Globalization and Outsourcing: Impact on The Toro Company

This report examines the effects of globalization and outsourcing on The Toro Company, a manufacturer of irrigation and landscape products. It analyzes the perspectives of both shareholders and management, highlighting the challenges posed by new US economic policies, including tariffs, trade restrictions, and changes to tax regulations. The shareholders express concerns about reduced consumer spending, workforce issues related to H-1B visas, and social injustices in overseas branches. Management, however, views these policies as opportunities for growth, such as infrastructure investment and tax reforms, and outlines strategies like shifting production to countries with lower tariffs. The report also addresses the company's approach to outsourcing, emphasizing the importance of local labor, strategic investments, and maintaining competitive advantages in a global market. The report concludes with an overview of the short-term and long-term implications of the new policies and offers recommendations for the company's future strategies to leverage globalization for greater profitability and market penetration. The report uses multiple references from various academic journals and books to support its findings.

Running head: GLOBALIZATION AND OUTSOURCING
GLOBALIZATION AND OUTSOURCING
Name of the Student:
Name of the University
Author Note:

1GLOBALIZATION AND OUTSOURCING
This debate aims to answer the questions and demands of the shareholders to
the company’s CEO. The Toro is a public company that manufactures Irrigation supplies,
landscape & turf maintenance products. Its head quarter is in Bloomington, Minnesota,
U.S. the company is working in this felid since 1914 now facing problems due to the new
policies of the President.
Shareholders’ point of view:
The company is fast growing in the USA and in the other countries but the new reforms
of the US president has brought problems for its shareholders. Therefore, the company’s
independent directors need to review and report the process of their management in the
fields of law, finance and most importantly reputational risks for the company.
 The company website states that it collects taxes in all the states including Columbian
districts. Now the policies have emphasised on the physical presence for collection of
taxes.
 The withdrawal of the Consumer Financial Protection Bureau’s director that gives the
company being followed by the regulator added enticement to follow actions until the
President puts state’s own appointee.
 The company branches in south western Pennsylvania are suffering due to the new
policies. The job retaining employees are unsubscribing and foreseeing risk in the
future programs of the company.
 In the branches of Mexico, previously the North American Free Trade
Agreement enabled the manufacturers from the US migrated across Rio Grande but
Trump’s policy has prevented the negotiation of NAFTA (Potrafke 2013). This has
pulled down the free trade and has threatened for putting 35% tariff on the Mexican
goods. This has affected the company’s trade.

2GLOBALIZATION AND OUTSOURCING
 The policy has also affected the company’s trade in China. The Chinese import to the
USA has 45% tax increase.
 Britain is one of the biggest exporter of services which the company utilizes but in
Britain, the company’s growth also has slowed down which has affected in
company’s business across Europe (Stromquist and Monkman 2014).
 The business in India has suffered most. India and Us has an optimistic economic
relation and it aims to be strengthened by the policies and the new administration of
US. Since USA is the biggest market for the Indian export, the policies have affected
the business in Indian branches largely (Coşar, Guner and Tybout 2016). The annual
report of the Indian branch has revealed that trump’s Policies have promoted greater
restrictions on the free trade and increased tariffs on the goods imported to the USA.
The branch has reported net sales of Rs. 55,420.9 crores in the fiscal ended March 31,
2017.
 The company’s work force has also been suffered for the review of H-1B visa
programme and has raised concerns among the employees (Crane and Matten 2016).
This emphasises that the company’s policy can not alter the American workers but be
given to the highest paid and most skilled employees.
 The clients or the consumers has reduced as well as postponed their spending on the
products.
 The globalization component has made the rich more prosperous like the owners,
investors and the managers but the chief shareholders like employees of the company
are suffering.
 The branches of Africa and middle east have reported of social injustice, poor
working conditions (Dauth and Suedekum 2015). This includes labour wages and

3GLOBALIZATION AND OUTSOURCING
working conditions in the offices, as well as lack of apprehension for environment,
mismanagement of resources.
 In the offices of Indonesia and Myanmar, Workers are suffering from culture of fear
as these middle class workers re getting little leverage in this global game.
 It is difficult for the company to send resources on H1 B visa due to the new policy.
Therefore, it cannot hire cheap employees from other country (Stromquist and
Monkman 2014).
 Beside this, the promising and skilled professional cannot be recruited by the
company and they cannot get chance if they do not have seven years of working
experience.
From the management’s perspective:
As the company has shifted from the position where it was five years ago and achieved the
epitome of success but the new policies in the USA have affected the company in various
aspects. The shareholders are affected due to recent economic policy which has a great
impact on globalization and employee management of the company. New economic policies
have affected policies of the company in its international operation but has left some
optimistic aspect. These are-
 The trump effect has improved the USA’s lagging gross domestic production growth,
investment in infrastructure as well as tax reform, all of these have spurred economic
prosperity including improvement job opportunities as well as wage growth (Labonté
et al. 2015).
 Due to the economic policy change, the company has got the advantage of reduction
of barriers like tariffs, taxes, subsidies and other while operating internationally.

4GLOBALIZATION AND OUTSOURCING
 It has created scope for employing new workers, lowering the product’s prices to
provide the customers best deals in different nations thus increased market
penetration.
 For us, globalization has helped in economic growth and guiding the management to
open new branches of the company in new markets across the world.
 The globalization has enabled the company. The economic changes have started to be
beneficial for the common people as getting scope to purchase the products according
to their own currency rate.
 The scope of influx the information among the countries have increased therefore, the
company has been benefitted. It is now able to keep open communication among the
branches in different countries.
 The cultural intermingling among the employees have been increased. This has held
the company to maintain a healthy and good work culture in the office.
 Since the company shares financial interests, the corporation between the government
policies and company policies are trying to solve the ecological imbalance,
 The company has taken advantages of speedy travel, mass communication and quick
propagation of information with the help of internet and more importantly in trade.
 The globalization has helped the company in employing labour from different
countries and incorporated their skills in the company’s production.
 The policy has ensured that there will be no illegal immigration therefore, the
company can securely recruit employees.
 The new economic policy has stated that the corporate tax reformation would shift
profit taxation of the USA’s foreign subsidiaries to the territorial system. Under this
policy the subsidiaries of the USA corporation gains profit in low tax jurisdiction. For

5GLOBALIZATION AND OUTSOURCING
example, Ireland pays Irish corporate tax and is free for investing after the tax profits
in any countries (Ebenstein et al. 2013). This aspect will be helping our earning profit.
 The company is trying to bring back the funds back to the USA. This will help in
discouraging the tax repetition if the company pays full 35% tax on its profits and
does not need to pay additional tax.
 This territorial taxation system will encourage the company to return tax profits and
enhance farther growth and capital formation.
 The new policies of the territorial system have attracted the company for investing
more in abroad since the company can repatriate its profits gained in the foreign
countries. The company has taken measures to take full advantage of these new
system for encouraging different branch offices to invest more in the manufacturing
sector across that globe (Walter 2017).
 In India the company is taking advantage of its new taxation system that is GST or
Goods and Service tax. This will encourage the company for investing more as there
is only a single taxation system.
 We have recognised the problems of rising wages and tariffs in China. Therefore, it is
working to shift its production to the neighbouring countries of China which are
Myanmar, India and Indonesia (Goos, Manning and Salomons 2014). These countries
have shown reduction of tariffs as well as limitation of other impediments of imports
like machinery and other components. The labour of these developing countries also
have shown promises for improving infrastructure providing a strong growth in the
Asian countries (Rodrik 2017).
 To solve the problems regarding the new outsourcing model, the company does not
want to invest any advanced innovation for next few years. By this time the company

6GLOBALIZATION AND OUTSOURCING
will be able to come out of its comfort zone and innovate other options to solve
recruitment problem.
 For being a global company, the management has taken measures to hire the local
labour yet the leadership positions will always be occupied by the American people
(Görg and Görlich 2015). This will help the company to grow value added higher
collaborating work than only cheap resources.
 By employing local employees, the company will get more market penetration and
build way for acquisition or merging with local companies.
 The company wants to do the work more in the overseas countries and emphasise
profit from abroad as more work will led to gaining more profit. This will result in
lesser additional tax in the USA.
 More works done in overseas branches will be resulting in expertise which is much
need for this particular situation. This will also increase getting competitive
advantages than the different competitors both local and overseas.
 Increased professional expertise will assist the company in getting access to the
resources (Salager-Meyer 2014). This will have greater impact on manufacture as
well as supply of the products.
overall, I see these new policies as huge opportunities for the company, provided all the
directors, management and shareholders are able to get proper strategy and their proper
implementation. There are be short term undulations, but longer span they look positive.

7GLOBALIZATION AND OUTSOURCING
References
Coşar, A.K., Guner, N. and Tybout, J., 2016. Firm dynamics, job turnover, and wage
distributions in an open economy. The American Economic Review, 106(3), pp.625-663.
Crane, A. and Matten, D., 2016. Business ethics: Managing corporate citizenship and
sustainability in the age of globalization. Oxford University Press.
Dauth, W. and Suedekum, J., 2015. Globalization and local profiles of economic growth and
industrial change. Journal of Economic Geography, 16(5), pp.1007-1034.
Ebenstein, A., Harrison, A., McMillan, M. and Phillips, S., 2013. Why are american workers
getting poorer? estimating the impact of trade and offshoring using the cps.
Goos, M., Manning, A. and Salomons, A., 2014. Explaining job polarization: Routine-biased
technological change and offshoring. The American Economic Review, 104(8), pp.2509-2526.
Görg, H. and Görlich, D., 2015. Offshoring, wages and job security of temporary
workers. Review of World Economics, 151(3), pp.533-554.
Labonté, R., Cobbett, E., Orsini, M., Spitzer, D., Schrecker, T. and Ruckert, A., 2015.
Globalization and the health of Canadians:‘Having a job is the most important
thing’. Globalization and health, 11(1), p.19.
Potrafke, N., 2013. Globalization and labor market institutions: International empirical
evidence. Journal of Comparative Economics, 41(3), pp.829-842.
Rodrik, D., 2017. Populism and the Economics of Globalization (No. w23559). National
Bureau of Economic Research.

8GLOBALIZATION AND OUTSOURCING
Salager-Meyer, F., 2014. Writing and publishing in peripheral scholarly journals: How to
enhance the global influence of multilingual scholars?. Journal of English for Academic
Purposes, 13, pp.78-82.
Stromquist, N.P. and Monkman, K., 2014. Defining globalization and assessing its
implications for knowledge and education, revisited. Globalization and education:
Integration and contestation across cultures, 1.
Walter, S., 2017. Globalization and the demand-side of politics: How globalization shapes
labor market risk perceptions and policy preferences. Political Science Research and
Methods, 5(1), pp.55-80.