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The practice of offshoring is not a new phenomenon. It has been utilized and hotly debated for many years and has only seemed to pick up momentum from both sides as the concept of globalization spreads. As Mary K. Coulter describes on page 41 in her 2005 textbook, Strategic Management in Action, “Potential markets are found all the way from small villages in China to Johannesburg to Moscow to Mexico City, and all points in between.” Globalization knows no borders. Businesses large and small are now able to compete with one another in the world market. Coulter goes on to point out that globalization not only means that businesses are able to expand their product reach, but they are also able to access vast “financial, material, human and knowledge resources” and that they “should be acquired wherever it strategically makes sense to do so.”
There are various reasons domestic firms consider and ultimately choose to offshore part or all of their business functions. The most obvious reason is money. Firms may be motivated by the pressure of stockholders and management to generate a return on their investment, or they may be looking for ways to cut expenditures because of the increasing cost of compliance to governmental regulations in the United States. Still, others may choose to offshore certain operations in order to stay competitive in their industry.
In the race to make more money or stay competitive in the world of globalization, firms need to take a step back and examine the full extent of their decisions. The choices they are making not only have an effect on the bottom line, but they also dramatically affect the lives of their loyal employ ...