"Outsourcing"

Issue : Outsourcing

 

Pin-Point SUMMARY

 

Important issue : Do MNCs have a duty to make jobs in homeland?

 

 

Prop.

 

*MNCs make suboptimal decisions, actually reducing the long-term return to their shareholders.

 

By making better sourcing decisions and helping their country become more hospitable, MNCs can serve their shareholders while maintaining a stronger home-country presence.

 

 

1.    employees are considered human resources (simply an input to the supply/ value chain)

A.    by reducing the cost, you increase earnings. Earnings are what go into the stock valuation formulas (NPV) and assess performance (in terms of ROI, ROA).

B.    assets a corporation has no legal or financial mandate to keep work on shore.

2.    It is all about the money, nothing more, nothing less. there is no concern about the people who will lose their jobs, people who have invested their entire professional career at this one company

A.    The only concern (from the executives and other vested parties) is the reduced cost, increased earnings and higher stock price

B.    Government can not tell a company where it can or can not do business. Similarly, companies are not structured for the benefit of society.

                        i.         A company is a profit engine, nothing more.

 

 

Opp.

 

*MNC investment abroad is good, not bad, unless it is a result of distorting tax policies that lead to overinvestment abroad.

 

If a strong local presence is in the interest of the shareholders, it raises the inevitable question: why do the MNCs not do it anyway?

 

Multinational corporations (MNCs)¹ clearly have a responsibility to enhance shareholder return and obey relevant laws and regulations.

1.    Companies are created by the state.

•     They are granted important privileges by the state (limited liability, eternal life, etc).

•     They are granted these privileges because the state expects them to do something beneficial for the society that makes the grant.

•     They may well provide benefits to other societies, but their main purpose is to provide benefits to the societies (not to the shareholders, not to management, but to the societies) that create them."

•     Historically, the nature of American corporations has changed from having customised, societally focused charters in the early 1800s, to retaining an avowed societal obligation in the 1970s, to the condition today where we can seriously debate whether they have a duty to country.