A Global market place

Business process outsourcing:

Outsourcing is an entire business process such as accounting, procurement, human resource management etc to a third party or service provider.

Part of the rapidly changing environment that managers face is the globalization of business. Management is no longer constrained by national borders. BMW, a German owned firm, build cars in South Carolina. Similarly, McDonald’s sells hamburgers in China. Exxon, a so-called American company, receives more than three fourths of its revenues from sales outside the United States. Toyota makes cars in Kentucky: General Motors makes cars in Brazil; and Mercedes sport utility vehicles are made in Alabama. Parts for Ford Motor Company’s Crown Victoria come from all over the world. Mexico (seats, windshields, and fuel tanks), Japan (shock absorbers), Spain (electronic engine controls), Germany (anti-lock brake systems), and England (key axle parts (With the business process outsourcing (BPO) boom taking off, customers calling for information and support in countries like US and UK find their calls being answered by call center operators based in India. Call centers and help desks of many multinational companies are being outsourced to low wage, English speaking countries like India. IT- service companies such as IBM, EDS, and Accenture have hired thousands of Indian software engineers to carry out work previously done near their customers in developed countries. Half of all calls to National rail Enquiries in the UK amounting to about 150,000 calls per day are handled from India.

Global village:

Refers to the concept of a boundary less world; the production and marketing of goods and services worldwide

These examples illustrate that the world has become a global village. To be effective in this boundary less world, managers need to adapt to cultures, systems, and techniques that are different from their own.

In the 1960s, Canada’s prime minister described his country’s proximity to the United States as analogous to sleeping with an elephant, “You feel every twitch the animal makes”. In the 2000s, we can generalize this analogy to the entire world. A rise in interest rates in Japan, for example, instantly affects managers and organizations throughout the world. The fall of communism in Eastern Europe and the collapse of the Soviet Union created exciting opportunities for business forms throughout the free world

International businesses have been with us for a long time. For instance, Siemens, Remington, and Singer were selling their products in many countries in the nineteenth century. By the 1920s, some companies including Fiat, Ford, Unilever, and Royal Dutch / Shell, had gone multinational. But it was not until mid 1960s that multinational corporations (MNCs) became commonplace. These corporations, which maintain significant operations in two or more countries simultaneously but are based in one home country, initiated the rapid growth in International trade. Today, companies such as Gillette, Wal-Mart, Coca-Cola, and Aflac are among a growing number of US based firms that realize significant portions of their annual from foreign operations. Many large Indian companies are also moving abroad in response to increasing pressures of globalization. Some of the largest foreign investments have been made by the public sector Oil and Natural Gas Corporation (ONGC) whose subsidiary, ONGC, Videsh is now active in 15 countries in oil exploration. Other public sector companies like Indian Oil and Bharat Petroleum Corporation Ltd., are looking at retailing in Sri Lanka, Singapore, and south East Asia, while Hindustan Petroleum Corporation Limited is considering an investment in a refinery in Saudi Arabia.

Tata Motors acquired Korean auto major Daewoo Commercial Vehicles to access Korean and Chinese markets. Infosys employs people from 70 different countries. It has over 40 offices and development centers in countries as diverse as the USA the UK, China, the Czech Republic, Australia, and Japan. About 80 percent of the revenues for the software giant Tata Consultancy Services come from outside India.