Cross-Cultural Perspective: The Cultural and Ethical Issue of Globalization Many American companies that are outsourcing jobs to other countries create a problem in the economy of the Unites States and also creates a cultural effect in a global scale. To this day, The United States had lost millions of manufacturing jobs compared to two decades ago (Heffner, 2012). Americans can no longer compete to international manufacturers, which put the United States economy in doom.
There are many factors involved as to why American companies’ decides to do its manufacturing business outside of the United States. The most obvious reason is the cost of labor. International wages from third world countries cost way less than wages in the United States. For example, manufacturers in China get paid 33 cents an hour (Heffner, 2012). As a company, the cost of doing business outside of the Unites States is way cheaper than hiring workers in the United States, which would cost more than 20 folds.
In addition to wages, outsourcing jobs outside of the United States would also save companies cost for payroll taxes, benefits, and dealing with unions that are common in The United States. Moreover, doing business outside the United States increases a company’s capital because the cost of labor wages and manufacturing are less, yet the sales remain the same. The cost of real estate and plant cost is less than in the United States. Companies don’t have to worry about maintenance, property taxes, insurance, and cost for operations (Samuels, 2013).
Although there are standards created by the International Labor Organizations when it comes to doing business in other countries, there are still fewer regulations set forth in other countries compared to regulations that are mandatory in doing business in the United States (Samuels, 2013). Companies will need to follow set rules and regulations in the United States, which means more paperwork, more taxes, worrying about workers rights, providing benefits to workers, paid time offs, vacations, etc.
More regulations means more cost and companies will definitely outsource jobs outside of the United States if it means saving them millions of dollars in cost. Another effects of outsourcing jobs outside of the United States are the cultural changes that are accompanied by doing business in other countries. It is no doubt that economy of third world countries are growing due to international trade that most foreign company brings in. But global business can change the way people live in a country. The ways of living are affected and so as the native language of the country.
For example, The Philippines is considered one of the poorest countries in the world (The Poorest Countries in the World, 2013) and just a decade ago there were very few foreign countries that do businesses in the Philippines. Now, there are so many American companies like, IBM, Cisco, TeleTech, and Sprint that outsourced jobs to the Philippines. Again, it is good for the growing economy of the Philippines, but at the same time it creates a culture shock in the country. It is now mandatory to take English courses in the Philippines, and most people are now speaking English language.
Long-term effect could be a decline in the native cultures in the Philippines. One example of ethical problems that arises in global business can be seen in the case of the company Nike. More than a decade ago Nike was involved in a scandal that the company allegedly hired children in its workforce in Pakistan, but later it was concluded that it was indeed the truth. Children made the soccer balls that were manufactured in Pakistan by Nike Corporation. It was known that the children were paid 66 cents to spend all day stitching the soccer balls.
Although there were laws in Pakistan about child labor, it was not fully enforced in the country (Azam, 1999). The problem was that records of birth were nearly impossible to obtain in countries like Pakistan. Therefore, there are now records keeping of how old the workers were. The country is not like the United States was every born child is listed in a database. Nike Corporation admitted the allegations and apologized for employing workers that in the United States would be considered under aged workers (Boggan, 2001) .
The company pledged not to hire under aged workers, “Nike said it would raise the minimum age for hiring workers at shoe factories to 18 and the minimum age for hiring workers at other plants to 16, in countries where it is common for 14-year-olds to hold such jobs. It will not require the dismissal of underage workers already in place” (Cushman, 1998). The company also “pledging to allow outsiders from labor and human rights groups to join the independent auditors who inspect the factories in Asia, nterviewing workers and assessing working conditions” (Cushman, 1998). Companies like Nike needs to consider the ethical responsibilities that is part of doing business in other countries. Not just because the country, like Pakistan, has laws that were not enforced properly in the country, it does not give any company the right to stray from the ethical responsibilities of companies to their employees. They should treat workers of other countries the same way that they would do if they were to employ workers in the United States.
When companies do business with other countries they must be aware of the cultural and ethical perspective that can arise in doing such businesses. There are many factors that influence the companies’ decision on outsourcing jobs, but the social responsibility of a company must be equal across the board. It doesn’t mean that wages, benefits, or other factors will be the same for worker in the United States and in other countries, but the level of commitment to workers, respect, and treatment must be adherence to the ethical responsibilities of companies to their worker. References Azam, F. (1999, June). NIKE: Nike Shoes and Child Labor in Pakistan. Retrieved from http://www1. american. edu/ted/nike. htm Boggan, S. (2001, October 20). ‘We Blew It’ Nike Admits to Mistakes Over Child Labor. Retrieved from http://www. commondreams. org/headlines01/1020-01. htm Cushman, J. (1998, May 13). INTERNATIONAL BUSINESS; Nike Pledges to End Child Labor And Apply U. S. Rules Abroad. Retrieved from http://www. nytimes. om/1998/05/13/business/international-business-nike-pledges-to-end-child-labor-and-apply-us-rules-abroad. html Heffner, T. (2012, May 15). American Manufacturing Can No Longer Compete. Retrieved from httphttp://economyincrisis. org/content/american-manufacturing-can-no-longer-compete Samuels, D. (2013). Pros & Cons of Outsourcing Manufacturing Jobs. Retrieved from http://smallbusiness. chron. com/pros-amp-cons-outsourcing-manufacturing-jobs-40320. html The Poorest Countries in the World. (2013). Retrieved from
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