Business Globalization Overview

INTRODUCTION
This unit provides an overview of globalization and what it means to be a global organization.

OBJECTIVES
To successfully complete this learning unit, you will be expected to:
Examine the scope of globalization. Review the major variables that are involved in changing the nature of world economies and cultures. Evaluate the negotiatory nature of international relationships. Identify 2-3 attributes that successful global managers must possess.

[u01s1] Unit 1 Study 1
STUDIES
Vital Source Bookshelf

After procuring the e-books for this course, you may access them via the VitalSource Bookshelf. A link to your Bookshelf is provided in the left Course Tools menu.

The interactive features built into the VitalSource Bookshelf help save time and enhance learning by allowing you to search, notate and highlight, organize, and share information about your texts. VitalSource Bookshelf is also available as a downloadable application. Once this application is on your computer or mobile device, your materials will be available even when not connected to the Internet. Visit VitalSource: Support to download the application.

Readings

Use your Hill text to read Chapter 1, “Globalization.” This chapter will provide you with a broad understanding of what globalization means and impress upon you how it will increasingly affect virtually every country, every business, and every business professional. (links: https://online.vitalsource.com/#/books/1259884341
https://online.vitalsource.com/#/books/1259884341/cfi/6/2).

Familiarize yourself with the globalEDGE research tool. This will be an important research tool throughout the entire class and for your course project.

[u01s2] Unit 1 Study 2
Project – Preparation
Throughout this course, you will complete a global feasibility project for which you will investigate the feasibility of launching a product in a selected country and then make a recommendation. Review the Feasibility course project description to familiarize yourself with the expectations and the components you will be expected to complete for this project. The first component will be due by the end of Unit 2. (see attachment).

[u01a1] Unit 1 Assignment 1:
Variables in Global Markets

Resources
Variables in Global Markets Scoring Guide.(See attached)
GlobalEDGE.(see link: https://globaledge.msu.edu/reference-desk)
APA Style and Format.(see link: https://campus.capella.edu/web/writing-center/apa-style-format)

Read the “Who Makes the Apple iPhone?” case on page 32 of your textbook.

In globalEDGE or the Capella Library, find at least one resource (in addition to the case study) that supports or rejects positions taken in the textbook.

You must use proper APA references and in-text citations to identify both the textbook and your additional resource.

Write a paper of 250–500 words, addressing the following questions:

What are the major variables and the driving force behind this type of outsourcing?

Do you consider this a good practice in terms of cross-cultural communication and cross-cultural organizational structures and hierarchies? Why or why not?

What other functions, services, or practices might be outsourced?
What are some of the issues business managers should consider as they determine whether or not to outsource such functions?
Important Note: There will be a deduction of points in your grade if proper APA format is not used.

Variables in Global Market

Variable of Outsourcing

Globalization of production is a business practice that has taken by storm most significant entities in the globe, notably Apple Technology Inc. Globalization of production is however affected by several variables. The primary variable is the availability of labor. In the case of Apple, a Chinese company won a bid to manufacture thousands of phone glasses because of its labor capacity. Since then, Apple company maintains a substantial share of its total production in China because of labor related factors like cost of hiring and availability of skilled workforce (Hill).  Technology is another critical variable that dictates a decision to outsource production. Advancement in technology translates to quality and efficiency among several other factors. Technology as a variable applies to aspects of communication and transport that affect production.  Other factors of production like land and management are also critical considerations.

Drivers of Outsourcing Decision

It is evident that the key driving force for outsourcing is cost reduction. In the case of production and labor, the cost of labor varies from one business environment to another.  Ramamani (2009) highlights that the ability to control costs is also a major driver of outsourcing. The hiring company is always in the position to negotiate with subcontractors in the market for the best price. Apart from financial motives, there are strategic issues that drive decisions to outsource. Companies like Apple have used outsourcing as a means of gaining access to other markets. The idea of creating a global market has earned Apple’s product penetration into international markets. Another driver of outsourcing includes the spread of risk and shifting of resources to more important activities like designing and software engineering.

Cross-cultural and Cross Communication Benefits of Outsourcing

Globalization of production or rather international outsourcing is a practice that has resulted in numerous benefits. One such advantage is increasing cross-cultural communication. Western and Asian countries have historically been subjected to different occurrences that have contributed to the cultural shift as well as communication problems. With globalization, the need to communicate effectively has led to cultural research, with the aim of narrowing communication and cultural rift (Hill).

Functions that can be Outsourced

Apart from the production function, several other services and practices can be outsourced. For instance, almost every aspect of the supply chain can be outsourced.  Logistics services are standard for international markets.  Procurement and sales functions of an organization can be subcontracted to another organization. Hill (2014) highlights that companies in this century should seriously consider intellectual outsourcing.

Decision to Outsource

The decision to outsource or not is critical as it may contribute towards the realization of organizational goals or pose challenges to the same.  Managers should outline core functions and competencies of the organization. Central functions should not be outsourced as they may lead to the realization of certain risks like loss of competency (Wasko, 2008). The decision to outsource should then consider the nature of the relationship between the subcontract and the organization. The outsourcing group should not expose itself to unnecessary risks. Management ought to undertake a keen analysis of the competencies of the subcontractor. Internals analysis of the subcontractor entails visiting the firm to determine its capacity. The contracting organization should maintain a keen eye on capital investments and operating ability of the subcontractor. The external environment of the subcontractor is an important issue of contention when subcontracting.  Executing business transactions in international territories require a proper understanding of existing rules and regulation. The cultural and political environment of the subcontractor must be analyzed before reaching a decision (Wasko, 2008). Ideally, there are numerous other factors to consider, depending on the nature of outsourcing and the industry that an organization is operating within.

References

Hill. (n.d.). Chapter One: Globalization. In Hill.

Hill, T. (2014, December 12). A Need for Intellectual Outsourcing. Retrieved from globalEdge.msu.edu: https://globaledge.msu.edu/blog/post/12770/a-need-for-intellectual-outsourcing

Ramamani, M. (2009). How to Go Offshore –Set up a Captive Unit or Outsource? Global Edge Business Review.

Wasko, J. (2008). Cross-border Cultural Production: Economic Runaway Or Globalization? Cambria Press.

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