Module 3

When I first read the question asking what offshoring was, I really had no idea. Was it maybe something to do with oil, I asked myself? After reading the assigned chapters, the answer became quite clear. As stated before, outsourcing is the contracting out of services or goods, that a lot of times is not central to the business, or that the business simply does not have the expertise in. An example is outsourcing payroll due to budgetary or expertise restraints. Offshoring is quite different, offshoring is when the entire operation of a company is physically moved to a new location to produce a product in the very same way. Obviously, the reason for moving is for cheaper cost to produce the product. This comes through cheaper labor, lower taxes, government subsidization, and lower health care cost. In Friedman's example, China has been the beneficiary of such practices. He states that China will soon be setting the global floor for lower wages and workplace conditions; this is as known as “the China price”. Products being produced at rock bottom prices in China have proven to be damaging to the US economy and it's job market. On the flip side, the benefit to consumers in the US has been significant. I, being a consumer, enjoy the reduced pricing of these goods, but they come at a cost, and that cost may ultimately be continued reduction of jobs in this country.

Supply-chaining is a method of collaboration among retailers, suppliers, and customers to keep a competitive edge. In Freidman's example, he uses the largest, most well known, retailer to deliver his point, that being Wal-Mart. Wal-Mart does not create a single product, but simply acts as a supply chain to deliver products at the most competitive price possible. The key is “global optimization”, which means Wal-Mart focuses on all aspects of delivering the product to market. For example, If I'm the product manager, you want to do business with the most reliable trucking company. If I'm the transportation manager, I'm looking for the lowest cost of transporting goods. Those two trucking companies might not necessarily be the same. One key aspect of Wal-Mart's success is its ability to coordinate distribution supply with hard to predict demand. Wal-Mart wants their customers to find what they need when they want it, but at the same time they don't want any particular product stacking up at one location, while having too few of the same product at another location. These same aspects could certainly be applied to other large retailers in the industry. Home Depot, Lowe's, and Best Buy are all likely to have been built on the same type of business model, and is probably a big reason they are so successful today.

How has Google affected business? Friedman describes it as “informing”. Informing is uploading, outsourcing, insourcing, supply-chaining, and offshoring all rolled into one. It can also be described as simply searching for knowledge. Google has essentially change the way consumers search for products. Seldom do we reach for the yellow pages to find the a local repair shop, or locate a restaurant in an unfamiliar area. What do we do? We get on the computer, or a mobile device, and simply Google it. Not only can consumers search for a particular business on demand, they can also research product. When you wanted to find in-depth information about a particular product before Google, there were essentially three methods; one being word of mouth, second was what the sales associate told you about the product (an we can certainly rely on them), and third was maybe a magazine like Consumer Reports. Now what do you do if you want specific information about a product, or you want to find what the best brand is? Well, you simply Google it, look at specifications, and see what others have had to say about the product. When buying a brand new car, it's not difficult to go out and find what a car dealership paid for the vehicle, and this becomes a huge bargaining chip. It was interesting to note that Friedman stated “Google hopes that in time, with a Palm Pilot or a cell phone, everyone everywhere will be able to carry around access to all the world's knowledge in their pockets”. Well, today as we read this assignment, we are at that point. Android devices and iPhones have changed the way we live, and information is portable like never before. I often chuckle anytime I see an expensive set of encyclopedias sitting on a bookshelf or laying around. I think to myself, why do you need that, the world now has Google and the Internet, where anything you could possibly want to know is instantly at your fingertips, and is current.