Over the past few years, many companies began to question whether or not to globalize and/or outsource their business. There are many areas to consider when faced with this important decision. Companies often tend to globalize to gain benefits from industries and technologies developed abroad. Corporations are able to appeal to a larger market after the domestic market is saturated to be able to expand and continue growth. While many other counties have different local products, companies need to be able to customize their products to adapt to other cultures. Douglas Daft, a past CEO for Coca-Cola said that globalization strategies had to adapt to the times and firms needed to “Think global. Act local.” His idea allowed for the company to build a global brand image while creating products to meet the local demands of the target market.
The questions corporations need to ask is: why do firms globalize? One of the main reasons why United States based corporations chose to globalize is for them to benefit from technological advancements that are used around the world. Global development makes sense as a competitive weapon. When choosing to globalize a company, there are many factors that come into play that could make or break the success of a company entering into a global market.
On the other side of the spectrum, what are the pros and cons of outsourcing? Outsourcing can range from payroll processing and accounting to production and customer service. One of the main advantages of outsources is to cut costs and streamline operations. Another benefit is to reduce labor costs. Hiring and training staff for short-term projects can be expensive; outsourcing gives the advantage to have other people focus on your projects at a lower cost. As far as cons from outsourcing are concerned, they involve loss of some control and the reliance on others who do not work directly for the company. The loss of control can create problems in areas such as delays, quality issues, and customer service. Outsourcing may also cause a negative reaction from the public and investors. The loss of jobs from home country to low-cost alternative locations represents difficult job losses. Although there are no negatives associated with outsourcing, the advantages also create reasons for larger corporations to outsource some work.
So to wrap this up, what are the outlined pros and cons of globalization and outsourcing?
The questions corporations need to ask is: why do firms globalize? One of the main reasons why United States based corporations chose to globalize is for them to benefit from technological advancements that are used around the world. Global development makes sense as a competitive weapon. When choosing to globalize a company, there are many factors that come into play that could make or break the success of a company entering into a global market.
On the other side of the spectrum, what are the pros and cons of outsourcing? Outsourcing can range from payroll processing and accounting to production and customer service. One of the main advantages of outsources is to cut costs and streamline operations. Another benefit is to reduce labor costs. Hiring and training staff for short-term projects can be expensive; outsourcing gives the advantage to have other people focus on your projects at a lower cost. As far as cons from outsourcing are concerned, they involve loss of some control and the reliance on others who do not work directly for the company. The loss of control can create problems in areas such as delays, quality issues, and customer service. Outsourcing may also cause a negative reaction from the public and investors. The loss of jobs from home country to low-cost alternative locations represents difficult job losses. Although there are no negatives associated with outsourcing, the advantages also create reasons for larger corporations to outsource some work.
So to wrap this up, what are the outlined pros and cons of globalization and outsourcing?
Pros
- Products accessible to reach more people
- Companies can benefit from technological advancements from around the world
- Labor and material costs may be cheaper in developing countries
- Lower trade barriers
- Competition may tend to lower prices and decrease the chances of inflation
Cons
- Some products may not be accepted by different cultures (products need to adapt to fit)
- Outsourcing as resulted in loss of jobs in home country
- Environmental restrictions may occur
- Loss of control may create problems such as delays in manufacturing, quality issues, and customer service
While there are many decisions to take into account when adapting a new change, the most important part is weighing the pros and cons and taking time to make the correct decision. In the book Carry a Chicken in Your Lap Bruce Alan Johnson and R. William Ayers demonstrate what can go terribly wrong when not being fully prepared to enter into global markets. This book provides failure and success stories of what companies can expect while contemplating the idea of expanding into foreign markets. Globalization and outsourcing may be the ticket to success for many companies, but careful preparation is key.
Post A Comment:
0 comments so far,add yours