Assignment 2: Outsourcing an MNC – Part 2Imagine that you are a senior business manager for the same U.S.-based MNC from Assignment 1 (attached ). Your management team has accepted your recommendation to outsource the IT, shipping, and warehousing departments to the country that you have previously recommended. Your management team now needs you to formulate an entry and implementation strategy in order to ensure the outsourcing strategy is executed effectively.In preparation for this assignment, use the Internet or Strayer Library to research the culture of and basic strategies for global integration into the selected country.Write a six (6) pages paper in which you:Describe the current culture of the outsourcing country. Illustrate your company’s ability to manage both multiculturalism and diversity in order to build multicultural team effectiveness.Analyze each of the four (4) basic strategies for global integration in terms of international strategy, multi-domestic strategy, global strategy and transnational strategy. Suggest the strategy that would be most fitting for your new venture. Justify your response.Prepare an environmental scanning analysis, and provide the management team with an accurate forecast related to different environmental factors that could affect the company within its proposed new operating location.Based on the environmental analysis, recommend both an ownership structure and organizational structure for operating the MNC within the new market. Defend your recommendation.Compose a political risk analysis that details both macro and micro risks and indigenization laws for the new country. Provide specific examples of said risks.Design an implementation strategy that considers the essential alliance partners. Based on the environmental and political risk analyses, determine the most significant challenges and opportunities to forming mutually beneficial relationships with the identified alliance partners. Justify your response.Use at least five (5) quality references. Note: Wikipedia and other Websites do not qualify as academic resources.Your assignment must follow these formatting requirements:Be typed, double spaced, using Times New Roman font (size 12), with one-inch margins on all sides; citations and references must follow APA or school-specific format. Check with your professor for any additional instructions.Include a cover page containing the title of the assignment, the student’s name, the professor’s name, the course title, and the date. The cover page and the reference page are not included in the required assignment page length.
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Running head: OUTSOURCING AN MNC
Assignment 1: Outsourcing an MNC-Part 1
There are numerous multinational corporations (MNC) in the television industry that
outsource parts of their business in the goal of reducing costs. Most companies have taken their
business abroad. For instance, Accutech Communications is an effective satellite television
organization that is in charge of distributing and installation of satellite systems that are used by
people in order to receive DirecTV or Dish TV signals. The company has been in business for
many years and has traded in the United States and many other countries across the globe.
Regardless of its prosperity, the organization is searching for ways to cut down expenses as a
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way of remaining competitive in the global satellite market. As a way of saving on costs in the
current challenging economy, the MNC has chosen to outsource its Information Technology (IT)
office, alongside transportation and warehousing, to a developing business sector with a specific
end goal; to lessen over the top expenses (Kobayashi-Hillary, 2005).
Accutech Communications furnishes its clients with the hardware expected to get to
diversion TV and also gives clients administration calls when required and a client
administration line that incorporates specialized backing for clients. With a specific end goal to
decrease transport and warehousing costs, Accutech Communications is searching for a
centralized, worldwide area where hardware can be sent over the globe at a lower cost and to
lower. Also in order to lowering IT expenses, the company is also searching for another
company to outsource Information Technology (IT) activities, for example, specialized bolster
administration line.
Benefits of Globalization
An organization that is keen on entering the worldwide business sector can discover
numerous advantages. The expense of outsourcing distinctive elements of the MNC can spare the
organization time and cash. While numerous American buyers disapproved of organizations
outsourcing before, this practice is turning out to be increasingly common and more accepted by
the customers. Outsourcing means allowing another organization to assume control over a
business capacity. The most critical advantage of outsourcing is the cost benefit where a
company may spend less on outsourcing than when such a service is done by the company itself.
Outsourcing business capacities, particularly to different nations, can spare Accutech
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Communications revenue when the outsourced company charges less to do the business than if
the organization did the job itself.
The other way outsourcing can make a company benefit is that it can make the
organization more productive particularly if the outsourced company has experience or mastery
in the outsourced work. Through outsourcing, the company doesn’t have to invest in
infrastructure needed to carry out the outsourced activities but else it’s the responsibility of the
outsourced company. Accutech Communications can wipe out the expense of preparing and
creating representatives and additionally complying with the strict work controls present in the
United States. There will also be period zone advantage which permits the organization to keep
on working when in the United States business hours have ended.
Countries Selected
The first country that been considered for outsourcing both Information Technology (IT)
division alongside transportation and warehousing is India. India is presently the most popular
nation for outsourcing bearing its appealing business infrastructure. The nation has a population
of more than 1.2 billion people and around 3.1 million graduates are added to the workforce
every year. Out of this population, majority of the people in the country use fluent English
language as a form of communication. The country has an educated and talented workforce. As
per the National Outsourcing Association (NOA), India is a favored nation for outsourcing for
the ability, value diminishment, and efficient infrastructure. The country is well developed,
peaceful and enterprising. It also has well established laws and regulations and an effective law
enforcement authority for apprehending law breakers. The executive, judicial and the legislative
arms of the government are also well established.
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The country also supports the IT business and gives MNC’s the speediest time to
advertise. Since India is 12 hours in front of the time zone, they can chose products to showcase
before rivals in the United States. This quicker turnaround time likewise helps the MNC in
saving money. When outsourcing in India, organizations receive improved efficiency,
productivity, and higher quality. This enables the MNC to focus much on the ore business.
Another nation that would be a decent place for American Accutech Communications to
outsource their information technology (IT), shipping, and warehousing services is China. China
is the second most well known nation for outsourcing. This nation has more than two billion
natives with a huge bit of the business sector being educated, talented, and dedicated. China
outsources for an expansive rate of MNC’s giving extensive scale fabricating gear and offices
that take into account the generation of products in this Asian nation (Kumar, 2006). Americans
organizations can create their products at a lower cost sparing them a lot of cash. The expense of
creating these products is brought down to the minimum due to the availability of cheap labor.
China provides everything to the MNC from assembling to transportation to logistics and also
other key part suppliers, which moderately ease work. Also large scale manufacturing means
producers can get the best cost and delivery in the best time. The typical cost for basic items in
China is low permitting the American organization to have their products fabricated less
expensive, representatives paid lower, and to sidestep the entangled work laws found in the
United States.
The country’s government system has a stable history though a communist. Although the
communist system is in direct conflict with China, this does not pose any threat of outsourcing to
the country. The country also has major technological advancement in place and therefore
bringing efficiency in terms of service delivery. In comparison of the two countries, they both
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offer almost the same outsourcing potential. However, there are ideological differences that
exist. For instance, while majority of Indians speak English, many Chinese don’t. China also has
invested heavily in technology and research thus wills offer better services. China is also
centrally located as compared with India.
Hofstede’s Four Original Dimensions of Culture
Hofstede’s four original dimensions of culture is a theory proposed by Professor Geert
Hofstede where he found there were four measurements to recognize one society from the other.
The four measurements incorporate power distance, individualism versus collectivism,
masculinity versus femininity, and uncertainty avoidance. The power distance (PDI) refers to the
distance between individuals in power and the readiness of the general population not in power
to accept to be controlled. There is equal distribution of power in the United States while in India
and China there are diverse force structures. China is a communist country where the state owns
everything and the people have little power. In the America however, government individuals
vote the general population in position of power into office; however individuals are isolated by
class. In India there is a parliament that incorporates a president that stays in office for five years.
The president and other government authorities are voted into office. India additionally has an
unmistakable station or class framework where in the past just certain classes in the public were
permitted to take positions of force. However the administration has built up laws that counteract
oppression the lower castes. Notwithstanding these directions, there are still cultural inequalities
in India especially people of lower castes, women and children.
Hofstede’s second measurement of society is individualism versus collectivism.
Individualism refers to the measurement in which people in the public eye are committed to deal
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with their close family versus the desire that the individual nurtures and is watched over by the
prompt and more distant family. In America individualism is prominent with a majority of
citizen focused on immediate family while in China the immediate and extended family work
together to ensure everyone is cared for but the good of society is also an important factor. In
China however, every citizen is bound to work for the well being of the country and not because
of their individual benefit.
In India there are both individualistic measurements and aggregate measurements. Since
India is a collective society because there is still the conviction that one ought to represent the
benefit of all of society, yet the individualistic characteristics are there because individuals deal
with their close families. The individualistic part of Indian culture is seen as a consequence of its
predominant religion and rationality of Hinduism (Hofstede’s, 2009). Hindus believe in a cycle
of life and death which is a personal and individual journey.
Hofstede’s next dimension of culture is masculinity. In India the nation would count more
on masculinity than the feminine nature. This means Indian culture is driven by rivalry,
accomplishment and accomplishment with the male being the provider and ladies are viewed as
less helpful. American would likewise score high on masculinity because of the drive for
competition, achievement and success but femininity would be equally high. In China
masculinity would be high in light of the fact that the nation is a male driven society. In China
ladies are not as esteemed as men. Uncertainty avoidance on the other hand means the degree to
which people want to avoid any uncertain situations. In India the nation has experienced
numerous progressions and disturbances that would make this score generally high. In America
the score for uncertainty avoidance would be generally low since individuals from the way of life
don’t feel undermined by unknown events. In China the score for the measurement would
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likewise be low. While china is a communist country, they have a steady government and
economy which reduces this state of anxiety.
Evaluation and Recommendation
The two countries present great opportunities for any MNC which is looking for
countries to outsource. In this case, Accutech Communications can choose any of the country to
outsource it Information technology services, or that of shipping and warehousing activities.
However, India presents a better deal than China due to the close ideologies and culture
especially in communication. Though China may be a little bit cheaper, India offers more quality
services and adheres to the procedures offered by the company. Also due to time difference
between America and India, it means that India may provide more selling opportunities due to
time difference. The Indian religion also makes the Indians be trustworthy, and reliable in any
business dealings. Moreover, the aspects of individualism also make people more industrious as
their hard work determines their lifestyle and economic power. This means therefore means that
it is better to outsource services in India than in China.
References
Hofstede’s, G. (2009). India Dimensions of culture. Retrieved February 2, 2015 from
http://geert-hofstede.com/india.html
Kobayashi-Hillary, M. (2005). Outsourcing to India: The Offshore Advantage. (Springer ebooks.) Berlin, Heidelberg: Springer-Verlag Berlin · Heidelberg.
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Kumar, G. S. (2006). Outsourcing laboratory based services: Inventing a new future for R & D
and testing. New Delhi: Tata McGraw-Hill Pub. Co.
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