Hi guys. Welcome back to Global Business Environment. This is the first module in this class in which we're looking at the global business environment and in particular trying to understand the question what is globalization. And last time we did a brief introduction and it's a, it's a broad topic and it's hard to answer it in a, in a short period of time. But from a business environment perspective, I want to kind of just jump in and talk about one specific issue to try to illustrate what we mean by global business environment and globalization. One of the hot words that you might hear in the news or in another class is outsourcing. And when you hear that depending on the country that you're living in or working in, this may have a more positive or negative meaning to people. For some people, for example, in the United States of America, outsourcing has come to mean something negative. That is because it's seen as causing jobs to leave the United States and go to another place where the individuals will benefit but it hurts the local United States economy. For others it means having the opportunity to get a job. So outsourcing can be a very positive thing. From a company perspective outsourcing might be seen positively because of a savings, cost savings. From a customer perspective sometimes it's viewed negatively because you feel like you may not understand the individual in a customer service situation because of their their accent if they're located in another country. And so outsourcing has become a word that has this multiple meanings to different people. The problem I have with outsourcing is the confusion that individuals have about what it is. And so I wanted to start with this and say that, first of all, outsourcing is something that doesn't just cross borders. It's a business practice that many businesses utilize, and we as individuals utilize. Outsourcing is simply hiring someone else to do something for us. So if I go to a mechanic and ask them to fix my car, I am hiring someone, I'm outsourcing a task fixing my car. Because I don't have the skills, or the knowledge, or the time to gain that, those skills or knowledge or the ability to do so. And so we all do that all the time,and lots of companies within many countries do the same thing. For example, at many universities across the world, there are restaurants on campus that are run or managed by outside companies, outsourced companies. And there are bookstores on many campuses that are also managed or run by outsourced companies. So outsourcing is a very popular business strategy in general that probably shouldn't have the negative meaning attached to it sometimes. In an international context, it's probably better to say international outsourcing when we're referring to a company in one country sourcing or hiring another company to do something. So, for example, if a high technology company like Microsoft in the United States hires a third party, another company, a separate entity, to provide some service, customer service. Design accounting support, in another place such as India, for example, that would be an example of international outsourcing. The reason that's important is because that's different outsourcing than offshoring. And a lot of people often mean offshoring when they say outsourcing. Companies engage in another strategy across the, the globe in which they build operations of their own, and manage those operations, and use their own brand name to take advantage of some benefit in that foreign location. So for example, if Samsung, which is a Korean company, builds a plant in Brazil and the building says Samsung on it and it's managed and operated by Samsung. That's an example of offshoring, and that also can, is an example of international jobs abroad and is an example of foreign direct investment. It's not the same thing as outsourcing. Outsourcing is when you hire a separate company to do a task or a job for you. And so, my concern is that you understand when you hear others in the news or in other classes talk about globalization, they'll often confuse these and, and mix things up. Now offshoring has its own set of baggage, you might say, or mixed feelings, because some people see it as losing jobs as well. Also, when a company in Korea, for example, has a plant in Brazil the profits that are earned, where do they go? Are they kept locally, and reinvested in the local economy, or are they repatriated or sent back to the home country of that company? And so there are lots of controversial issues when we talk about global business environment and globalization, which is why we have a whole class on this. Let me give you one example that you may have heard of in the news and then may be familiar with, because you may use products of this company. We talked about outsourcing and offshoring and the difference between them. Here's a picture of a foreign country from the United States and there there's a business going on here. And let's focus in on one company in this foreign country called Foxconn. Now you may have heard of Foxconn before. They are a major outsourcing company. They assemble electronics, many of electronic products that many people use around the world, including for Apple, for Dell, for Samsung, and so Foxconn is a, a major outsourcer with plants all across the world. This is a picture of a Foxconn plant in China where the employees are making the iPhone. And so, what you see is one small aspect, relatively speaking, of Foxconn's operations. But what's happened is sometimes people look at this picture and say that's Apple. When in fact it's a Foxconn plant. And so that's one of the many complex issues we start to see with the global business environment is Apple's brand reputation is affected by utilizing this outsource partner because the individual average person isn't familiar with offshoring and outsourcing. If this were Apple, then it would say Apple and it would be an offshore plant not an outsource plant. This has become controversial because of things like the high rate, relatively high rate of suicides which occurred tragically at this Foxconn plant in China. And the utilization of these nets which were to prevent the ability of these employees from tragically taking their lives. And the reason I show this to you is that this is a very symbolic and powerful way of trying to understand the complex issues related to globalization and global business environment. Questions are asked such as, is it worth it for companies to go abroad and, and do business in a, in a foreign place and attract workers at a lower cost, to relatively tedious jobs. at, at lower wages than might be paid in the home country. And what are the cultural issues and meanings of, of this type of practice of putting up nets and is it Apple's responsibility since they hired Foxconn or is it Foxconn's responsiblity? Is it the customers' responsibility? Should we feel somehow a part of this because we demand and purchase these products such as the iPhone or the iPad. And and these suicides are somehow related to that. And, and that's just one example. It also brings up ethical issues when we cross borders. What are the wages that ought to be paid just for example. And so we're going to try to explore a little bit more of that as we go along in this course but that's just an example of how of how hot a topic the globalization and global business environment one is, and how important it is to really delve into it and try to understand what's really going on. So we'll leave it for that, this will be the end of part one of module one of Global Business Environment. We'll leave it for now, and we'll pick it up with part two, were we'll try to delve into what globalization really is, and if it is really happening to the degree that we think or have been told. Thank you
