...BUSA 3000 The Turks and Caico Islands: More Than a Getaway Offshoring can be defined as the practice of moving employees or certain business activities to foreign countries as a way to lower costs and avoid taxes. In most recent years, offshoring has become extremely popular worldwide. Arguably one of the most dominate places for offshoring, Turks and Caicos has made offshoring one of its key sources of income. Turks and Caicos is not only one of the most beneficial places for businesses to offshore, but is also a leading contender in offshoring when compared to prominent countries. The Turks and Caicos Islands offer far more than sunshine, an easygoing lifestyle, and friendly residents. In recent years, these Caribbean islands have definitely established a reputation in the world for offshoring. For some time now, I have heard how magnificent this island was, but never had thought to look more in detail about it. As a British Overseas Territory, the Turks and Caicos Islands comprise an archipelago of eight main islands in two groups. Turks is to the east, Caicos is to the west, and has number of smaller cays as its surrounding neighbors (International Business). The foundation of Turks and Caicos’ economy are tourism, the offshore industry and the fishing industry (International Business). The Government encourages tourism because it pulls in more than 1,000,000 visitors a year. One can only imagine the amount of revenue gained from tourist alone. If tourists contribute...
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...Offshoring, also known as offshore outsourcing, is the term that is used to describe the practice among companies located in the United States on contracting businesses beyond U.S borders to perform services that would otherwise have been provided by in-house employees in white-collar occupations. The term can be applied to U.S. firms that are offshoring the jobs of blue-collar workers on textile and auto assembly lines, for example, which has been taking place for decades. The extension of offshoring from U.S. manufacturers to facilitate providers has heightened public policy concerns about the extent of job loss and foregone employment opportunities among American workers. This concern was especially relevant to policymakers because of the national unemployment rate persistently exceeding 9% despite the end of the Great Recession in June 2009 . The outsourcing of service sector jobs from the United States was a response to the early 1980s recessions when employers narrowed their focus to the company’s core mission and contracted peripheral activities (e.g., janitorial duties) to other U.S. businesses. The 2001 recession caused employers to seek further efficiencies by tapping into the global supply of labor. U.S. businesses were able to outsource overseas the jobs of white-collar workers in some service providing industries as a result of widely disseminated technological advances that permit low cost, good quality, and high speed transmission of voice and data communications...
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...globe are capitalizing on offshoring to achieve business competiveness. In the last 3 years or so, offshore IT has assumed new forms to include offshoring of business processes. Offshoring of IT is intensifying and firms are strategically leveraging offshore capability and the structural cost savings, while also focusing on deriving operational innovation. Robust models and quality and project management processes are employed to unleash the benefits of offshore IT. The same complexities and challenges still exist, some even growing in their scale and assuming new dimensions. Although many refined and proven managerial and organizational practises and technological tools and infrastructures, are now available, the challenges and constraints involved in managing offshore IT are far from gone. The art of managing offshore IT work is still evolving While there exist tangible and high visibility benefits of offshoring IT operations, they come along with certain riders. We will look at certain hidden costs that have the potential to either reduce savings considerably. Companies that want to succeed in offshoring, shall avoid the below statements. Pursuing the Low-Cost Worker: Offshoring is not only about sending processes to places that will execute at low labour cost. That, today, is no longer the primary reason offshoring is adopted. Quality is of equal or, sometimes, more importance. Businesses, instead, are proceeding with caution and only select offshoring as a strategic option...
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...What Went Wrong At Boeing? My article, The Boeing Debacle: Seven Lessons That Every CEO Must Learn, elicited spirited conversation. Several commentators noted that, in addition to the general lessons, Boeing made specific errors in the way it handled outsourcing and offshoring. Let’s take a closer look at those specifics. Boeing enthusiastically embraced outsourcing, both locally and internationally, as a way of lowering costs and accelerating development. The approach was intended to“reduce the 787′s development time from six to four years and development cost from $10 to $6 billion.” The end result was the opposite. The project is billions of dollars over budget and three years behind schedule. “We spent a lot more money,” Jim Albaugh, Chief of Commercial Airplanes at Boeing, explained in January 2011, “in trying to recover than we ever would have spent if we’d tried to keep the key technologies closer to home.” The right goal: add value for customers Let’s start with what Boeing did right. After losing market share to Airbus (owned by EADS) in the late 1990s, Boeing could have decided to focus on reducing the costs (and the selling prices) of its existing aircraft. That would have led inexorably to corporate death. Instead Boeing decided— commendably—to innovate with a new aircraft that would generate revenues by creating value for customers. First, Boeing aimed to improve their travel experience for the ultimate customers, the passengers. As compared...
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...also an important asset of international growth strategies of many service firms. Bryborn & Jantell (2005) states that every now and then there is a boom of interest in cutting operating costs and every time there is a different ways of how it is done. In the 1990’s, the trends used to cut costs were re-engineering of business processes. However, in the early 2000’s, after the economical downturn, there was a similar trend to reorganize business processes and the trend was called offshore outsourcing. The major driving force for offshore outsourcing are customers who wants more of everything for less money. In MIDAS Bulletin Oct-Dec 2004 publication mentioned that, “ Malaysia is among the top three contenders for offshoring business in the world according to the 2004 Offshore Location Attractiveness Index compiled by the global management consulting firm A.T. Kearney, sources were quoted. Malaysia is ranked 3rd behind India (1st) and China (2nd) but ahead of Singapore (5th), Philippines (6th) and Thailand (13th). In its report, A.T. Kearney considers Malaysia a “ natural choice” for offshore services in view of its low costs, particularly for infrastructure, the most attractive business environment among emerging markets, strong global exposure of the workforce, and government support for the information and communications technology (ICT) sector. Other significant initiatives cited by A.T. Kearney include the government’s investments in infrastructure and...
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...Effects of Outsourcing Name Institution Effects of Outsourcing Abstract Outsourcing is the practice of assigning a firm's business progressions to an outside agency for the purpose of improving service quality, driving innovation, or developing benefits of lower labour costs (Burkholder. 2006). Intercontinental outsourcing occasionally known as offshoring is a significant facet of economic globalization. Since outsourcing hints to more specialization, it is anticipated to reduce production expenses and to raise productivity. This study uses micro data on American firms to investigate the effects of international and domestic outsourcing on the economy at large, jobs, the production quality and the its ethnic view in the United States. It is based on a unique survey on outsourcing covering the period 2001 to 2013 over a decade of study. The survey allows one to distinguish between domestic and international outsourcing and between outsourcing of core and support activities. This article will highlight the changes that have been observed since the initiation of the outsourcing practise to its impact on the areas of study in sub-topics. Introduction The conflict has been going on from at least the 1880s, when the first New England textile mills initiated moving its manufacturing process to the Carolinas. Whatever name it goes by be it runaway plants, outsourcing, global sourcing, offshoring workers and the public tends to have mixed fillings towards it, executives view it as unavoidable...
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...In a radical departure, many businesses are discovering tiiat manufacturing their products onshore rather than abroad is more efficient—oni/ cheaper. BY Brendan I. Koerner In early 2010, somewhere high above the northern hemisphere, Mark Krywko decided he'd had enough. The CEO of Sleek Audio, a purveyor of high-end earphones, Krywko was flying home to Florida after yet another frustrating visit to Dongguan, China, where a contract factory assembled the majority of his company's products. He and his son, Jason, Sleek Audio's co-founder, made the long trip every few months to troubleshoot quality flaws. Every time the Krywkos visited Dongguan, their Chinese partners assured them everything was under control. Those promises almost always proved empty. As he whiled away the airborne hours, Krywko made a mental list of all the manufacturing glitches that had nearly wrecked his company. There was the entire shipment of 10,000 earphones that Sleek Audio had to discard because they were improperly welded, a mistake that cost the company millions. Then there were the delivery delays caused by the factory's lackadaisical approach to deadlines, which forced the Krywkos to spend a fortune air-freighting products to the U.S. Even when orders were produced on schedule, Krywko wasn't too pleased with the situation: S6 The company always had precious cash tied up in inventory that took months to arrive after the prototypes had been approved. The headaches had finally become too exasperating...
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...has disadvantages as well. For businesses, the quality of a product from the result of outsourcing kind of takes a nosedive. Since many firms that provide outsourcing quickly cut the quality of component parts in order to increase their margins. Eventually customers who are accustomed to believing your brand promise begin to notice that your once-great products are suddenly cheap. Also since most of the third party service providers excel at the services they provide, businesses are guaranteed of better quality than an in-house employee would give. Additionally, any service provider will always look to give the best of services since their reputation is at stake. Also another reason why outsourcing is bad is that companies may be supporting slave labor and child labor. Offshoring agreements typically involve a long supply chain that may very well include companies with labor practices which, if publicized in the United States, could destroy your company's reputation. Do you really want your firm associated with little kids who lose their fingers working in unsafe conditions? It is an unfortunate situation; however, this happens a lot overseas. It is true that off shoring of processes result in...
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...OXFORD REVIEW OF ECONOMIC POLICY, VOL. 22, NO. 4 DOI: 10.1093/oxrep/grj029 OUTSOURCING AND OFFSHORING: IMPLICATIONS FOR PRODUCTIVITY OF BUSINESS SERVICES MARI SAKO Saïd Business School, Oxford1 This paper reviews the implications of outsourcing and offshoring for the productivity of business services in the UK. Official statistics indicate that business-service productivity has grown by over 20 per cent in the last 7 years at the same time as employment grew by 20 per cent. The paper considers possible factors that account for the simultaneous growth of employment and productivity. First, we discuss outsourcing and offshoring, and their role in enhancing productivity through greater specialization, standardization, and consolidation of business processes, and a shift to higher value-added services. Outsourcing of business services is interpreted as part of corporate restructuring, namely as the unbundling of corporate functions as well as vertical disintegration. Second, as some services become more like products, both low-skilled and high-skilled jobs are subjected to productivity growth through standardization and digitization. It is argued, however, that the future of business-service productivity is on a knife-edge, depending on the mix of two sources of productivity enhancement—namely greater standardization and capturing value from customized solutions. I. INTRODUCTION Services have become a dominant part of the UK economy, accounting for 66 per cent of GDP,...
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...INTRODUCTION At the height of Henry Ford’s empire, he owned every aspect of the supply chain, from the steel mills, the rubber plantation and the factory. But with diversification of markets and increasing globalisation, companies do not have this luxury. Supply chains have grown longer and require more time and money to delivr, companies need to focus on core competencies while still maintain a control over the supply chain. The polarisation of the global market is important too and is currently characterized by expanding product variety, short life-cycle, shifting customer demand and continuous advancement in technology. HISTORY AND PRESENT Twenty years ago, experts were predicting the death of companies that did not relocate to countries with smaller overheads and costs. The fanatical levels of competition between companies reduced the prospect of success or failure to one absolute: cost. This led to an exodus of companies travelling to production facilities on the other side of the globe. Thus supply chains became long and unwieldy, reducing the amount of control and oversight over it. The influx of wealth in the LEDCs allowed the governments to improve standards , according to the International Labour Organisation, wages in Asia between 2000 and 2008 rose by 7.1-7.8%/ year; this reduced the cost advantage that brought the companies flocking to their doors. Oil and energy prices and consequently transportation costs have sky rocketed, which reduces the cost advantage...
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...Is Offshore Outsourcing of Medical Business Practices Ethical? Abstract The healthcare industry is one of the largest in the United States. The United States spends an estimated $2 trillion annually on health care expenses, more than any other industrialized country (Johnson, 2010). The growth of this industry is expected to continue well into the future. However, today more than ever, healthcare providers are faced with many financial pressures. Offshore outsourcing offers companies substantial savings on costs which improves profitability. Managed care organizations and healthcare providers realize how outsourcing business processes to experts allows them to focus on their core business without worrying about back-office functions (Namasivayan & Bell, 2006). Despite the cost savings, it is important not to overlook some of the issues that may be associated with outsourcing. Is Offshore Outsourcing of Medical Business Practices Ethical? The healthcare industry is one of the largest in the United States. The United States spends an estimated $2 trillion annually on health care expenses, more than any other industrialized country (Johnson, 2010). The growth of this industry is expected to continue well into the future. As the baby boomer population gets older and medical treatments become more and more advanced, those needing medical care will increase exponentially giving rise to an already growing field. Yet, despite...
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...Chapter 1 1. What is the name of the superstore which exists in South Africa and other countries and is considered to be the next Wal-Mart? a. South-Mart b. African-Store c. World-Mart d. Shoprite Answer: D Factual, International Business, p. 5 2. Companies are no longer limited by their domestic boundaries and may conduct any business activity anywhere in the world; these companies are more likely to compete anywhere because of a. Technology b. Globalization c. Free trade system d. Business strategy Answer: B Conceptual, International Business, p. 6 3. Multinational companies or MNCs are a. Small companies that have some form of international business b. Large companies that have some form of international business c. All companies that have some form of international business d. None of the above Answer: C Conceptual, International Business, p. 6 4. The study of international business helps prepare you a. To deal with the evolving economy b. To develop the necessary skills to succeed in business c. To make a business survive d. (a) and (b) Answer: D Conceptual, Nature of International Business, p. 7 5. Which of the following three statements about multinationals is NOT true? a. The largest multinationals are often privately owned b. The smallest multinationals...
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...The Globe Grows Smaller The world we live in today is continually growing smaller and people are more connected with each other more than ever before. This is contributed to globalization; which for our purposes is defined as the increasing speed and ease that capital, services, goods, technologies, people, information, cultures, and ideas cross borders at. This paper will be analysing the effects of globalization on many aspects of France. Historically, France has opposed globalization and this disdain started gaining ground during the early 1990s as Europe was becoming integrated. The French feared globalization because they wanted to preserve their own rich culture, and because they saw globalization as another form of americanization and wanted no part of that. An example of this would be in 1999 when “a forty-six-year-old sheep farmer named José Bové was arrested for dismantling the construction site of a new McDonald’s restaurant in the southern French town of Millau. He acted, he argued, in protest against U.S. retaliatory trade sanctions against European products (notably, French cheese) and the uncontrolled spread of free market globalization. By attacking McDonald’s, and getting himself photographed in handcuffs in the process, the publicity conscious Bové was striking out at the symbol of U.S.-inspired globalization, a perceived threat to French identity and culinary traditions” (Gordon, 1). José Bové tried to stand up against a global corporation who was eating away...
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...Dell Cause Study in brief: Dell made an offshore call center for their technical support in India to lower the cost, but there has been a lot of complains. Reason of offshore? 1- lower cost 2- Focus on Core Business 3- Operational expertise — Access to operational best practice 4- Helping other countries Is Offshore good or Bad? Its good & bad at same time! Translation of the Case Study into Quality Theory ( Reasons of Failure ): 1. First of all they didn’t do a market study & analysis before starting offshore, and they didn’t look for previous companies experiences. (They didn’t make pilot study before) 2. They put the Cost over the quality 3. Short vision concentrate on current profit instead of long term profit 4. They moved customers to unsatisfied which will make bad reputation ( word of tongue) ( as mentioned their website is full of complaints , which will lead to loss of future customer & current customers ) 5. No customer focus ( one to one) they were applying the theory of “one fit for all” 6. they didn’t study their customers well (culture & didn’t consider the culture of customers accent ) 7. No training done for call center employees ( obvious from scripted answer) 8. They affected the society by reducing the number of jobs which affect the overall society 9. the segmentation of call centers they have done was wrong, because it didn’t solve the problem ( segmentation...
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...S COLOPLAST A/S — ORGANIZATIONAL CHALLENGES IN OFFSHORING w 9B08M031 Ivey Management Services prohibits any form of reproduction, storage or transmittal without its written permission. Reproduction of this material is not covered under authorization by any reproduction rights organization. To order copies or request permission to reproduce materials, contact Ivey Publishing, Ivey Management Services, c/o Richard Ivey School of Business, The University of Western Ontario, London, Ontario, Canada, N6A 3K7; phone (519) 661-3208; fax (519) 661-3882; e-mail cases@ivey.uwo.ca. Copyright © 2008, Ivey Management Services Educational material supplied by The Case Centre Copyright encoded A76HM-JUJ9K-PJMN9I Order reference F240103 Version: (A) 2008-06-24 INTRODUCTION Director Allan Rasmussen took a good deal of pride in the achievements of Coloplast A/S1 (Coloplast) in Tatabánya, Hungary. In consecutive quarters in 2004, the plant had outperformed the company’s longer established Danish production units in quality levels (see Exhibit 1). Rasmussen had been the Tatabánya plant’s manager, its first, since 2001. Just three and a half years later, he was responsible for the daily management of a plant with a head count of 550 and production valued at 1.5 billion Danish kroner (DKK). In 2005, he resumed his position as director of Coloplast’s Danish subsidiary and returned to Denmark. With the Hungarian operation, Coloplast had learned important lessons in designing and implementing...
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