• Join over 1.2 million students every month
  • Accelerate your learning by 29%
  • Unlimited access from just £6.99 per month
Page
  1. 1
    1
  2. 2
    2
  3. 3
    3
  4. 4
    4
  5. 5
    5
  6. 6
    6
  7. 7
    7
  8. 8
    8
  9. 9
    9
  10. 10
    10
  11. 11
    11
  12. 12
    12
  13. 13
    13

Economic Effects of Global Sourcing

Extracts from this document...

Introduction

Economic Effects of Global Sourcing Abstract Global sourcing is a hot topic of discussion throughout the business world. The manufacturing and service industries are the most prevalently sourced today. The pressure is on for CEO's to implement sourcing strategies. This paper shows why today's businesses feel the need to invest in offshore operations. These reasons can include 1) reduced operating and labor costs, 2) increased productivity, and 3) access to talent worldwide. Additionally, the paper will focus on the history and future of sourcing, as well as how the global economy is affected. Table Contents Abstract 2 Contents 3 Introduction 4 History 4 Benefits 5 Economics 6 Future 9 Summary 9 Reference page 10 Economic Effects of Global Sourcing Global sourcing is the movement of work and talent from a high-cost market to a low-cost market. The process allows organizations to compete most effectively in their chosen markets. The most commonly sourced sectors are the manufacturing and service industries. Nations and their businesses involved in global sourcing are seeing fast economic growth. "During the 1990s, income per person in "globalizing" developing countries grew more than three and a half times faster than it did in "nonglobalizing" countries" (Securing Growth and Jobs, 2004). ...read more.

Middle

jobs." At that time, NAFTA and GATT/WTO were being implemented (Offshoring, 2004). Experts predict that by 2015, U.S. companies will source U.S. $135 billion in wages and 3.3 million professional jobs. Also, services exported to countries such as India, the Philippines and Russia grew significantly in 2003. The U.S. has dominated almost 75 percent of the sourcing market. With the increase in communication, sourcing has become easier and less expensive. "The U.S. economy recently took an unprecedented path when it regained strength during 2003 and 2004 without creating growth in jobs" (Bonvillian, 2004). Manufacturing and production industries continue to see shrinkage. However, the service sector is seeing incredible growth. The U.S. economy has historically relied on a 1-percent annual population increase resulting in workers and increased output. We are now seeing a major demographic shift. The U.S. faces structural economic difficulties. Hopefully the U.S. can find comparative advantage in the impending global economy. Our last economic war occurred in the late 1970s. Japan was on its way to becoming the largest economy in the world. The U.S. was able to salvage the automobile sector, but lost its dominance in the electronics division. "The U.S. industry's light truck platform, which was protected by tariff from foreign competition, became the basis for the next several generations of U.S. ...read more.

Conclusion

The emergence of China and India can provide benefits to our economy. As these two countries develop as markets, we will be able to sell goods and services to them. However, the number of U.S. exports is currently being squashed by the number of our imports. The Future of Sourcing The future of global marketing is not known at this stage of the game. There are many theories however. One such theory is that over the next 20 to 30 years, the rise of the four largest emerging markets, known as the BRICs - Brazil, Russia, India and China, could create a dramatic effect on the world economy. In turn, China and India could surpass most of the major economics. Currency appreciation, in addition to growth could help BRICs rise. Summary In conclusion, global sourcing makes good sense. If work can be performed more efficiently and for less cost elsewhere, why not? Additionally, the benefits may be seen worldwide. Opportunities for growth and expansion in other areas here in the U.S. will open up as the more menial, labor-intensive positions move elsewhere. However, larger countries, such as the U.S., China and Japan, need to ensure that human rights laws are not violated when entering into contracts with other countries, and within their own employment sector. ...read more.

The above preview is unformatted text

This student written piece of work is one of many that can be found in our GCSE Economy & Economics section.

Found what you're looking for?

  • Start learning 29% faster today
  • 150,000+ documents available
  • Just £6.99 a month

Not the one? Search for your essay title...
  • Join over 1.2 million students every month
  • Accelerate your learning by 29%
  • Unlimited access from just £6.99 per month

See related essaysSee related essays

Related GCSE Economy & Economics essays

  1. Chinese economy sets for soft landing in 2005.

    The frenzied investment and loan growth raised worries about the economy overheating. Both fixed investment and bank loans slowed down subsequently, but at a faster pace than expected. Fixed investment growth registered only 18.3 per cent in May, which compared to more than 50 per cent in the first two

  2. The Quest for Optimal Asset Allocation Strategies in Integrating Europe.

    Rit= ?t + ?jt + ?kt + ?it where Rit is the return on the stock i at time t, ?t is the common factor, ?jt is industry j effect, ?kt is country k effect and ?it is the error term.

  1. Split Votes: A Nation Divided on the Marijuana/Drug Legalization Debate

    Countless studies have shown that it is no worse, maybe even better, to the body than alcohol and does not have the addictive properties of nicotine. All this said the government still spends billions of dollars to try to eradicate this plant from the nation.

  2. Major Economic Organizational Issues

    Different economic systems answer them differently. The basic and general economic systems are: * Market economy (the basis for several "hands off" systems, such as capitalism). * Mixed economy (a compromise economic system that incorporates some aspects of the market approach as well as some aspects of the planned approach).

  1. What are the ecological consequences of global economic growth?

    expansion of the economy, for example the type of environments that have to handle wastes, such as rivers, land dumps, the seas, and the atmosphere. Then the real possibility emerges that there is a limit to the expansion of the economy.

  2. Transaction Cost Theory

    Broadly defined, organisational capabilities refer to a firm's spare managerial capacity arising from indivisibilities or different rates of growth of the various aspects of the firm, as well as the knowledge, skills and experience within the firm. The spare capacity can be in virtually any area of operation of the

  1. Outsourcing. From the us point of view, how large is the outsourcing phenomenon and ...

    We can distinguish 9 categories: > Management occupation > Business and financial operation occupations > Computer and mathematical occupation > Architecture and engineering occupations > Life, physical and social science occupation > Art, design, entertainment, sports and media > Sales and related occupations > Office and administrative support occupations.

  2. An Empirical Investigation into the Causes and Effects of Liquidity in Emerging

    loans or earnings, and therefore look to the high-yield market as a means of doing so. There are even specialist buy-out companies, which use the high-yield debt as a way of raising money to buy a public corporation from its shareholders, often for the benefit of a private investment group.

  • Over 160,000 pieces
    of student written work
  • Annotated by
    experienced teachers
  • Ideas and feedback to
    improve your own work