THE CHALLENGES OF GLOBALIZATIONToday, the lowering of trade barriers by the World Trade Organization, accompanied by improvements in communications and transportation, has greatly increased the pace and scale of world trade.

Offshoring & Outsourcing• Offshoring- when companies move their production facilities to

countries where the costs of labor and other productive resources are lower.

• Outsourcing – When companies hire other companies, often from overseas, to produce parts or to provide other services.– Outsourcing permits companies to focus on other business issues, while

freeing up management professionals to focus on more important issues.Example: A computer assembled in the United States today, for example, may have parts manufactured in Taiwan, China, Thailand and Mexico. The computer may use software designed by computer engineers and programmers in the United States and India. When American customers call customer service, they may be talking to English-speaking representatives half-way around the world in India or the Philippines.

• New information technologies, such as the Internet, make it easier for customers to search for products and to place orders, even from overseas.

• These technologies also make it easier for manufacturers to track their inventory and to predict future needs.

• Shipping has also become easier with containerized cargo. Goods are packed into large truck-like containers and loaded onto a cargo ship. After the ship lands at its destination, the containers serve as the backs of trucks or as railroad cars, without repacking.

Benefits of Globalization• Globalization has provided many benefits. People enjoy goods

and services from all around the world. • They also enjoy the benefits of greater connectivity - ease of

communication. We can now reach one another by telephone, Facebook, cellphone, e-mail, or such new services as skype –an internet based videophone call.

• Advances in information technology, medicine, and engineering spread quickly.

• Globalization has also speeded up the pace of economic development. Average standards of living are higher than ever before.

Costs of Globalization• Manufacturing has shifted away from countries where labor costs are higher, so

many workers in more developed countries have lost their jobs. • Workers in newly industrialized countries are forced to work long hours under harsh

conditions are exploited to lower the cost of goods. • Globalization has also increased pollution and global climate change. • Diseases now spread more quickly, creating a risk of pandemics. • A financial crisis in one country can quickly spread to others. This increases the

potential threat of a global recession. • Globalization has also created huge trade imbalances.

• For example, Americans buy far more goods from China than they sell there.• Another disadvantage is that local communities and cultures are losing much of

their uniqueness under the impact of globalization. • Global phenomena, like American fast-food or '''pop'' music, replace local

customs and traditions. • The wave of globalization can even provoke violent reactions. Muslim

Fundamentalists express anger at the spread of contemporary global culture. Despite these disadvantages, globalization has become too deeply ingrained to disappear.