Last edited by Prince EWS; 12-11-2012 at 08:31 PM.
~ Cribbage ~
Rejecting 'analysis by checklist' and 'skill absolutism' since December 2009
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.
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.
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.
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.
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.
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
haha.....that is a pretty cool idea
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 ?
With the English bid I said: Let us be brief. If you give back the Falkland Islands, which belong to us, you will get my vote. They then became sad and left
There are currently 1 users browsing this thread. (0 members and 1 guests)