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The inspiration of outsourcing has been a round for years but there are many challenges that still remain. Competitive pressures, increasingly rapid pace of technology, dwindling product life cycles and stockholder concerns have forced more companies to streamline operations globally. On the contrary, union workers struggle to keep pace with a changing mark place that strongly supports outsourcing. This phenomenon has led to many issues within manufacturing for United States (US) organizations including but not limited to massive job loss. (Neblett 2004)
While many manufacturers have reduced the quantity of jobs, many are also turning to unconventional measures as a means to preserve as many jobs as possible. Some organizations are reducing the benefits of worker while others are delaying salary increases and decreasing hours. When business does recover these moves can lead to a substantial pay off. Behlen Manufacturing Co., a metal fabricator, avoided massive downsizing by reducing factory worker’s hours and solicited salaried employees to take a 10% pay cut, The Wall Street Journal recently reported. When orders increased late last year, the firm was able to restore hours and wage levels, and moved to meet the demand with its experienced workforce undamaged. When the economy does revitalize, companies that have eliminated a generous quantities of laborers may be unable to respond quickly enough to meet the over-whelming demand, consequently leading to lost sales and decreased market share. If possible, the job eliminations should be avoided; however the layoff is not the only area of concern. As noted by John Di Frances, a Wales, WI-based management consultant, substantial layoffs carry concealed costs that are never fully known. Declining morale and disrupted customer relations among those costs frustrate the remaining employees who often can not absorb the responsibilities of their departed coworkers. The result is that workers create short cuts wherever possible contributing to more quality complaints and product robustness concerns (Iversen 2005).
Through beliefs and values a code of ethics forms the building blocks of organizational behavior with an organization.
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Throughout many centuries, there have been on-going differences amongst corporate management visions versus the labor movement. The business union view has been almost continuously dominant. The Gompers-Meany vision has been solely organized on the basis of skill and craft. In this vision unions focus primarily on the immediate economic needs of their members during production. The selected leaders act as agents with employers for members, whose primary role is to provide resources and to support an agenda determined by those leaders. These unions accept the political choices offered by the major parties and search to secure the best deal possible. The unions strive to increase labor's share of the wealth but accept that capital is entitled to a greater controlling share. Their leaders believe there must be a partnership between labor and capital from which both can succeed. Opposing this vision has been social-movement unionism advocating a labor movement that is inclusive, in which unions act as an agency of worker empowerment based on democratic member participation with leaders who are accountable to members.
Stakeholders are identified as shareholders, employees, customers, suppliers, lenders, and society. The notion of corporate stakeholders has become greatly accepted. Others have investigated the appropriateness of stakeholder theory. In that research stream, the use of stakeholder theory to develop corporate-level strategy is common. Within organizations, the role of stakeholder extends beyond the strategy but into the establishment of performance goals. The performance goals set by a manager are influenced by the pressures exerted by the organization's stakeholders. This suggests that a process might exist within organizations whereby stakeholder interests are recognized and included as key components in the establishment and development of performance goals.
There has been considerable interest in recent years in stakeholder theory at the corporate level in organizations. The notion that stakeholder interests are key strategic assets of an organization could lead to the establishment of corporate performance goals. Using this approach at the manufacturing level would allow for both the addition of the interests of the internal stakeholders at a higher organizational level (vertical flow-down) and the interests of other functions such as those from marketing (horizontal cross-flow) and any other entities that have vested interests in manufacturing.
The United States lifestyle has created an indirect affect on the manufacturing industry when it comes to wages. One important aspect to foreign competition is price, which has a major impact on wages. Aligning company's resources with foreign suppliers of less quality driven products could complement the companies bottom-line, which could translate a competitive edge. Outsourcing to only foreign suppliers may not be completely necessary, but outsourcing to local suppliers could be the difference to profit versus loss. Outsourcing to a local company that is already set to manufacture a specific product may save capital from investing in a completely new directive.
A skilled worker base directly effects productivity and capital equipment downtime. Many industry leaders and manufacturing organizations are making strides to proactively focus on training internally and externally. Capital equipment suppliers are making it standard on purchases to train operators for the machine and train people to program. The expense of communication and time to communicate has becomes extremely inexpensive. Computer aided drafting (CAD) designers are creating software to create the most efficient machining practices possible, along with shop floor integration for cutting down lead times. (Peterson 2005)
Despite the uncertainty associated with recent estimates of job losses, most observers agree that the trend toward off-shoring sector of production and jobs is likely to continue. A variety of economic, technological, and regulatory factors are driving this shift in production and jobs. Lower production costs in foreign countries are a major cause of off-shoring. Although the costs of land and other resources may be cheaper abroad, the main difference between the U.S. and developing countries is labor costs. In the U.S. the cost of benefits and health insurance is expected to be increasingly higher. The true difference in labor costs per unit of output may not be as large as these wage figures suggest, however, U.S. workers have high average levels of productivity. High average productivity by U.S. workers reflects our advanced technology and large amounts of capital per worker. The cost savings from off-shoring also might be reduced if the firm incurs higher transportation and telecommunication costs or management spends more time on service data security. (Garner 2005)
Conclusively, outsourcing is defined as hiring a third party to perform a task that would typically be performed internally. Outsourcing has become directly affiliated to the term "cost effective”. Visions of low labor costs, less liability, transfer of responsibility, a continuous workforce, and flawless electronic communications have created increased interest in outsourcing, mainly outside the U.S. From legal research and document organization to customer service have been given to business seekers in foreign countries in an effort to demonstrate the current shift in the economy. Lost in the rush to outsource, however, has been a reasonable assessment of the potential liabilities associated with this activity (Cinelli 2006).
With this activity there are many stakeholders at risk, including the organization that prompted the outsourcing activities. There vested interest lie on immediate goals while not foreseeing the ultimate impact of union workers and controlled labor. This can lead to a decrease in market share and losing the true interest of stock holders after businesses volume increases to a full-filling capacities.
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