Economic interactions and flows

Outsourcing
Definition: where a company or corporation will either buy products it intends to resell or hire another company to perform certain functions

Most Popular Outsourced Services
1. Transcription
2. Call Center
3. Engineering Services

Outsourcing in India

• Most attractive location in the world to locate global services, including IT.
• Although New Delhi is the capital of India and Mumbai its financial center, it is actually Bangalore that has become its most important IT center
• The government has aerospace, defense, IT, software and telecommunication research facilities based in Bangalore.
• Bangalore has enjoyed sustained growth nearing 10% per annum and now has India's third highest GDP per capita
• Bangalore's BPO:
• BPO = Business process outsourcing which basically means back room operation like human resources, customer services and accounting
• Reuters, HSBC, Dell, JP Morgan and Citi
• Bangalore's ITO:
• ITO = Information technology outsourcing includes things like IT support, programming, collation of data and data analysis
• Microsoft, Google, Yahoo, Cisco, Samsung, Motorola and Intel

What are the reasons that make Bangalore as a home of IT outsourcing?

1. Most Indians know how to speak English 

2. Growing number of high skilled graduates
3. Lower payment
4. Geographical location near to Europe, Middle East and East Asia

My thoughts:

Before I research some information about outsourcing, I did not know that India has been the pioneer in providing outsourcing solutions. Through reading articles, I realized that outsourcing to India has a lot of benefits since it is cost-effective and provides high-quality services. It seems like outsourcing to India is definitely a "win-win situation".

Question:
Aside from India, what other countries are expected to be a good place to locate global services and why?

Political Outcomes

Political Outcomes

Find a recent online article about one of the following multi-governmental organizations (MGO):

• European Union (EU)

• Association of Southeast Asian Nations (ASEAN)

• North American Free Trade Agreement (NAFTA)

• MERCOSUR (the common market of South America)

ASEAN NEWS: A LOT ON POLITICS AND LEADERS, TOO LITTLE ON SOCIAL ISSUES

Summary:

The ASEAN articles did not show much discussion of other development issues, which are key to strengthening the foundation of the ASEAN Community due in 2015. The most prominent subjects of focus in the ASEAN were territorial disputes and conflicts, foreign affairs and diplomacy, which accounted for 22.03 percent of the ASEAN articles reviewed. The least-reported topics – with less than 2 percent of the total – were poverty, health, emergencies and natural disasters, education, unequal development and gender. While there was a good amount of coverage on the political and foreign-policy aspects as well as economic issues around ASEAN, there was a severe lack of reportage on social issues that included poverty, education, unequal development and gender – even as ASEAN pursues its goal of becoming a community with deeper links among its member countries.

My thoughts: 

ASEAN was established with the aim of accelerating economic growth, social progress, cultural development among its members, protection of regional peace and stability, and opportunities for member countries to discuss differences peacefully. I believe that multi-governmental organizations such as ASEAN should not only just work on those problems, but also inform the people what is happening and what they are actually doing. Therefore, it is important to provide more in-depth information about socially relevant subjects, going beyond the usual practice of following ASEAN-organized events and looking into more of what the organization does, through articles or other media so that they can hear people's voices too.

(http://www.aseannews.net/asean-news-a-lot-on-politics-and-leaders-too-little-on-social-issues/)

Globalization: Socio-cultural exchange

Cultural Diffusion and Cultural Imperialism

Choose either the concept of cultural diffusion (voluntary/consented change in culture)or cultural imperialism (enforced/pressured change in culture) and using specific examples explain how transnational corporations either intentionally or unintentionally spread consumerism through your chosen concept.

The cultural diffusion and cultural imperialism have influenced many countries. For example, the language, clothes, food and entertainment. I believe that among those influences, food has the biggest changes and influences. Because of some transnational corporations such as McDonalds and Coca Cola, people especially Asians enjoy eating hamburgers, chicken or pizza. Although Korea has its traditional food, we now eat in McDonalds or KFC more frequently.

Cultural Imperialism
Definition: the practice of promoting the culture values or language of one nation in another

Advantages and Disadvantages of Cultural Imperialism

ADVANTAGES	DISADVANTAGES
Greater variety of commodities available New technologies are introduced Economic development may take place as trade increases between two locations	Places around the world become increasingly homogenized Local cultures are lost or diluted (language, dress, food, music, etc.) Local businesses maybe forced out of business they can't compete with large international TNCs Economic and political exploitation E.g. resources may be stripped

Examples:

McDonald's

     McDonald's is the World's largest hamburger chain. It has over 33,000 restaurants in 119 countries and serves an estimated 68 million customers daily. McDonald's started as a barbecue restaurant in 1940 in California. The company was started by Maurice and Richard McDonald. In 1955 Ray Kroc but the operation of the McDonald brothers. McDonald's now employs over 1.7 million people and has revenue in excess of $24 billion. McDonald's became a listed company in 1965 and the "Big Mac" first appeared three years later in 1968. McDonald's first oversea restaurant opened in Canada in 1967, the second country it opened in was Costa Rica in 1970. The UK did not get a restaurant until 1974. 

     

     McDonald's restaurants are operated as either a franchise, an affiliate or directly by the corporation. About 15% of all restaurants are owned directly by the corporation, while the rest operate as franchises or part franchises (affiliates). Franchises pay the McDonald's Corporation franchise fees, marketing fees and rent - normally all based on profits. McDonald's has also adapted it restaurants to suit local taste (glocalisation). For example, halal meat in the Middle East or kosher meat in Israel and no beef in India. 

(For more information: http://www.mcdonaldization.com/whatisit.shtml)

Cultural Diffusion

Definition: the spread of cultural ideas from their place of origin to other regions, groups or nations

Advantages and Disadvantages of Cultural Diffusion

ADVANTAGES	DISADVANTAGES
Enrichment  Enrich the existing dominant culture. When the technological innovations of one culture are diffused to another, they can foster positive social change and dramatically improve the lives of people in other cultures. Understanding Promoting interaction and understanding between cultures E.g. The Internet allows almost instant communication between people of different cultures, promoting interaction and understanding through the cross-cultural exchange of ideas, beliefs and values. Promotes linguistic awareness and understanding of their cultures.	Cultural Leveling This is process by which different cultures become increasingly similar to one another, most often as a result of travel and communication. It can erode the traditional cultural practices, beliefs and interests of one group, in favor of another, therefore creating one culture that dominates all others.  Ethnocentrism This is process by which we make false assumptions about another culture. It can often lead to misinterpretation, prejudice and negative relations between social groups.  E.g. people may talk of British drivers driving "wrong side" of the road, instead of saying the opposite or left-hand side.  Encourages people to judge others based on their own experiences and ideals, instead of learning about and respecting them for who they are.

Examples:
Coca Cola

     Coca Cola is headquartered in Atlanta, Georgia and is the World's largest soft drinks company. It now sells products in over 200 countries and its range has increased (over 3,500 different beverages) to include products like Sprite, Fanta, Inka Cola and water like Joy. Coca Cola now has over 146,000 employees worldwide. 

    In 1919 the company was bought off Asa Candler by Ernest Woodruff. Woodruff's son Robert was a very clever marketer and introduced Coca Cola to the Olympics in 1928. Post Word War 2 Coca Cola to the Olympics in 1928. Post WWII Coca Cola grew even more expanding into over 120 countries. In the 1960's new products like Sprite were launched along with the first can. To this day Coca-Cola continues to expand its products range (through acquisition and development). It also increased its marketing through international sporting events and teams.

(For more information: http://www.bbc.co.uk/news/business-10716077)

Pros and Cons of Globalization

GLOBALIZATION

Definition: process of interaction and integration among the people, companies and governments of different nations, a process driven by international trade and investment and aided by information technology.

PROS

CONS

Productivity grows more quickly when countries produce goods and services in which they have a comparative advantage. An open economy spurs innovation with fresh ideas from abroad. Numerous employment opportunities Free movement of capital Provide wider choices Improves quality Boosts economy Spread knowledge Technological development sharing of information Increase of demand of products increases rate of production Promotes global economic growth, creates jobs, makes companies more competitive, and lowers prices for consumers Free trade country does not levy taxes, duties, subsidies or quota on the import or export of goods

Many people from developed nations are losing jobs and that is posing a problem for them since the companies are outsourcing work to developing countries since the cost of labor is low and profits the company considerably. Loss of cultural identity Rise to more health risks and presents new threats and challenges for epidemics HIV / AIDS Uneven wealth distribution Promotes traits of commercialism Affects local markets It is not working for the majority of the world UN Development Program reports that the richest 20 percent of the world's population consume 86% of the world's resources, while the poorest 80 percent consume just 14%.

 

     Globalization is deeply controversial. Proponents of globalization argue that it allows poor countries and their citizens to develop economically and raise their standards of living, while opponents of globalization claim that the creation of an unfettered international free market has benefited multinational corporations in the Western world at the expense of local enterprises, local cultures, and common people. Resistance to globalization has therefore taken shape both at a popular and at a governmental level as people and governments try to manage the flow of capital, labor, goods and ideas that constitute the current wave of globalization. To find the right balance between benefits and costs associated with globalization, citizens of all nations need to understand how globalization works and the policy choices facing them and their societies.