globalization and outsourcing

The essay by Barry Lynn that was found on FindArticles explains the many problems the large companies of America are experiencing or soon will experience. Most of the large companies in America started out having verticle integration with all or most of the production taking place within the United States. The example Lynn gives is Ford. Ford had all of their production happening in one place in Michigan. What Ford and many of these other companies have learned is that when you have part or even all of the production taking place in other countries where labor is cheaper than in America, these products can be made faster and for less money. Many of these large companies have taken this to a level where America has become dependent on all of these other countries for its' products. While the folks in Washington like to turn a blind eye to this and deny any depedancy on other countries like China, the fact of the matter is that were a devastating earthquake hit Taiwan, Dell and mony other companies would be out of commission for weeks. The problem isn't that the executives of Dell won't be able to get the parts from their subsuppliers, it's that the subsuppliers won't be able to get their parts from the sub-subsuppliers who the executives don't even know. It's as though this verticle integration through out the world has become a system where the people who are supposed o be in control aren't really in control. It's one thing to look at this as our world turning into Marshal McLuhan's Global Village but that would be if we simply looked at the communication aspect of this. This isn't simply making the world a smaller place because of our ability to communicate around the world easily, this is creating such strong interdependencies that American companies are losing control of themselves. The main issue here is that when big companies outsource across the world, it takes away the power from the American company itself. The executives of these large companies don't really have the control. It is the sub-subsuppliers that have the control over these large companies because one small mess up at that level will hurt the company for weeks. What is even more crazy is that these companies don't have any alternate plans. That is one of the most important rules in business to be able to make their product another way if one way fails, but these companies have no alternative plan for when one of these countries like Taiwan has an earthquake, or a tsunami hits. For more on how companies aren't looking into the "what ifs" (alternative plans) check out Alexis' Blog.

Our relationship with China is one of such dependence that a war between these two countries is nearly impossible. Beijing is quickly gaining the power and control over most of America's large companies. Other countries such as Mexico, the Phillipins and Brazil all clamour for more American factories in their countries because it is thought that these plants will stop inflation and create jobs. However, while these factories may stop inflation, they also stop growth within the country and we all know about the working conditions for the jobs that are created. Having all of these different parts of each company all over the world also makes it easier for companies to hide money in certain places and then the executives who have made all of the money by hiding the debts and making the stock go higher can simply say that they had no idea of what was going on because they don't really control all parts of the company. This is what the Enron executives are doing. The company was so big that how could they know everything that was going on with in it all over the world? Also, the portions of the company that are being made in other places besides America, aren't even specifically part of that company. These parts of the big companies are separate entities unto themselves that the larger companies don't have a say in how or when they operate. To find out about how Sony has their walkmans made in other countries, check out Anthony's Blog

While in the 1950s after the second world war, many countres in Europe joined their steel and coal companies to prevent one country from going to war with the other country because it would hurt their economies too much. Instead of going about this joining in an organized way, America has simply jumped into a large number of countries economies with out any sort of rules writen beforehand. This has created a very dangerous situation. All of the prduction is taking place outisde of America causing Americans to only play a role as the consumer instead of the producer. We're just supposed to sit back on our ever-growing asses and buy what people in other countries have made for us.