Who wins / Who Loses Through Globalization

Question: Discuss Who wins / Who loses through Globalization. For example, there are probably at least 4 Stakeholders: Con Edison customers, Con Edison stockholders, Indian workers depicted in the factory, foundry workers in the United States. Some people suggest this is how England and the United States became economic powerhouses (and newcomer China), that is, on the backs of prior generations. Do you think there is a role for laws and legislation to prevent or minimize working conditions depicted above? Answer: Globalisation has become so pervasive in the last two decades that it has transformed the economic activities in both the developed and the developing world. The seemingly low value manufacturing activities are increasingly being outsourced to developing countries particularly India and China due to the low labour cost and lax labour norms. However, this has profound implications for a plethora of stakeholders situated both in the developed and the developing world. There is a point to review such outsourcing in wake of the likely future implications of these activities for the various stakeholders involved (Iqbal and Dad, 2013). In wake of this background, the given case of outsourcing of manhole covers manufacturing needs to be analysed. In the given case, there are primarily the following stakeholders that may be identified. Con Edison Customers Con Edison Stockholders Indian workers working in the foundry factory Owners of foundry factory in India Foundry workers in the US Con Edison Customers Since the manufacturing of manhole covers is outsourced to India, the customers are able to get the product with the requisite specifications at the cheapest cost. At one level this is advantageous for the customers since the price is minimised but at the same time it is disturbing to see that these manufactured in such inhuman conditions. As a result, there may be tendency on the part of customers not to accept such products and even be willing to pay a token incremental amount to ensure that worker safety norms are adhered. Con Edison Stockholders In the short term, Con Edison stockholders must be pleased since the company is able to minimise the costs by sourcing quality manholes from India. As a result, they are able to maximise the profits of the companies. However, in the modern business world underlying ethics and CSR (Corporate Social Responsibility) play a critical role for stockholders as it ensures sustainability of the business. However, such practices as have been shown in the pictures leave the impression that the company is concerned only about lowest costs even at the expense of human life and dignity. Clearly, such practices do not auger well for the company in the long-term since the customers may start looking at alternative options and hence would be detrimental to the interest of the stockholders. Indian workers working in the foundry factory For the Indian workers it is beneficial to an extent since they are able to get an employment and thus able to feed their family. This is critical especially in a country like India where social security arrangements are typically lacking and thus people have to depend on their own earnings for a plethora of basic necessities. However, the downside is with regards to worker safety and the hostile work conditions in which these workers have to work and the long term implications of these on the worker health that needs to be ascertained. However, despite these hostile conditions the workers rarely compliant since they are aware that they would be readily replaced by other workers who need employment. Owners of foundry factory in India The owners of foundry factory in India are benefited by the contracts they obtain from Con Edison. This is primarily because these are able to earn a hefty profit because of the low wages given to the workers. Also, they provide employment to the otherwise unemployed people and thus enable livelihood for these. Hence, it is a win-win situation for the foundry factory owner in India. Foundry workers in the US- These are negatively impacted by the sourcing of the contracts to cheap destinations such as India. These contracts do not consider the difference in the provisions for the workers security and the incremental cost. Further, as a result of unemployment amongst the foundry workers, future supply of foundry workers would be adversely impacted. Additionally, the US government needs to provide greater support to those unemployed because of the outsourcing. It can be concluded from the above discussion that globalisation does not result in win-win situation for all stakeholders. Further, for the key stakeholders, it is at times a mix of both with potential gains in the short term but these are overturned in the long term. As, a result it is imperative that the various stakeholders including the government should play a more constructive role so as to ensure that not only that gains overweigh the cost but also that these should be sustainable in the long run. It is imperative that the outsourcing contracts should contain clauses about worker safety and other working conditions similar to that in the west so that these operations are not carried out as sweat shops (Iqbal and Dad, 2013). Additionally, the governments also need to play a more proactive role with regards to regulation of industries especially those in the organised sector since these do not follow the requisite safety norms. A collective effort from the government and the co mpanies that outsource these contracts is required in order to improve the working situation of the workers (Sardana, 2012). Further, globalisation can result in a success story provided all the stakeholders are responsible. The wage levels in developing nations are comparatively very low as compared to the developed nations. Thus, even after discounting for the poor regulatory environment, there are gains to be made for outsourcing companies in the West as a significant differential would still be maintained. With regards to laws and regulations, more than the introduction of new laws, it is required that the current laws should be applied with more strictness and should be applied to unorganised sector may be in a diluted form as they form a significant portion of the overall manufacturing capabilities in the developing world (Sardana, 2012). References Iqbal, Z. and Dad, A.M. (2013), Outsourcing: A Review of Trends, Winners Losers and Future Directions, International Journal of Business and Social Science, 4(8), 91-107 Sardana, MMK (2012), HEALTH AND SAFETY AT WORKPLACES IN INDIA, Retrieved December 15, 2015 https://isidev.nic.in/pdf/DN1204.pdf