5 pages/≈1375 words
Business & Marketing
International trade and investment patterns: WTO and IMF (Essay Sample)
please following the questions to complete the essay. 1. What are the potential opportunities and costs for companies based in the UK in outsourcing their operations to countries in the enlarged European Union? Please give example to illustrate your answer. 2. Explain the impact that membership of the following may bring to the UK economy: (a) The World Trade Organisation (WTO) (b) The World Bank (c) The International Monetary Fund (IMF) 3. Explain the currency risks facing UK companies with relation to global exchange rates if they were A) major exporter and B) a major importer. source..
The Central and East European countries (CEECs) that have recently joined the European Union have continued to increasingly emerge on the map of various global companies as locations possible for outsourcing (Stare & Rubalcaba 2009). Technological and globalization processes have been identified as the dynamic changes that drive all sectors of the economy thus challenging the international division of labour. International outsourcing has been considered to be a very important part of the above processes therefore benefiting countries such as the United Kingdom (UK), firms and other wider areas. In essence, international outsourcing is basically the relocation of production from higher labour cost countries to those with lower labour costs. The most distinguishing factor of the international outsourcing of services is that it goes beyond the boundaries of the service sector thus affecting business processes regardless of the sector. In addition to that, it is not only relevant for low skilled activities but also for the higher-skilled activities. According to Wensum & Vickery (2005), the European Union is substantially lagging behind the United States in terms of international services, outsourcing a part from the United Kingdom. The reason behind this is because the European firms often tend to externalize their services to a less extent than other countries` firms. Other existing barriers such as market fragmentation due to the existing natural and artificial barriers such as lack of internal markets and regulations and language barriers in the non-English speaking countries hampers the capacity of these countries` ability to outsource internationally.
Various research communities have used a variety of perspectives that are theoretical in nature in investigating the effectiveness and efficiency of outsourcing decisions (Busi & McLover 2008). The existing theories such as the Resource-Based and the Transaction cost Economics view of the firm have been used to predict that under the conditions that are right, the outsourcing of various processes and activities often reduces cost. Transaction Economic costs theory argues that firms should always consider the cost-benefit tradeoff between processes that are internally executed and the external outsourcing of the same process as a principal determinant. Therefore financial performance metrics act as a good measure of getting the effectiveness of this decision. Taking an example of the United Kingdom, there have been various opportunities and cost benefits as a result of outsourcing their operations in the enlarged European Union as evidenced from the cleaner coal technologies that are being supplied to the Central and Eastern Europe markets which consists of countries such as Czech Republic, Bulgaria, Croatia and Macedonia just to mention a few. Its membership with the European Union has led to increase in trade as major projects are being advertised in the European Communities and the markets official journal thus opening up of free international competition. There has also the existence of significant manufacturing and engineering expertise based in Eastern Europe thus ma...
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