to adhere to universal business ethics Continuing to be proactive in pro-poor initiativeContinuing to be proactive in pro-poor initiative Ex: Canada- pro-poor pharmaceuticalsEx: Canada- pro-poor pharmaceuticals

16 Thank you!

17 Works Cited Michael LeGault. "Global outsourcing-deal with it. " Canadian Plastics 1 Sep. 2004: ABI/INFORM Global, ProQuest. Web. 17 Oct Michael LeGault. "Global outsourcing-deal with it. " Canadian Plastics 1 Sep. 2004: ABI/INFORM Global, ProQuest. Web. 17 Oct Aichlmayr, M.. "Manufacturing, Maquiladoras & Material Handling. " Material Handling Management 1 Nov. 2007: ABI/INFORM Global, ProQuest. Web. 17 Feb Aichlmayr, M.. "Manufacturing, Maquiladoras & Material Handling. " Material Handling Management 1 Nov. 2007: ABI/INFORM Global, ProQuest. Web. 17 Feb By Michael Selz. "ENTERPRISE. " Wall Street Journal 20 Dec. 1993, Eastern edition: ABI/INFORM Global, ProQuest. Web. 28 Feb By Michael Selz. "ENTERPRISE. " Wall Street Journal 20 Dec. 1993, Eastern edition: ABI/INFORM Global, ProQuest. Web. 28 Feb Conkey, C. (2006). Made in USA? now, customers get to choose. Wall Street Journal - Eastern Edition, 248(33), B1-B8. Retrieved from = &site=ehost-live Conkey, C. (2006). Made in USA? now, customers get to choose. Wall Street Journal - Eastern Edition, 248(33), B1-B8. Retrieved from = &site=ehost-live = &site=ehost-live = &site=ehost-live Madigan, K., & Mandel, M. J. (2003). Outsourcing jobs: Is it bad? BusinessWeek, (3846), Retrieved from = &site=ehost-live Madigan, K., & Mandel, M. J. (2003). Outsourcing jobs: Is it bad? BusinessWeek, (3846), Retrieved from = &site=ehost-live = &site=ehost-live = &site=ehost-live