Globalization Exercise : The Manufacturing Industry

1478 WordsJun 23, 20166 Pages
According to the PowerPoint presentation, Globalization Exercise # 2, the manufacturing industry, particularly the clothing industry, was the first trade to go global. More specifically, “[s]ince the Industrial Revolution, manufacturing have been seen as the measure and symbol of economic development.” (sic) (Globalization Exercise # 2, slide 7). The PowerPoint Presentation further notes that the primary and secondary products’ traditional trade routes occurred during the period of colonialism, and through the 1980s. Moreover, generally, “[r]aw materials came from less-developed countries,” and “[m]anufactored goods [came] from more-developed countries.” (Globalization Exercise # 2, slide 5). However, over time, as the trade of raw…show more content…
After consideration and deliberation over the aforesaid economic and non-economic factors relating to the manufacturing and production of a company’s goods within the clothing industry, various companies recognized that they could maximize their profits, while maintaining their local corporate offices and distribution sites, by simply setting up manufacturing and production locations in countries with lower labor costs, compared to the country that the company’s headquarters is located. An example of this theory would be for a company to have its headquarters, or corporate offices, in Switzerland, while establishing manufacturing and production locations in a foreign country, such as Bangladesh. Among other factors to take into consideration, the impact that this approach can have on the company by increasing the company’s profit margin, by lowering production and labor costs, can be simply seen by comparing Switzerland’s average cost of labor (i.e. $35.00 per hour), to Bangladesh’s average cost of labor (i.e. $0.20 per hour). (Globalization Exercise # 2, slide 16). This concept of lowering labor costs is referred to as offshoring and outsourcing. On the one hand, when a company engages in the practice of offshoring, they focus on producing and manufacturing their
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