IST 1100 Module 3

I had always heard the terms outsourcing and offshoring and assumed they were in essence the same thing. It was interesting and informative to learn how the two differ and ways in which companies use both.

Outsourcing is when a company takes a function of their business operation they are doing in house, whether it be marketing, advertising, call centers, research, it could be an number of things, and they have another company do it for them. The process that is outsourced is then reintegrated back into the overall process. This is why there are advertising companies in the world that just do advertising for other companies, they are good at it and it is more efficient for other companies to just let them do it. The same goes for the example of 24/7 in India and all of the customer service they do for American companies. It is cheaper for the work to be done in India by 24/7 than to be done on American soil by the company themselves.

Offshoring is a completely different type of business strategy. With outsourcing someone else is doing the work for you, offshoring is doing the work yourself but in another place. Taxes, labor laws, and minimum wage are just a few things that vary from country to country. Things in China are drastically different than they are in the US. A company might decide they want to take their production factory and move the entire process to China, they could hire Chinese workers for a fraction of the cost that they would pay American workers and get tax breaks they wouldn’t get here.

Another thing that was explained in The World Is Flat that I wasn’t clear on was what a supply chain is exactly. I used to just think of Wal-mart as a supply chain, as in they are a chain of stores and they supply things to the public. It is a lot more than that and it is actually quite complicated. A supply chain is the entire process that gets products from development and manufacturing into a consumers hands and all of the steps in between. With the digital age and high speed internet, supply chaining has become even more efficient and useful by big store chains like Wal-Mart. Wal-Mart is a beast in the supply chain world, It utilizes it like no other. There is a sophisticated tracking process that alerts a manufacturer or a distributor as soon as an item is sold in a store and preparations are made to ship another so that that item will be available as often as possible without the need of overstocking. Think of how much overstock and wasted inventory there would be if an effective tracking system tapped into the supply chain wasn’t in place for a company like Wal-Mart. When all of the moving parts of manufacturing, distribution, and retail are weaved together it makes for a much more efficient sales process and supply chain.

Google has become one of the biggest names in the digital world. This book points out the effect that google has had on the world and more specifically in the business world and it was written several years ago. Now Google has their android operating system on over a 1.5 billion devices worldwide, each integrated with google search that has pushed google to be even bigger than they were. Google has put the world at our fingertips. So much information is now available and it is available so readily and quickly. If businesses can maintain an online presence and do what it takes to show up at the top of search results, it can make a huge difference in the type of business they can drive. Another thing Google does that affects businesses is their ability to track individuals buying and click habits while they are online and advertise to them accordingly. Now people are getting ads for things that Google knows they will be interested in, thus being able to focus their advertising efforts and thereby helping companies that do business with Google be even more efficient.