The Effects of Outsourcing on the Economy Abstract Job outsourcing has sent American Jobs to foreign workers. The largest corporations in the United States are turning to outsourcing for inexpensive ways to lower overall costs. Outsourcing has become a controversial new way of doing business. There are pros and cons with outsourcing. We can ask questions such as: Who is benefiting from outsourcing?
Macro environment Commercial Metals Company competes in the steel industry. Commercial metal is competing against other steel companies regionally and globally. The steel industry is highly cyclical and therefore, very susceptible to changes in the economic environment. Economic recessions lead to a large decline in business as their main buyers are also largely affected by recessions. In addition, the fact that the US government has recently open doors to Chinese steel companies to operate businesses in the US, this may start to influence the economic environment of the US steel industry as well.
Changes in operations will help increase job exports. For the U.S., companies export new capital equipment and production to help create potential competitors. Importing countries demand that exporters shift part of their production to the purchasing nation in order to gain their sale over others. The emphasis on exports to developing countries combined with the focus on sales of new capital goods may introduce inappropriate technologies into nations with high unskilled labor pools. Exports of mining, petroleum, and infrastructure equipment may help multinational corporations and developed countries access cheaper raw materials, with few benefits for the residents of developing countries.
In my opinion, there is a different view of the context a corporation is used upon and I will refer to the difference of a corporation in the United States and the context of a corporation in countries like Russia and China. In the United States, 99% of the wealth is captured by 1% of the population. This is a fact well known and well debated globally: i.e. Apple’s balance sheets have a better cash flow than the entire state of US. Should we look further into the political campaigns, it is also a fact that major corporations finance these long and costly campaigns in order to support the decision makers that will “assist” them with pursuing their objectives.
Many may argue that the falling economy and the wealthy not wanting to share their shares is to blame for the raising rates of poverty here in the states. Poverty of course, has a lot to do with money and income but underneath that it is has a deeper story. Stories of how different people are suffering from it and how they are managing to live day by day. It almost seems as if it’s a foreign nation of its own and you only understand the concepts if you are in it. There is no doubt that here in America we are dealing with one of the greatest economic downfalls.
Since textile-mill was a labor-intensive industry, in more recent years, the search for cheaper production costs had begun to move the textile-mill industry to Asia. Secondly, the strong U.S. dollar had made foreign textile manufacturers products much cheaper than those from U.S. companies. In addition, the World Trade Organization recently had announced that it would ban its members from using quotas, which would further open the U.S. market to competition from other countries. So how would Aurora face the crisis, since its sales have decreased four years in row, and its price fell from $30 per share to $12 per share, how would Aurora solve its problems? Zinser 351, a new ring-spinning machine, was under considered by the management of Aurora.
Many countries have been controlling their population, like India and China to become socially and economically developed. This is what the U.S must do in order to maintain a safe and well rounded country. Population control can improve the economic condition of a country. Population growth is altered with respect to the particular country’s economic position. A country having a large population may be suffering from many economic problems such as unemployment, poverty, high consumption rate and even debt.
These countries, which were considered developing nations or third world countries have emerged from the global economic crisis as the new face of world economic powerhouses. As the effect of monetary turmoil deepens, in Europe and United States; two conflicting economic theories and solutions for this crisis have emerged. One theory favors the “pumping of money” or stimulus money into the economy which in certain economists views represents a “stalled engine”, which needs more gas. The extra money means, people will have more money to spend, which in turn mean more demand for products which will lead to the creation of more jobs which will make the economy grow again hence stimulating the economy. The other theory is tightening of the belt or Austerity measures.
Companies started outsourcing, and started to hire people from another country for a smaller wages; as companies race to make a name for them, and to make more money, and to look for cheaper labor cost. Globalization 2.0 ended around the 20th century, year 2000. As the globalization 3.0 begin, that’s when Friedman stated that the world is flat and that it shrank from small to tiny. “Friedman argues that the world has become flat due to technological advances connecting people in China, India, and the United States as if we were all next-door neighbors” (p. 3). Since technologies have improved, the world became more of a globalization