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📖 From this lesson, you must know…
- Explain the factors that drive companies to outsource jobs and processes
- Explain the positive and negative impacts of outsourcing on workers and communities
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Definition: Multinational Corporations - A multinational company (MNC) is a company that operates in more that one country.
Definition: Outsourcing - Setting up businesses abroad to produce parts and products for domestic use or sale
For example, Microsoft is an American company with a large presence in the United States. However, Microsoft manufactures electronics in 🇨🇳 China, develops software in 🇪🇺 Europe, and runs servers in 🇭🇰 Hong Kong.
Which factors of globalization makes outsourcing possible?
Mobile labor market - Workers and students moving around means that people from less developed countries can move for new job opportunities.
International trade - The establishment of a global system for trade enables goods and services to cross borders.
What motivates companies to outsource?
- Labor cost savings: Lower labor costs, as companies can take advantage of lower wages in less developed countries.
- Expanding cultural expertise: More knowledge of culture and language to expand a company.
- Government incentives: Less regulation, lower taxes, and other incentives could drive a company to move.
What are the positives of outsourcing?
- Cheap Mass Manufacturing: This system enables more developed countries to have cheap consumer goods.
- New Jobs in Less Developed Countries
What are the negatives of outsourcing?
- Exploitative Labor Practices: Workers in less developed countries are paid little to work in dangerous conditions.
- Environmental Exploitation: Industry in less developed countries is unregulated, meaning they pollute more.
- Domestic Job Loss: Jobs in more developed countries are lost because they move away
https://www.youtube.com/watch?v=yw8a8n7ZAZg&pp=ygULdm94IG51cnNlZXM%3D