The Practice of Outsourcing to Third-World Countries

The Practice of Outsourcing to Third-World Countries

The practice of offshore outsourcing among multinational companies has grown significantly over the past two decades as multinational companies adapt to globalization. One of the reasons why MNCs outsource is informed by the desire to access cheap labor. Also, weaker environmental regulation laws in some countries push multinational companies to outsource from such countries to reduce operational costs. By using foreign direct investment and international subcontracting, multinational companies fragment their processes to enhance their bottom line. Notably, outsourcing has a cultural impact on the local country where an organization outsources, not to mention the economic impacts for the company and the countries where it outsources.

Nike

Impact of Global Stratification on the Local Culture

Nike’s global outsourcing policy has encouraged education uptake in third-world countries. As the company moves to third-world countries with limited education access, it makes intentional efforts to encourage education uptake so that it can get literate employees (Mridha, 2021). For instance, Nike conducts campaigns aimed at encouraging education uptake. The ‘future sole’ competitions targeting senior high school and college students is one such initiative that has encouraged education uptake.

Also, global stratification by Nike has encouraged technological improvements in the third world. The company is in a continuous process of adopting technological improvements that can potentially improve its processes. For instance, the collaboration with Flash allows consumers to access product details through the company’s website. The collaboration has influenced consumers in third-world countries to resort to using e-commerce platforms for their retail needs.

On the flip side, Nike’s globalization has previously faced a backlash for multiple reasons. First, Nike has been cited for exploitative labor practices, including low wages and having employees work for long hours. Another negative impact of Nike’s globalization is cultural homogenization (Wang et al., 2020). As the company grows in third-world countries, locals have begun to dump their traditional brands for Nike. Cultural homogenization is an obstacle to the growth of home-grown brands.

The Impact of Global Stratification in the United States

Nike’s global stratification positively contributes to the US’s real GDP. As the company improves its bottom line due to its globalization strategy, it generates more revenue. Nike, just like any other private company, pays taxes to the US government, contributing to economic growth.

On the negative, Nike’s global policy has exacerbated economic inequality in the US. By outsourcing production to developing countries, Nike takes away jobs that Americans would otherwise do. The increased profits resulting from globalization only benefit a few top executives who in turn receive a huge compensation.

Biggest Winner

Nike is the biggest winner in its global stratification policy. As a multinational firm located in the United States, it benefits from its global stratification strategy through improved revenues, market expansion, and access to lower-cost labor in third-world nations. Nike may cut manufacturing costs while increasing profit margins by exporting production to nations with cheaper labor prices. Furthermore, Nike’s branding and marketing techniques help to maintain its leading position in the worldwide sportswear industry.

On the other hand, third-world nations that host Nike factories might experience benefits as well as drawbacks. On the one hand, Nike’s presence in these nations has the potential to create jobs and contribute to their economic development. However, there are issues regarding the exploitation of workers, undesirable working conditions, and harm to the environment linked to the company’s supply chain practices. Furthermore, the reliance on multinational firms such as Nike for employment might expose these countries to volatility in the global job market.

References

Mridha, Md. A. H. (2021). Global Culture: Its Existence and Consequences on Our Lifestyle in Bangladesh. Open Journal of Social Sciences, 09(01), 167–187. https://doi.org/10.4236/jss.2021.91012

Wang, T., Mmag, In, M., & Wiener. (2020). Globalization; Impact On Culture. https://epub.jku.at/obvulihs/download/pdf/5392484?originalFilename=true

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Target a multinational corporation/international company and the practice of “outsourcing” to third-world countries. Some examples of MNCs (multinational corporations) would be Nike, General Motors, Ford, Microsoft, and Fender Music. Research its effects on local culture. Write a summary and analysis of 500-750 words and include the following:

The Practice of Outsourcing to Third-World Countries

How does global stratification impact local culture? What are the positive and negative effects?
How does global stratification impact the United States? What are the positive and negative effects?
Who is the biggest “winner” in this situation? Explain.