A WORLD OF WORK Outsourcing means that companies hand work they used to perform in-house to outside firms. ADVANTAGES: v bring down costs ‘e lift profits and boost growth specialisation Due to the advance in technology products have become more complex which made it difficult for one company to do all the work itself. In order to manage the complexity of these products the astute idea of outsourcing represents an ideal solution (e. g.
car industry) DISADVANTAGES: v drain of jobs, v higher organisational costs ‘e overview, Some years ago this phenomenon used to be hailed as a wonder of the new economy. Nowadays the opinion is less exuberant. Same forces of globalization are blamed for relentless export of jobs from rich to poorer countries (depressing proof for the declining competitiveness in engineering skills) GLOBALISATION A network between businesses all over the world is established in order to make use of the strengths of different technologies and cultures. NEGATIVE ASPECTS: v fierce competition, v anxiety among people, v possibilities of expansion for smaller companies are restricted (monopolies) The movement of work abroad agitates worries in the West and is a cause of concern among the public. Global business work is farmed out to other companies which cam perform this work and fulfil required tasks best (The comprehensive and hence intricate task of making a product is split up into several activities. Then you search for competent companies and assess their performance.
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... for the stores to introduce new vendor third party products, and new company products through expansion and deletion of retail shelf space. Weaknesses ... place of the work that they themselves would otherwise have to do. Customers are also looking for a company that offers exceptional ...
In the end you select a specific number of companies which are needed to carry out these activities successfully. ) International business Companies follow the traditional way of doing business (the process of doing international business resembles the pattern of business which firms stick to in their home countries).
All work which is involved is done by one company. NEW GEOGRAPHY OF PRODUCTION AND Consumption In former times companies used to manufacture close to where their goods were consumed. v Nowadays each bit of work goes to whatever company or country is best suited to it.
v Experts reckon that by re organising production intelligently, multinationals can hope to lower their costs by over 50 %. v Also white-collar work is outsourced due to the spread of the internet, along with cheap and abundant telecommunications bandwidth. v Examples: corporate human-resources services, debt collection or credit-card processing. v Second is reason is the fall of transport costs ‘e separate geography of production and consumption Over the next years Russia, China and particularly India will emerge as essential hubs for services such as software engineering and market research. v Reorganisation of work ‘e estimated that more than half of white-collar work currently done in-house could be outsourced (especially in the following industries: software engineering, banking and IT services).
CONCLUSION: All in all it can be summarized that outsourcing represents a possibility of bringing down costs, lifting profit and boosting growth, but at the same time it inspires fear about the drain of jobs.
However, it is crucial to understand that outsourcing is an irrepressible movement which will dominate the world market in future. Companies have to follow this development but simultaneously take all troubles in order to create a balance between the traditional way of business and the promising idea of outsourcing.
