The Impact of Globalization on Business Enterprises

Topics: Outsourcing, International trade, Economics Pages: 8 (2581 words) Published: June 9, 2006
The Impact of Globalization on Business Enterprises
Janice New
University of Phoenix
Forces Influencing Business in the 21st Century MBA/501
Dr. Genny Turano
Situation Analysis and Problem Statement
American Communications is a telecommunications industry that is having financial problems and problems competing with cable companies, and other telecommunications companies. The company needs to find ways to cut cost so they can compete with other companies. This paper will outline challenges, opportunities, and dilemmas that may arise for American Communications due to the decision to outsource call centers. In order for American Communications to survive the company needs to frame the correct problem, identify the company's goals, identify challenges, and possible dilemmas that may arise. American Communications must develop a plan to compete with other companies, provide good customer service and make a profit. The only way this can be accomplished is condition and state of the company must be analyzed and outlined correctly. Situation Background (Step 1)

American Communications is a telecommunication company that is on the verge of going under due to competition from other companies, which is resulting in a lower profit margin. This is causing concern among the stockholders. The stockholders are concerned that the company will not be able to rebound from the lost of profit caused by services offered by other intercommunication companies and the cost of labor for call centers. American Communications has decided to try to cut cost to increase their profit margin. Profits will be used to add new services to attract new customers. The company has decided to cut cost by outsourcing their call centers. Issue Identification

There are several issues facing American Communications but the one that this paper will focus on is outsourcing call centers. American Communications will face several issues or opportunities due to this decision among these are analyzing trade theories, barriers that may arise and risks that comes with this decision. Each one of these must be analyzed and handle in a professional and appropriate way. First trade theories need to be addressed among these are comparative advantage, free trade and protectionism. The company needs to look at these theories and determine how they affect the opportunity of outsourcing. Comparative Advantage is said to exist when a country has a margin of superiority in the production of a good or service and their opportunity cost remains low. (Tutor2u 2006) Another thing that needs to be considered is free trade; free trade is said to exist when there are few barriers to international trade between countries. (Tutor2u 2006) Protectionism is barriers that hinder international trade of services or goods. (Tutor2u 2006) After identifying and understanding each theory American Communications must determine if any of these will affect their plan of outsourcing call centers. First comparative advantage is an argument for outsourcing call centers, India offers lower labor cost, which in return will decrease cost for the company and will increase profits. Free trade is also a plus in this situation there are not many barriers for outsourcing call centers a number of companies are already doing this. Outsourcing of call centers to India works. Global Communication can research other companies that are doing this and see the benefits of outsourcing. Risks of Doing Business Overseas

Call center outsourcing is not a new phenomenon but it has evolved and come a long way from its origins and is in a sense entering a more collaborative era, an era treats the center as a valuable competitive weapon. As call center outsourcing has become more widespread and more important to customer relationships, companies and vendors have learned a number of lessons about how to best approach the...

References: Amiti, Mary, Service Offshoring and Productivity, Evidence from the United States January
2006 Retrieved May 6, 2006 from Datamonitor
Drezner, Daniel, The Outsourcing Bogeyman May/June 2006. Foreign Affairs the-outsourcing- bogeyman.html?
Germain, Jack, The Security Implications of Outsourcing. Sci-Tech Today May 2006
Tutor2u, Comparative Advantage and gains from free trade.
White, Randall Global Spin: Probing the Globalization Debate. Where in the World are we
going? Toronto: Dundurn Press, 1995
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