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Thread: For Economics Majors

  1. #16
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    Quote Originally Posted by Prince EWS View Post
    My big chance to actually be useful for once on this forum .
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  2. #17
    Global Moderator Prince EWS's Avatar
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    Quote Originally Posted by Hurricane View Post
    Governments should be tasked with maximising their own economies - economies of other countries and the welfare of their citizens while a consideration should be secondary.
    Indeed but it's not the government doing the vast majority of the outsourcing. A business should be tasked with maximising its own bottom line; their effect on the economy should be secondary to them unless it would have flow-on effects back to them.
    Last edited by Prince EWS; 12-11-2012 at 08:31 PM.
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  3. #18
    Cricketer Of The Year Agent Nationaux's Avatar
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    Agree with Benchy regarding 1 and 2. Very good answers mate (I can understand PEWS's jealousy.

    Manufacturers also outsource to places where the raw materials for their goods are readily available for production. And if they are readily available in that country, it's highly likely that the workers are more skilled in that industry.

    GDP measures the market value of the total amount of goods/services produced in the country, so you will only add to GDP even if you are competing against businesses in your own economy. As uppercut stated, it's quite a poor measure of economic wealth.
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  4. #19
    Global Moderator Prince EWS's Avatar
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    Quote Originally Posted by Uppercut View Post
    Yeah, it's tough to maintain competitive conditions when it comes to the biggest companies. But it seems unethical to me to pay rich people lots to do what poor people would be willing to do for little. So outsourcing ftw nevertheless.
    It's really not remotely that simple though and you know it. Outsourcing is often cheaper merely because of the difference in IR laws between countries. It's not always simply a matter of "someone in another country will do the same job for less than someone here would"; it's often a matter of "the market here have been regulated to a point where even though I could find a local worker to do this job for the same or less than what I'm paying for overseas labour, I'm not allowed to".


  5. #20
    Cricketer Of The Year Agent Nationaux's Avatar
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    Quote Originally Posted by Prince EWS View Post
    Indeed but it's not the government doing the vast majority of the outsourcing. A business should be tasked with maximising its own bottom line; their affect on the economy should be secondary to them unless it would have flow-on effects back to them.
    AWTA. If the government starts intervening then we will move away from capitalism.

    Outsourcing is better for a more modern and globalised world. It allows for the efficient transfer of capital where needed and thus benefits the global economy.

  6. #21
    Cricketer Of The Year Hurricane's Avatar
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    Quote Originally Posted by Prince EWS View Post
    Indeed but it's not the government doing the vast majority of the outsourcing. A business should be tasked with maximising its own bottom line; their affect on the economy should be secondary to them unless it would have flow-on effects back to them.
    True. I focused on the government as I thought in my mind (although I didn't state it) should the government look to curb firms from outsourcing. Would this help or hurt the economy?
    From what Bench has written it could hurt the economy if you curbed outsourcing as the ability of companies to focus on their core functions could deteriorate and lead to less use of quality as a source of competitive advantage (hope I have paraphrased him right). Are there any other ways that it helps the economy.

    Clearly outsourcing helps the individual firms no question.
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  7. #22
    Cricketer Of The Year Hurricane's Avatar
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    Quote Originally Posted by Agent Nationaux View Post
    Outsourcing is better for a more modern and globalised world. It allows for the efficient transfer of capital where needed and thus benefits the global economy.
    Gun post.

    So what you are implying is that NZ exports will rise because countries like the Phillipines get more wealth to actually import our products.

  8. #23
    Cricketer Of The Year Agent Nationaux's Avatar
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    Yeah that's the gist of it. We need to start looking at economies in terms of a globalised economy and not national economies. When you do a transaction using your kiwi bank debit card for milk in the US at Wall mart, the whole transaction transcends national boundaries.

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    I don't follow any of this. We should decide fiscal righteousness with a game of monopoly.

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  10. #25
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    Quote Originally Posted by Prince EWS View Post
    It's really not remotely that simple though and you know it. Outsourcing is often cheaper merely because of the difference in IR laws between countries. It's not always simply a matter of "someone in another country will do the same job for less than someone here would"; it's often a matter of "the market here have been regulated to a point where even though I could find a local worker to do this job for the same or less than what I'm paying for overseas labour, I'm not allowed to".
    Yeah, I was ranting at Phlegm along those lines a while back IIRC. About how forcing companies to maintain Western standards of reasonable working conditions overseas moves business away from the poorest economies that need it most.
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  11. #26
    Cricketer Of The Year Agent Nationaux's Avatar
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    For example when we refer to say a financial market we don't call it the UK financial market or the Chinese financial market. We say the globalised financial market. I can buy securities in a New Zealand company right now in the UK if I wanted to.

  12. #27
    Cricketer Of The Year Turbinator's Avatar
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    All great points listed here in this thread, but to dive slightly deeper into the topic –

    Outsourcing needs to be implemented carefully in order to be an effective tool for individual firms. Like most things, it also has its own risks. A simple example would be in the case of companies attempting to manage their operating exposure, where the objective is to stabilize cash flows against fluctuating exchange rates. A company may select low-cost sites to outsource its manufacturing capabilities, but this in turn could result in higher production costs as the increase in manufacturing sites may prevent it from developing economies of scale. Partially offsetting any advantages achieved through outsourcing, this alone could have a profound influence on a company’s competitive position.

    But as AN mentioned, in industries that transcend national boundaries, a flexible sourcing policy is critical in order for companies (and to an extent, their respective countries) to remain competitive. Especially in the case of economies that aren’t diversified and are heavily reliant on one company/industry (in the case of Finland – Nokia), this is true. So yes, the main benefactors of outsourcing tend to be the shareholders and company management, and in some cases the monetary gains (in respect to Hurricane's third question) are not substantial enough to make a profound impact on the disposable income of consumers. But in an increasingly globalized world, it has become imperative for companies to exercise greater strategic focus, and retain its core competencies (for example, design capabilities in the tech industry) and high-value added activities when structuring an outsourcing plan. With that said, it is also important to manage operational risks that may arise from process fragmentation, which is another area where a company may falter in its attempt to lower production costs.

    From more of a government and economy perspective, however, it is very important to gauge exactly which processes are being outsourced. What is termed as “destructive outsourcing”, should be avoided, especially in the case of many advanced economies that specialize in high tech/quality exports. For example, the government should incentivize companies in the technology industry to maintain their design capabilities in the case of a country like the US, which is known for its cutting-edge research and development. Or else, over time, it faces the risk of losing out to companies abroad that have evolved from working on relatively simple tasks to more sophisticated processes. And this deployment of high-value added activities to offshore centres across Asia is already taking place. Companies that successfully outsource operations and boost their bottom line have set a benchmark for its competitors in the industry. When others follow the example set, it can have a drastically adverse affect on a nation’s ability to carry out the same processes, with the requisite skills, knowledge, and supplier infrastructure having been eroded over time.
    Last edited by Turbinator; 12-11-2012 at 03:00 PM.

  13. #28
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    Answers will always require certain assumptions to be made

    Simply assume everything away until you have simple supply/demand scenario

    Low supply/high demand = good

    High supply/low demand = bad

    This tactic earned me a 4.0 in micro economics at post-grad level from one of the world's top unis and shows you what a joke the subject is

  14. #29
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    haha.....that is a pretty cool idea

  15. #30
    Request Your Custom Title Now! Spikey's Avatar
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    really gonna need to see some documentation
    Indians can't bowl - Where has the rumour come from as I myself and many indian friends arwe competent fast bowlers ?

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