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By Adriana CedenoBy Adriana Cedeno

And Sonia LunaAnd Sonia Luna

Global ProductionGlobal Production

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ObjectivesObjectives What is outsourcing?What is outsourcing? History of outsourcingHistory of outsourcing Who is outsourcing?Who is outsourcing? What is outsourced?What is outsourced? Jobs outsourcedJobs outsourced Leading exporters and importers Leading exporters and importers Benefits and the costs of outsourcingBenefits and the costs of outsourcing Socioeconomic implications for the Socioeconomic implications for the

developing nationsdeveloping nations The DebateThe Debate

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What is outsourcing?What is outsourcing?

Is a technique used by companies to Is a technique used by companies to increase efficiency and effectivenessincrease efficiency and effectiveness

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History of outsourcingHistory of outsourcing

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Who is outsourcing?Who is outsourcing?

Multinational CorporationsMultinational Corporations Ex.Ex. Coca ColaCoca Cola Texas instrumentTexas instrument BoeingBoeing

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What is Outsourced?What is Outsourced? Anything in the value chain: Equipment, Anything in the value chain: Equipment,

raw materials, parts, technology, people, raw materials, parts, technology, people, and functional areas such as (R&D, sales, and functional areas such as (R&D, sales, marketing, finance, accounting, etc.)marketing, finance, accounting, etc.)

http://www.youtube.com/watch?v=H95-IS_EQlIhttp://www.youtube.com/watch?v=H95-IS_EQlI

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Jobs OutsourcedJobs Outsourced

Computer Programmers Computer Programmers Pharmacy Technicians Pharmacy Technicians Telephone Operators Telephone Operators Billing and posting clerks and Billing and posting clerks and

machine operators machine operators Computer Operators Computer Operators Data EntryData Entry Word Processors and Typists Word Processors and Typists Tax Preparers Tax Preparers Medical TranscriptionsMedical Transcriptions

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Imports and Exports By CountryImports and Exports By Country

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Benefits of outsourcingBenefits of outsourcing Lower production costLower production cost Economies of scaleEconomies of scale Economies of scopeEconomies of scope SpecializationSpecialization Increase sales and revenuesIncrease sales and revenues Greater capabilities (ex. R&D)Greater capabilities (ex. R&D) Market expansionMarket expansion InnovationInnovation No time constrainsNo time constrains

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Costs of outsourcingCosts of outsourcing

Quality decreasesQuality decreases Legal and EthicsLegal and Ethics Transaction costsTransaction costs Managerial issuesManagerial issues Cultural differencesCultural differences Political and business uncertaintiesPolitical and business uncertainties Copy right infringementsCopy right infringements

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Socioeconomic Implications Socioeconomic Implications for the Developing Nationsfor the Developing Nations

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The DebateThe Debate Imported technology crowds out Imported technology crowds out

local technology and investmentlocal technology and investment Labor AbusesLabor Abuses Environmental degradationsEnvironmental degradations CorruptionCorruption FDI’s capital is used in speculative FDI’s capital is used in speculative

attacksattacks MNC’s relocate to lower-cost MNC’s relocate to lower-cost

production zonesproduction zones

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The Debate cont.The Debate cont. Pollution and dumping of waste and toxic Pollution and dumping of waste and toxic

materialsmaterials• Issues surrounding intellectual property Issues surrounding intellectual property

rights:rights:• Protecting the interest of MNC’s vs. developing Protecting the interest of MNC’s vs. developing

nationsnations• Transfer of million of dollars of monopoly Transfer of million of dollars of monopoly

profits by MNC’s out of the countryprofits by MNC’s out of the country• Patent rights in agricultural biotechnologyPatent rights in agricultural biotechnology• Patent rights in pharmaceuticalsPatent rights in pharmaceuticals

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The Benefits of OutsourcingThe Benefits of Outsourcing FDI’s offer benefits of capital formationFDI’s offer benefits of capital formation DC’s can exploit competitive advantageDC’s can exploit competitive advantage Provides for open networksProvides for open networks

• It helps bridge the ties to novel information/knowledge It helps bridge the ties to novel information/knowledge acquisitionacquisition

• Helps bridge ties among nationsHelps bridge ties among nations Technology transferTechnology transfer

• No need for DC to invest and researchNo need for DC to invest and research• Learning by doing process improve productivity & Learning by doing process improve productivity &

efficiencyefficiency Potential for economic growthPotential for economic growth It fosters economic development -improving livesIt fosters economic development -improving lives

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Concluding thoughtsConcluding thoughts There is no turning back the clock to globalizationThere is no turning back the clock to globalization Outsourcing is part of the globalizationOutsourcing is part of the globalization It can help DC’s and increases their potentialIt can help DC’s and increases their potential It can help these nations get out of povertyIt can help these nations get out of poverty The benefits outweigh the trade offsThe 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

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Thank you!Thank you!

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Works CitedWorks Cited

Michael LeGault.  "Global outsourcing-deal with it. " Michael LeGault.  "Global outsourcing-deal with it. " Canadian Canadian PlasticsPlastics  1 Sep. 2004: ABI/INFORM Global, ProQuest. Web.  17 Oct.   1 Sep. 2004: ABI/INFORM Global, ProQuest. Web.  17 Oct. 2009.2009.

Aichlmayr, M.. "Manufacturing, Maquiladoras & Material Aichlmayr, M.. "Manufacturing, Maquiladoras & Material Handling. " Handling. " Material Handling ManagementMaterial Handling Management    1 Nov. 2007: ABI/INFORM Global, ProQuest. Web.  17 Feb. 2011.1 Nov. 2007: ABI/INFORM Global, ProQuest. Web.  17 Feb. 2011.

By Michael Selz.  "ENTERPRISE. " By Michael Selz.  "ENTERPRISE. " Wall Street JournalWall Street Journal  20    20  Dec. 1993, Eastern edition: ABI/INFORM Global, ProQuest. Web.  Dec. 1993, Eastern edition: ABI/INFORM Global, ProQuest. Web.  28 Feb. 2011. 28 Feb. 2011.

Conkey, C. (2006). Made in USA? now, customers get to choose.Conkey, C. (2006). Made in USA? now, customers get to choose. Wall Street Journal - Eastern Edition, 248Wall Street Journal - Eastern Edition, 248(33), B1-B8. Retrieved (33), B1-B8. Retrieved from from http://search.ebscohost.com/login.aspx?http://search.ebscohost.com/login.aspx?direct=true&db=aph&AN=21862757&site=ehost-livedirect=true&db=aph&AN=21862757&site=ehost-live

Madigan, K., & Mandel, M. J. (2003). Outsourcing jobs: Is it bad?Madigan, K., & Mandel, M. J. (2003). Outsourcing jobs: Is it bad? BusinessWeek, BusinessWeek, (3846), 36-38. Retrieved from (3846), 36-38. Retrieved from http://search.ebscohost.com/login.aspx?http://search.ebscohost.com/login.aspx?direct=true&db=aph&AN=10518233&site=ehost-livedirect=true&db=aph&AN=10518233&site=ehost-live