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Computers in Society Week 13: Computers and Globalization
Globalization Globalization refers to the process of creating a
worldwide network of businesses and markets. [Quinn 2011] It
involves international investment. The work to develop,
manufacture, sell, and support a product occurs across multiple
The Nature of Globalization Globalization depends on computers
and digital technology, especially high-speed, high capacity
communications. Software and algorithmic techniques for logistics
allows for the coordination of complicated supply and manufacturing
operations. Fast communications and the ability to move large
amounts of data allows managers to make quick decisions.
The Nature of Globalization (2) Globalization is primarily a
business and commercial phenomenon. It is driven by efforts to find
economic advantages and to profit from them.
Barriers to Globalization Globalization is primarily a business
phenomenon, but it requires crossing international boundaries. That
involves governments. The interests of government often agree with
those of business. However, they can come into conflict in areas
such as national security and employment policy.
Barriers to Globalization (2) In order to deal with problems
between governments, a range of international agreements have been
negotiated. In addition, international organizations have been
formed to deal with conflicts that arise that are subject to the
International Organizations The World Trade Organization (WTO)
is an international organization that helps develop international
trade agreements and resolves trade disputes between nations. In
addition, there are two older international financial institutions,
the World Bank, which makes loans to developing nations, and the
International Monetary Fund (IMF), which works to stabilize
international financial systems.
Trade Treaties and Agreements The European Economic Union is an
economic political union of the nations of Europe that regulates
trade through a standardized system of laws. The North American
Free Trade Agreement (NAFTA) is an agreement between the U.S.,
Canada, and Mexico that creates a joint trading partnership.
Outsourcing Outsourcing means contracting a business function
to someone else [Wikipedia]. Outsourcing may be, but does not have
to be, done internationally. Outsourcing has occurred in various
industries: Services Software production Engineering
Outsourcing in Services Outsourcing in the telecommunications
industry has been going on since at least the 1980s. Companies
provided people to answer phones, take orders, or provide
information for other companies that did not want to provide a
phone center. In the last decade, many phone answering services in
the U.S. have been outsourced to India. While it has cut costs for
companies, it has also generated many consumer complaints.
Outsourcing in Software Outsourcing in the software industry
has increased greatly over the last decade. Advances in
communications and meeting technologies and the existence of a
large, technically trained population primarily in India has led
many U.S. companies to move routine software development work
abroad. Software engineering, architecture, and design activities
have stayed in the U.S., but people are concerned that they could
Outsourcing in Engineering Outsourcing in engineering has
followed a pattern similar to that in the software industry. U.S.
immigration rules limit the number of technical workers who are
admitted to the U.S. Engineering work is spread over the world.
Communications technology supports work that now can continue
throughout the 24-hour day. As workers in one regions end their
work day, workers in a time zone eight hours earlier start
Outsourcing in Manufacturing The outsourcing of manufacturing
work has caused the greatest controversy in the U.S. The reason is
that it affects the largest number of workers. Issues of national
security are also part of the debate. Economic inequality in the
U.S. is also a concern.
Outsourcing in Manufacturing (2) Originally work was outsourced
for cheaper labor. However, Asia in particular has developed the
infrastructure to allow large manufacturing complexes to change
rapidly as changes in product design require new parts, materials,
and processes. Logistics and supply chain issues play a key role
A Case Study To explore the ideas about globalization, I would
like to use Apple and Foxconn as a case study. Wednesdays class
will cover a series of articles from the New York Times that
reasons that Apple moved production to China, and that documented
the problems in plants manufacturing Apple products.
Apple and Outsourcing For many years Steve Jobs was proud to
claim that Apple products were made in the U.S. In 1984 he said
that the Macintosh computer was a machine that is made in America.
The NeXT machine was made in the U.S. as well, and even in 2002 the
later versions of the Macintosh were made in California.
Apple and Outsourcing (2) However, by 2004 Apple began to move
its manufacturing operations outside the U.S. Apple was not doing
well then financially, and it made the move to cut costs. According
to an Apple executive, Timothy D. Cook, Apples CEO, believed there
were two main reasons for moving production to Asia:
Reasons for Moving to Asia Companies in Asia can scale up and
down faster than companies elsewhere. Asian supply chains have
surpassed whats in the U.S. Example: Glass Screens for iPhone
Other Benefits of Manufacturing in China The scale of the
workforce needed to produce the iPhone and iPad make it difficult
to build in the U.S. The number of industrial engineers needed to
oversee production is more than the U.S. workforce could support.
Even though production costs are a small part of the iPhones cost,
the labor market issues remain a problem.
Other Benefits of Manufacturing in China (2) For commodity
products, low labor costs are important in assuring profitability
(or minimal losses). See, e.g.,
Where Does the Money Go? The cost of manufacturing an iPhone is
a small part of its price. Apple makes a large margin on its
products (the margin is the difference between the cost of the
product (design, manufacture, marketing, and sales) and its price).
If the workers arent making this money, who is? Apple shareholders
Environmental and Conservation Issues The manufacture, use, and
disposal of electronic devices has significant environmental
impacts: manufacture requires the use of rare earth metals
manufacture involves the use of toxic compounds use of electronic
devices consumes substantial electric power
Environmental and Conservation Issues (2) While there are
efforts to recycle electronic devices, there are still a number of
problems with the disposal of such devices: Not all devices can be
recycled. CRT monitors and TVs are becoming hard to recycle, and
unrecycled CRT devices are a severe pollution problem. Recycling
can release toxic chemicals into the environment Recycling is often
done in third-world countries where environmental standards are