General Motors have been operating by subcontracting third parties over the last twenty years, thus increasing its viability in the market. Companies decide to take a multinational operation approach to gain competitive advantage in the local and the global market. General motors focus on the offshore and outsourcing approach primarily on the third world countries, thus increasing the company’s viability in the market for its cars. General Motors outsourcing approach has both positive and adverse effects on the company and local culture.
Outsourcing has created positive impacts on the local culture of the business. For example, outsourcing, especially from the third world countries, has created a chance for the company to acquire cheap, thus increasing its production capability. This information indicates that General Motors enjoys the benefits of receiving cheap labor that create an opportunity for developing a competitive advantage in the market (White & James, 2017). Pooling employee from different parts of the world has created new ideas in the business, thus leading to restructuring of the organizational culture. For example, some of the costs initially classified as long term have been changed to short term, thus minimizing the costs of operation. Though outsourcing has created a positive change in the organizational culture, it is evident that some of the changes have negative impacts. For instance, the company has focused on adopting IT programs to increase efficiency in its operation (Hirschheim, 2015). General Motors Corporation is not an IT company and focuses on IT program makes it challenging for the company to maximum benefits from its operations. Though outsourcing has created a market for the cars that have failed in the local market, it is evident that the company has lost its demand in the local market. This information shows that the company has focused on producing cars that serve the interests of global consumers forgetting their local customers.
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Global stratification has caused both positive and negative impacts in the United States. For example, globalization and outsourcing by General Motors Company have created an opportunity for increasing sales volume in the company. Outsourcing creates a chance for drawing cheap labour from third world countries, thus increasing the possibility of succeeding in the market. However, outsourcing creates a negative impact on the United States. For instance, the decision by General Motors Company to import vehicles from low wage countries targets US plants and workers (Bilan et al., 2017). Employees from less developed nations provide cheap, thus creating an opportunity for the company to operate by not hiring works from the United States. In effect, there will be an increase in the level of unemployment in the United States as they are replaced by cheap labour from third world countries. The United States also faces adverse effects associated with increased closure of several plants in the country, thus minimizing the chances for receiving revenue through taxation.
Based on the analysis, it is evident that General Motors appears to be the winner in the global approach. The company has increased an opportunity for securing cheap labor from overseas, thus maximizing its level of production at low costs. As a result, General Motors is in a position to increase the level of revenue. Low costs increase a chance for increasing competitive advantage through pricing. General Motors also has an opportunity for creating new markets for its cars, especially for vehicles that have failed to succeed in the US market. Though there may be closing off some of the company’s plants, it is accompanied by opening other plants in third world countries.
References
Bilan, Y., Nitsenko, V., Ushkarenko, I., Chmut, A., & Sharapa, O. (2017). Outsourcing in international economic relations. Montenegrin Journal of Economics, 13(3), 175-185.
Hirschheim, R. (2015). Information Systems Outsourcing. Wiley Encyclopedia of Management, 1-4.
White, R., & James, B. (2017). The outsourcing manual. Routledge.
