“The world is flat” is a phrase coined, and the title of a best selling book, by Tho
mas Friedman detailing how globalization creates an even economic landscape for countries and businesses alike. Many factors, including increased communication technology, outsourcing, and off-shoring foster a climate where businesses need to adapt to a changing world or they will not survive. Small businesses in particular have a difficult time assimilating to global markets due to their lack and access to resources. Outsourcing to countries with lower regulation, lower taxes, and lower labor rates means that small business must find a way to adapt to the changing world or go out of business. For an example of how business, including small business can be effected by globalization, look no further than an American staple, General Electric.
In July of this year, the medical giant decided to relocate its X-ray manufacturing division from Waukesha , Wisconsin to Beijing , China . GE called Waukesha home for more than 100 years, but this year, something needed to change. GE will train foreign engineers, invest billions in a foreign country, and layoff their Waukesha domestic workforce to compete globally and stay ahead of the curve. This company paid less in taxes than you or I last year (actually GE was refunded more than a billion dollars) and decided to take their business overseas. The closing of a large plant immediately impacts the workers; however, we should also consider the smaller businesses that served the plant. Brick and mortar businesses provided materials. Shipping companies benefited from delivery sales. Restaurants fed a work force. All will undoubtedly take a financial hit. Without adaptation, creativity, and ingenuity, small business, like the ones that served GE, will be out of work because of a flatter world.
mas Friedman detailing how globalization creates an even economic landscape for countries and businesses alike. Many factors, including increased communication technology, outsourcing, and off-shoring foster a climate where businesses need to adapt to a changing world or they will not survive. Small businesses in particular have a difficult time assimilating to global markets due to their lack and access to resources. Outsourcing to countries with lower regulation, lower taxes, and lower labor rates means that small business must find a way to adapt to the changing world or go out of business. For an example of how business, including small business can be effected by globalization, look no further than an American staple, General Electric.
In July of this year, the medical giant decided to relocate its X-ray manufacturing division from Waukesha , Wisconsin to Beijing , China . GE called Waukesha home for more than 100 years, but this year, something needed to change. GE will train foreign engineers, invest billions in a foreign country, and layoff their Waukesha domestic workforce to compete globally and stay ahead of the curve. This company paid less in taxes than you or I last year (actually GE was refunded more than a billion dollars) and decided to take their business overseas. The closing of a large plant immediately impacts the workers; however, we should also consider the smaller businesses that served the plant. Brick and mortar businesses provided materials. Shipping companies benefited from delivery sales. Restaurants fed a work force. All will undoubtedly take a financial hit. Without adaptation, creativity, and ingenuity, small business, like the ones that served GE, will be out of work because of a flatter world.
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I must first say that the book that the article is based off of seems very intriguing to me, and I think I might search Amazon for a used copy of it. Yes that would be me using a B2C Pure-Play e-retailer. Back to topic. I agree with your view on the fact that a flatter world does cause a lot of American companies to have to outsource to try and compete with companies that are already in other companies that can provide the same products at higher profit margins due to lower labor and supply cost.
ReplyDeleteI like the fact that you also drew attention to the fact that for every large American company that is moved off shore, that it effects the smaller businesses around it as well. There is a ripple effect with any change and with the world becoming more and more "flat" the ripple is beginning to extend further with each change.
Good Post.
Brent Evans
Yes, indeed theeffectof globalization over small business segments is smashing. Such impartial competence is forcing small business outof the picture. To compete in a market where products life cycle are short and quality is constantly improved, companies need to monopolize their surroundings by merging domestics with foreign customs.Small business lack of such alternative having less capital and resources to compete globally.
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