Globalization Exercise : The Manufacturing Industry

In the contemporary China’s economy, it is no doubt that Auto parts Industry has become one of the fastest growing industries which plays a major role in the development of the domestic manufacture as well as the GDP Growth.

Globalization is mainly thought about as a modern phenomenon; something that just recently came about. While it certainly is a hot topic of discussion, the concept itself has not only existed long before the modern era but it has transformed and connected ancient civilizations leading them into the modern era. Trade has existed since the beginning of human history whether it be the trade of goods, innovations or ideology but the emergence of globalization however which I define as trade on a global scale never happened until the Silk Road emerged. Through Alexander the Great’s conquest to spread Greek culture throughout the world, we will see how once distant cultures connected in a way never seen before that ultimately led to the Silk Road.

Global trade first began towards the beginning of 15th century. Due to enhancement in travel people were able to travel farther and trade more goods. People were developing better crops to

At MAC beauty stores, most, if not all of the people working there love MAC products and they wear them at work and outside of work. At American eagle, it is the same thing, the employees wear American eagle clothing, although at most stores they are not required to do so. It is important for employees to feel passionate about retailing and passionate about what they are selling. If the employee does not like the products and tries to sell it, it would not be a successful sales as if the employee loved the products, unless the employee is an amazing

Offshoring is one of the reasons behind the recent unemployment hikes. Roughly 3 million jobs were offshored in 2015 alone (“Number of U.S jobs moving offshore”). Simply put, offshoring is when a company decides to purchase products or services from a third party; usually

* Outsourcing the labor in different stages (manufacturing, operational, etc.) allows for the company to save costs which can increase the profit margin and improve the financial situation.

Over the past decade, many companies from North America have moved to foreign countries. This migration is known by many names – “runaway plants”, “outsourcing”, “global sourcing” and “offshoring” ("Outsourcing: What's the true impact? Counting jobs is only part of the answer."). According to Investopedia, outsourcing is “a practice used by different companies to reduce costs by transferring portions of work to outside suppliers rather than completing it internally” ("Outsourcing Definition | Investopedia"). Companies outsource primarily to cut cost. This mostly helps them to reduce their cost by 60 percent since labour in many Asian countries like China and India is very cheap. Even though offshoring is benefiting companies, it has negative

"Its been said that arguing against globalization (and many of the issues related to globalization) is like arguing against the laws of gravity." This statement comes from Kofi Annan, who won the Nobel Peace Prize in 2001 and also became the seventh secretary general of the United States (The Nobel Foundation, 2001). The quote introduces, in its broadest sense, the issue discussed in this paper. While the general idea of globalization is not our primary focus in this report, one of the most controversial subjects to arise out of the globalization phenomenon, offshore outsourcing, is of particular interest to us. Offshore outsourcing (hereafter used interchangeable with offshoring) has been around for some time now. The

Great Britain took the lead in using trade to tie the world together economically. Britain had a large empire including India, Canada, and Australia. The breakthroughs of the Industrial Revolution allowed Britain to manufacture cotton textiles, iron, and other goods more cheaply and as a result, production soon outstripped demand in domestic markets. So, European manufacturers sought markets elsewhere in the world. Cotton Textiles are a case in point. In 1820, Britain exported 50 per cent of its textile production. Europe bought 50 percent, while India bought only 6 percent. Then, as protective tariffs were erected in the United States and other European countries against British textiles, manufacturers aggressively sought other markets in non-European areas. In 1850, India was buying 25 per cent of British textiles and Europe only 16 per cent. Since India was a British colony, it could not erect tariffs to protect its own textile industry, and as a result, many Indian weavers were put out of work by cheap British textiles.

Outsourcing overseas is a major disadvantage to the American economy. Contrary to popular belief, companies argue that low- cost labor will in turn save them money and raise competitiveness, which will result in less costly products. When taken into consideration outsourcing eliminates domestic jobs. When a firm outsources, the jobs outsourced are, by definition, removed from the country. These jobs are then sent overseas, where labor is paid far less than in the United States:

In a capitalist society, it is the mission of private industry to make a profit. The more profit made; the better the company can establish competitive advantage. Those who do not pursue profit maximization usually fall out of competition and go out of business. In the apparel industry, approximately 60% of cost of goods sold is in labor. The manufacturing sector of the apparel industry began leaving the United States in pursuit of lower cost labor. They accomplished this by relocating some or all of their manufacturing base to low wage countries. With implementation of NAFTA and the Caribbean Basin Initiative, Mexico and the Dominican Republic were the beneficiaries of much of this production. As China and other areas in the Far East were

Outsourcing according to Vonderembse (2013) is defined in the text as obtaining goods and services from outside suppliers. These goods and services are manufactured in different countries and then delivered to the country in question. For the United States, these goods and services can often be created in countries such as India, China, and Vietnam and then shipped at a less costly price than creating them by the businesses which purchase them. The goal of every business is to make as much profit as it possibly can and to do this, they must keep costs low. When this happens, they are able to create a higher profit margin and

Offshoring has its advantages as well as it disadvantages, as most business decisions do. It is the weighing of those two leverages that make the debate of offshoring such a conflict. Offshoring reaps many benefits for companies. For starters, offshoring allows companies to stream their productions globally. With this they may then begin to cut cost of goods to a lower rate to increase the demand, a plus for both the company and it’s consumers. This investment also acquires new customers and even puts the companies into new market

A savings in cost is often resulted in the outsourcing of the organization’s work to organizations located in foreign countries in which the wage rates are low.

Economic globalization has become the most important feature and a general trend of present world economic development. Globalization is a phenomenon and also a process of development of mankind and human society (Hamilton, 2008). It is the essential feature of the modern age. Globalization is the cross-border flows of capital and goods, including capital, labour, technology and natural resources (Bożyk, Misala & Puławski, 2002). Economic globalization is a historical process, and the germination of it could date back to the 16th century. After the industrial revolution, capitalist commodity economy, modern industry and transportation have been developing rapidly. The world market was fast expanded and the foreign trade was