“Access to cheap but skilled labor has been a major driver of globalization. Assessing the role technology can play in reducing production and operating cost, from an American companies perspective, analyze the pros and cons of adopting advantages technology at the firm and societal level. In the face of unrelenting globalization company’s face, present a well reasoned and supported deduction and recommendations. “
Globalization which is on the rise for the past few decades now has made its impact felt on organizations and societies all over the globe. The term is not new and had been since the people traveled the world for trade in ancient times. The major boost to globalization came with the advent of technology in transportation and communication.
The progress in these two fields has removed borders as barriers in business and increased the cross border business. The advancements in Information technology have increased the knowledge and information of the people about the economic trends and opportunities that are spread across the globe. The speed of globalization has increased at an unprecedented pace in the past few decades.
Globalization is considered as a process of interaction between companies and governments worldwide, it affects the social, cultural, and economic aspects of everyone participating in the process.
With the increase in globalization, the companies have gained a competitive advantage from benefits like new raw material sources, new markets, and lowered operating costs. The most favorable aspect of globalization for companies is that now, they can manufacture the products anywhere in the world, where the cost of manufacturing is low and sell it anywhere, to earn maximum profits.
The key aspect of globalization is to gain competitive advantage through low-cost skilled labor; this has made companies switching their production lines to countries with high skilled low-cost labor. The shift towards globalization has been positive for a few nations and negative for others on the basis of factors like employment creation and revenue generation. Globalization has been profitable to the developing countries as it has created new job opportunities and an increase in production. The countries are also benefited from the inflow of foreign funds, FDI, which is boosting their economies.
For countries like the US, globalization has taken a toll on the employment market and increased the unemployment hours in the country for the people. The unskilled labor has taken the worse toll as the technology has left no or very few jobs available in the markets for them. For the skilled labor, the market has been not good as well, the rates of work have really deteriorated in the recent past with a lower number of new jobs and competition faced from global manpower.
The difference between the labor cost of the US and China clearly defines how access to cheap labor can lead to companies’ inclination towards globalization. The shift in production units from the US to China is due to the fact that developing countries like China have increased their role in international trade and are benefiting from the skilled manpower they have which is ready to work for way lesser amount than their American counterparts.
Technology can play an important role in reducing the production and operating costs of a company. Though it can be a substitute for low-cost labor, in the long run, it will not contribute to the increase of employment in the country. People needed to operate the technology or the machines will be from the skilled labor market, the unskilled labor will still see lower jobs and employment hours.
Technological involvement in the production line will reduce costs, as the process will have fewer mistakes and errors. The machines make lesser mistakes and errors, increase in the speed of production, reducing the overall cost, also less or no faulty product will reduce the cost of repair a company has to bear. Technology can lower the number of people needed to perform the manufacturing function, Automation is the new labor for companies nowadays. With automation in place, a company can lower the number of employees and still keep the quality of work uncompromised.
From an American perspective adopting technology in the companies will have it sets of positive and negative effects on the society and the firm itself. Starting with the Pros of technology inclusion, technological inclusion will help the companies manufacture their goods in the local market again, at the cost of the outsourced process. The technological integration or automation will create jobs for skilled labor.
With an increase in local production, domestic revenues will increase helping the society grow and keep the economy moving. The same is also reflected in the per capita income growth of the country adopting the technology. The technology adoption will also help the firms in meeting the competitive demands of the market and face globalization.
Taking the Cons of technology inclusion in the workplace, first of all, technology can be costly, from purchase to installation, maintenance, and upgrading each step requires funds.
To this training employees for the technology and also for the upgrades increase the cost and time investments. The upgrades can decrease the morale of the workforce if they are not able to keep up with the learning process. A technical snag can relate to shutting down of the whole process and can cause a loss in terms of man-hours and productivity, also the cost of technical support and maintenance add to operating costs.
The adoption of technology can reduce the need for labor significantly causing unemployment in the society, higher unemployment levels in society can reduce overall purchasing power. This all can lead to a lower standard of living and lesser funds for investing in public welfare.
Technological adoption in an organization or in a country is directly linked with a reduction in the cost of production of goods and an increase in the per capita income of society. To deal with globalization, initiatives have to be taken by both the country and the company at their levels. The country must put in more effort to invest in infrastructure and training of manpower (training unskilled labor and bring them at par with skilled labor) to build a business-friendly and supportive environment.
The country must also make reforms in the tax policies for businesses to support them, measures must also be taken to boost trade with different nations. On the companies’ part, the companies must maintain and constantly improve the understanding of the markets and their developments. The companies must find a balance between the technology and manpower to get benefits from the capacities of each; this will help them offer the product in the market at a competitive cost. Companies must emphasis on training and development of human resources; they serve as a very important factor in dealing with globalization. The companies must plan for expanding their markets and reinvesting to strengthen their presence in the market.
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