High production costs in developed countries drive companies to seek cheaper opportunities to conduct business abroad. The most effective way to lower costs is to outsource business operations to countries with cheaper workforce, less strict regulations, and lower taxes. Nike is one of the most famous examples of a company that frequently outsources its activities to third world countries. The analysis of effects of outsourcing and subsequent stratification on local culture and the United States will showcase the US as the primary beneficiary both culturally and economically.
Impact on Local Culture
The first effect of outsourcing on local culture is the creation of jobs and the cultivation of a global mindset. The entrance of a large multinational company to a developing market is always a significant event. For example, the arrival of Nike in Vietnam has provided the economy with thousands of jobs and qualitative sports products (Dominguez, 2020). From the economic perspective, the presence of foreign companies is a positive influence, since it signifies the involvement of local cultures in the globalized world. However, the size and competitive advantage of large companies also means the inability of their smaller counterparts to survive. As a result, local companies lose customers, which has a detrimental impact on domestic industries and cultural perception of economic power of one’s country.
Impact on United States
The United States benefits from outsourcing activities because the lower costs of production in developing economies lead to the US obtaining goods and services at a cheaper price. At the same time, the image of American economic prowess is propagated through successes of US multinational companies, which further affirm its leadership in the globalized world. However, the outsourcing of jobs to foreign countries leads to the losses of jobs in American market. When Nike started producing shoes, most of them were made in the US. However, the search for lower production costs has resulted in Nike moving production from America to developing countries, including Vietnam (Donado, 2021). Qualified American workforce was faced with a lack of employment alternatives, since lower-paying jobs were overtaken by immigrants. As a result, while the US economy benefits from outsourcing, average Americans are at a disadvantage.
The Winner
Despite the fact that the resulting global stratification benefits and harms third world countries and the US, America is in the more advantageous position. American workforce is more qualified, more valued and has more work opportunities that their counterparts from developing countries. While Vietnamese may lose their national industries and domestic producers to American competition, they cannot compensate by moving to the US and working there. Meanwhile, educated and qualified Americans are in high demand around the world and can effortlessly find a job.
Conclusion
Altogether, it should be evident that global stratification and globalization in general primarily benefits the US. Nike exemplifies the competitive strength of American companies, which can enter developing markets and derive value from them. Outsourcing provides the US with cheaper goods and services and reaffirms its position as economic and cultural leader. Meanwhile, the negative impacts are more severe in developing countries that in the US, because its citizens have less flexibility and employment opportunities enabled by global stratification than Americans do. Ultimately, globalization benefits the US because its companies are bigger and stronger than local businesses in third world countries.
References
Dominguez, L. (2020). Nike vs. Adidas. International Relations Journal 2020, 39, 37-47. Web.
Donado, A. (2021). Why do they just do it? A theory of outsourcing and working conditions. Open Economies Review, 32(3), 559-586. Web.