The Global Marketplace
In order to be competitive, companies need to be able to sell their products all over the world. However this can be problematic as different countries have different cultures and therefore different markets or product needs. Some companies use design teams based around the world so they can design for a particular market or culture. Other companies use market research focused on the specific needs of specific markets.
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Click here to see some more cultural fails.
Offshore Manufacturing of Multinationals
Most multinational companies are based in developed countries such as Europe USA and Australia. However, as part of their strategy to become more competitive a lot of their manufacturing is moving off shore. They will draw on the expertise of the individual countries in developing new products as well as manufacturing them there.
Most multinational companies are based in developed countries such as Europe USA and Australia. However, as part of their strategy to become more competitive a lot of their manufacturing is moving off shore. They will draw on the expertise of the individual countries in developing new products as well as manufacturing them there.
We have also been experiencing different types of knowledge work and manufacturing almost anywhere because of the improvement in communications as a result of the worldwide IT infrastructure. We are all aware of call centres that used to be based in the UK being replaced by call centres based in India. |
There has for some time been offshore manufacturing in developing countries but these were mainly for the manufacture of shoes, toys or cheap electronics as well as some simple service work such as processing credit card receipts. However this has developed further with companies actually relocating to less-developed countries such as China, India and some of the former USSR nations and outsourcing their work there.
Over recent decades brand-new sparkling corporate buildings and industrial estates have been sprouting up in these new countries to meet the demand for products there and for outsourcing of offshore manufacturing. The images above show the difference in the Shanghai skyline over ten years
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The driving forces of the Internet and high-speed data networks coupled with improved digitisation that covers the entire world means that design data can simply be sent to another country for manufacture or localised expertise can provide the necessary development of products. The key reason multinationals outsource or manufacture offshore is quite simple in that is incredibly cheap and they can achieve the same quality of work at a fraction of the price compared to Western world.
For a quick slide show click here
For a quick slide show click here
For example a large majority of plastics manufacturing requires moulds to be manufactured and if an injection mould was to be manufactured in China it would cost approximately half the amount it would in the Western world (Click here for a real world example) . It would also cost 30% lower in Taiwan. Having bases in these developing countries also makes it easier to gain access to these increasing overseas markets.
Ethical Issues of Offshore Manufacturing
Local and Global Production
When considering the issues relating to local and global production, we are looking at the impact of multinationals on the quality of life, employment and the environment. Although these companies are welcomed by the governments in developing countries because of the regeneration they bring with them, unfortunately there are many negative aspects on the local population that come with them as well.
From a positive aspect the economic regeneration of local areas brings employment in the manufacturing and service industries; this brings with it an improvement in living standards with career development and a multi-skilled workforce. There is also a physical regeneration of infrastructure, transportation and local amenities. There is also a widening of the country's economic base with foreign currency being brought into the country, improving the balance of payments. It also enables the transfer of technology that would be incredibly difficult without the backing of multinationals.
Unfortunately there are some downsides: From an environmental perspective, there will be an increase in pollution to the atmosphere as well as waste production because of the increase in manufacturing activities. The new plants, factories and infrastructure can also result in the destruction of the local environment. From an employment perspective there will be lower wages compared with their developed world counterparts where minimum wages are law. The same is similar for employment rights where developed countries have unions to support staff with unfair issues such as equal rights or unfair dismissal. There are also lower safety standards especially when using sweatshops. There is also minimal chance of promotion as managerial roles are usually undertaken by developed country employees. Unfortunately local communities can become dependent on these multinationals which is a real issue if the company pulls out. There is also the devaluing of traditional craft skills as these are replaced by repetitive machine work.