AES Coursework 1: Offshore Manufacturing's Economic Impact Essay

This essay explores the multifaceted implications of offshore manufacturing, focusing on the relocation of production operations from developed to developing countries. It examines the economic benefits, such as cost reduction and access to new markets, alongside the drawbacks, including intellectual property theft and job displacement in the originating countries. The essay delves into the social and political impacts, such as the exploitation of labor in developing nations, cultural clashes, and the influence of offshore industries on local economies and political landscapes. It also addresses the rise of IT culture and its role in facilitating offshore operations, as well as the impact of globalization on the evolving international business opportunities. The paper concludes by analyzing the challenges and opportunities for companies engaged in offshore manufacturing and the need for international governance to address the issues that arise.

Running head: ENGLISH ESSAY
ENGLISH ESSAY
Name of the student
Name of the university
Author Note

Offshore manufacturing by the industries of the developed countries provide fruits other
than just cost cutting exercise and other economic benefits. It can become common in the future
world when agreements related to free trade skies will come in action. The paper highlights the
important points on the fact that the basic challenges companies when it comes to offshore
manufacturing in a developing nation, probably a second world or third world country, where the
respective company has to abide by the economic, social and political standards of the respective
country where it might be getting established.
Major hubs of offshore manufacturing are competing with each other to attract clients
from the developing world. Cost based competition has reached to its peak. Still, companies are
considering other facts related to outsourcing. A company tends to migrate its offices and
industry from its nation to a developing nation in order to intake the outsourcing assistance and
services from the respective developing countries. Nowadays, the international companies or
rather, the companies of the west are taking initiatives to build their offices in eastern countries
for off shore production which now, they think as a cost cutting exercise (Alkali et al. 2016).
Certain eastern countries have taken the offshore production practices as their main source of
economy for themselves. Such activities have been undertaken by the developing countries in
order to create value proposition for the companies of the developed countries which has led to
their economic development up to a certain extent (Gonzales et al 2004). Therefore, it can be
said that the companies that shift from developed to developing nations get a colossal benefit
when it comes to off shore and outsourcing assistance and aid. Business policies are formed and
formulated in domestic, international and trans-national basis in the developed, developing as
well as underdeveloped countries. Business houses and trade centers have always highlighted the

importance of liberalization of international trade, not only for profit purpose but for welfare
purpose as well as it leads to an overall development of the economy (Mankiw and Swagel
2006). Therefore, the governments of today encourage free trade which includes outsourcing.
Nevertheless, there are a plethora of disadvantages associated with the duplication of the
technology in the absence of proper copyright laws. There are certain cases where there are
colossal copyright issues. Sometimes the manufacturers working in the off-shore lands adopt the
technology from the outsourcing country and start a business of their own, which is a reality. In
the countries which becomes proficient in manufacturing products, tends to start producing
products for the local purposes (Ghelfi 2005). Such theft of intellectual property is a drawback of
outsourcing market of the third world countries. It has been estimated that by the year 2022 more
than hundred countries will start operating with free trade skies. The outsourcing employees have
been suggested not to use the copyrights to anything he or she creates outside his or her
workplace with the help of personal resources, that can lead to piracy issues. Globalization has
been one of the leading causes for the collaboration of different manufacturers and producers of
distinct products and services. However, such intellectual property rights and theft of intellectual
property should be dealt with by the international and trans-national governments so that the
global economy does not witness friction and obstacles in their operations.
With the rise in Off Shore manufacturing market, the local employment markets are
getting completely washed away or shut down. Such acts are leading to complete shutdown of
the local economy leading to regression and underdevelopment of the economy. With the
increase in migration of the companies to the developing nation, with the introduction of new
and premium quality products and services, the natives are ruthlessly avoiding their local and
national products. The call centers that are opened in the Asian countries continue to receive

racial discrimination on phones and in their operations where the American and European
customers insult them based on their race and color, leading to a subtle xenophobia (Ellram, Tate
and Petersen 2013). Nowadays, off shore industries have also entered into politics and socio-
political issues. The voters are asked for votes by the politicians promising them outsource
manufacturing industries (Mohiuddin and Su 2013). Such acts have led to disintegration of the
national industries with a plethora of problems such as political intervention and xenophobia,
where the companies who gain massive success in off shore manufacturing often tends to lose
their infrastructure in their native land.
With the IT culture at rise for the upheaval of the IT technology and industry, offshore
manufacturing operations are increasing in developing countries. Developing nations such as
India, China and Sri Lanka had developed an “IT culture” among them and has been the leading
nations for providing the information technology support to the multinational companies and
other companies in the developed countries (Lindberg, Voss and Blackmon 2013). The
information technology has provided a unique platform for business. The online buying and
selling platforms throughout the world (that are generally manufactured by the Asian countries)
has optimized, standardized and leveraged the demands and preferences of the customers, giving
rise to a new marketplace, the online marketplace, available to almost all the population with all
the services synergized together (Dolgui and Proth 2013). Information technology has power to
unite as well as divide the customers according to the market trends.
With the change in the population of the customers, the preference and invention of
quality of products and services are also changing. The goods that are manufactured by the local
companies are determining the price index and range of the products of the international
companies in the market of the developing nations (Kazmer 2014). Such events are also leading

to provision of marketing opportunities for such companies in the huge, ever changing and ever
evolving market of the developing nation which is directly and indirectly dependent upon the
income, socio-cultural and socio-economic trends of the population. With multiple versions and
designs of the products, the international markets are leveraging their capabilities by optimizing
the labor market. (Foster et al. 2013).
With globalization, the world markets are changing with a plethora of international
business opportunities. Off-shore manufacturing is emerging as another operation in the bigger
picture of the events that companies are undertaking. The respective paper is an introspection
and analysis of the companies heading to offshore manufacturing in developing countries, their
challenges and opportunities.

References:
Alkali, A.M., Abbott, P., Dasuki, S.I. and Quaye, A.K., 2016. Offshore business process
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Ellram, L.M., Tate, W.L. and Petersen, K.J., 2013. Offshoring and reshoring: an update on the
manufacturing location decision. Journal of Supply Chain Management, 49(2), pp.14-22.
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Ghelfi, D. (2005). The ‘Outsourcing Offshore’ Conundrum: An Intellectual Property Perspective.
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https://www.wipo.int/sme/en/documents/outsourcing_fulltext.html.
Gonzales, A., Dorwin, D., Gupta, D., Kalyan, K. and Schimler, S., 2004. Outsourcing: past,
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Lindberg, P., Voss, C.A. and Blackmon, K.L. eds., 2013. International manufacturing strategies:
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Mankiw, N.G. and Swagel, P., 2006. The politics and economics of offshore outsourcing.
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