Offshore Cases and Google Problems
Question 1 "The Offshoring Debate in a Small Organization" by Benny Sisko
Many people imagine only enormous Fortune 500 companies as moving production and jobs overseas. However, in today's weakened economy, even smaller businesses are now opting for outsourcing more and more to keep costs low. Even smaller companies have to deal with complex issues that are normally thought to be dealt with by larger Fortune 500 companies. Yet, despite benefits, there are also high risks involved in outsourcing, risks that go far beyond the boundary of the single organization in questions.
There are a number of major benefits of outsourcing. Smaller companies can dabble in outsourcing, but often not so much in offshoring, which often requires higher initial costs despite the overall costs savings (Kumar & Salzer 2010). Essentially, outsourcing focuses on using lower labor costs to get production done in other countries where costs are not as high as the United States (Stuart 2011). Outsourcing is becoming increasingly less expensive as more and more companies are jumping on board and influencing foreign manufacturers to keep prices low. Some small businesses may have no choice but to outsource, while others do it to save costs and increase profit margins (All Business 2008). Here, the research states that "Outsourcing converts fixed costs into variable costs, releases capital for investment elsewhere in your business, and allows you to avoid large expenditures in the early stages of your business," (All Business 2008). It also increases overall efficiency of both production and the running of the organization as a whole.
However, there are costs associated with potentially furthering damage to the American economy. It is within this aspect that many believe small businesses and other organizations should exude a strong sense of social and corporate responsibility, thus keeping production local despite the potential for small decreases in profit margins. Therefore, the research suggests begs the question: "Do American corporations and other organizations, including non-profits, hospitals, and colleges have a social responsibility to help keep the overall U.S. economy strong even if it means pressure on profits?" (Sisko 2009). Many believe that the increasing trend for outsourcing is having a damaging impact on an already weakened American economy. In this regard, "Critics claim that outsourcing places the corporate interests of the company and its shareholders over the job security of domestic employees leading to a detrimental effect on the local economy," (Reddy 2008). Moreover, American creativity and ingenuity is often at stake when IT and other technical needs are outsourced. This could place technology in danger of pirating. With fewer restrictions on copywriting in many of the nations we now outsource to, like China, sensitive and innovative technologies can be at risk for illegal copying. Many of the nations that work with outsourcing have been slow to set up greater restrictions and regulations in regards to protecting copyright and other forms of creative capitol. Moreover, there is a loss of managerial control that could result in lesser quality control regulations (Bucki 2011). When managers are not present to have a strong impact in the production process, negative results can often follow. Essentially, without a more watchful eye from organizational representatives there in person, quality can suffer significantly. This can also lead to a lowering of consumer reputations, as customers begin to see the quality of certain brands and products decline.
Overall, it is clear that outsourcing, although with some benefits, does play more into creating more of a problem than a solution. In today's weakened economy, outsourcing is only a quick fix that tends to increase the level of erosion going in behind the scenes in the American economy. Therefore, smaller organizations can do their part by keeping projects and production on American soil.
Question 2 "Google's China Problem (and China's Google Problem)" by Clive Thompson
In an era of corrupt business deals, Google has long stood out as one company that refuses to sacrifice its ideals for profit. Google is trying to "bring information to the masses," without compromising its primary goals of putting the user first in order to provide them with free and accessible information (Thompson 2006). Thus, Google has earned a stellar reputation from its international consumer base. Yet, this is now being threatened...
Thus, Google had spent great effort and finances in developing software that was more compatible with character-based languages that are used in most Asian nations, like China. The company even brought in Kai-Fu Lee, who later became the head of operations in China who promoted Google's humanitarian and utilitarian efforts to bring the power of the internet to a much wider variety of individuals in China and abroad across the world; "Lee can sound almost evangelical when he talks about the liberating power of technology," (Thompson 2006). At first, this was a promising endeavor, with hopes of high profits and the thought of bringing technology and education to millions of Chinese.
Yet, there have been many problems along the way. In 2002, the government had blocked the site entirely. However, this was essentially an illegal action by the Chinese government "Because the company had no office at the time inside the country, the Chinese government had no legal authority over it -- no ability to demand that Google voluntarily withhold its search results from Chinese users," (Thompson 2006). The blockade only lasted two weeks. Yet, it made it clear to Google that the Chinese government was willing to block Google entirely if the company did not follow the Communist censorship guidelines.
Google had to readjust its strategies. In January 2006 Google began compromising some of its core principles to work within China under the strict watchful eye of the government. In order to do business in China, Google had to compromise some of its major goals; "To obey China's censorship laws, Google's representatives explained, the company had agreed to purge its search results of any Web sites disapproved of by the Chinese government," (Thompson 2006). For example, users in China cannot search for Tibet or Falun Gong, as well as the 1989 Tiananmen Square massacre. This came as a response to experience working with the strict Chinese government. Google China announced a new version of the site to be used within China
Issues of following the country's strict Communist censorship laws that are much stricter by a looser liberal American standard. Yet, the Chinese definition of what is to be censored is very vague, and the government often asks international search engines sites to interpret these loose restrictions autonomously. According to the research, "The Chinese system relies on a classic psychological truth: self-censorship is always far more comprehensive than formal censorship" (Thompson 2006). This often slows internet speeds down significantly, putting a burden on the user to have to deal with waiting for their searches to go through these complicated sets of firewalls and censorship devices.
In order to help strengthen their position, Google set up offices in China to increase the speed of the service, but this left them open to having to obey Chinese censorship laws.
Activists and Google enthusiasts in the United States were outraged. To them, Google had gone too far in compromising its own basic core principles. Even the value of the company was in jeopardy, with stocks falling after the initial announcement. It seemed like Google was abandoning its quest to provide free and untainted information to all. Here, the research suggests that "In the eyes of critics, Google is lying to itself about the desires of Chinese Internet users and collaborating with the Communist Party merely to secure a profitable market," (Thompson 2006).
Essentially, the market is large in China and there is a high profit potential there. However, if Google's operations in China impact its reputation around the rest of the world, more money will undoubtedly be lost abroad rather than in China alone. In fact, in 2009, Google China only accounted for $23.6 billion in international revenue, which essentially was a small fraction of what Google made abroad (Helft & Barboza 2010).
If the dispute continues to place Google at a disadvantage with its international stock holders, Google should stop its operations in China in order to save face with the rest of its international customers. The year 2009 saw government hackers get into the personal accounts of Chinese Gmail users (Helft & Barboza 2010). That was Google's last straw, and the company did eventually shut down operations in the country. In order to try and deal with this problem, Google should continue to reroute Chinese users to another site that is based in Hong Kong, and thus free of the overbearing Chinese censorship laws (Helft & Barboza 2010).
However, if Google wants to reopen its business lines in China, it must take a very safe approach. Thus, Google should then strictly enforce a policy not allowing users…
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