International Business and Policy

International Business and Policy

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Critically evaluate the impact that outsourcing has had on GE . Analyze their decision to have multiple outsourcing partnerships

Introduction

Before discussing this question , it is important to know why US companies like GE and others engage in outsourcing their strategic business units to foreign countries . Mostly outsourcing involves transferring or shifting the manufacturing or services related jobs to other economically efficient foreign countries

in to enjoy several advantages . These advantages relate to capturing the sales-growth attaining lower labor costs and other cost reduction opportunities . A company can transfer its manufacturing business function , processing business infrastructure , or operations to other countries where it seems to be economically and strategically viable . Through outsourcing , a firm was capable of generating higher profits since lower costs were the main advantage enjoyed by outsourced companies . The success of an outsourced function or operation depends not only on lower costs but also on political stability , language , skills , infrastructure , property rights and legal system etc of that country . The major pull behind outsourcing from foreign markets was saving in labor costs and probably , this was the reason why GE globalized itself around the world . Workers worked at a much lower wage rate in the Asian countries than they worked in the US . The wage rate was almost 5 to 6 times higher in US than in the Asian markets . This appeared...