ethics 347 outsourcing - Outsourcing The industrial...

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Outsourcing The industrial revolution brought America to the forefront or world economics. Previous top producers could no longer keep up with America’s ability to shift with demand and create outputs with such speed. Nations began striving to feed the American machine with raw materials in order to keep up. Throughout the U.S.A men and women worked diligently in plants and in service positions for large companies with direct command order. During the 1980’s developments in the theory of management and administration as a science led to the practice of off outsourcing; this practice allows companies to place certain aspects of their production or organization with an outside entity in order to increase production or cost efficiency. This lowers the firms fixed cost but brings up ethical and macroeconomic questions, as companies begin to outsource beyond American shores many feel negative consequences will occur, and others are more optimistic. The crux of this issue lies in whether or not companies should strive to benefit their shareholders or the entirety of their stakeholders. Outsourcing makes efficient use of a firm’s capital because it is redirected to a more efficient producer. This new efficiency is giving firms more money and multi-national presence then ever before, and with this shift many Americans are facing situational unemployment. America is switching to a service based economy and many feel it may still thrive to unimaginable heights if its citizens learn to embrace this and pursue education that will allow them to be innovators rather
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then laborers. Others feel outsourcing will drag the GDP down and is socially irresponsible in American society, for instance the lead paint scare facing Mattel was due to an outsourcing problem. Today’s corporations will inevitably outsource with the current climate of private equity restructuring and open communications with china. This is the ultimate shift in the American free market drive for capital restructuring. Inevitably their will be detractors to this new system however in the long run this will prove beneficial. If the work force can adapt to this new economy America is poised for a dominant position. If too much outsourcing occurs and middle management shifts offshore then a cause for concern would arise as our nation would be dependent on the hands of another. Outsourcing is ethically defensible as it is simply trying to maximize a firm’s utility and if the work force can adapt it will benefit from this. It is a deontologically sound decision because the consequences aren’t readily determined. In a world of globalization, U.S. companies are constantly seeking strategies to become more competitive. Important objectives of the strategic response have been to reduce costs, stay ahead of competition, and enhance profits. Outsourcing has become a main cost-cutting strategy in the twenty-first century. It occurs when a company moves work out of the enterprise. A special report in the Canadian Business Review magazine refers to outsourcing as a
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This note was uploaded on 04/07/2008 for the course BUSINESS E 347 taught by Professor Oldguy during the Spring '08 term at SUNY Stony Brook.

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ethics 347 outsourcing - Outsourcing The industrial...

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