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1、An Analysis of Imposing Stiff Penalties on Companies to Offshore1. IntroductionIt has become a hot issue that whether the government should or should not protect American jobs by imposing stiff penalties on companies that transfer jobs offshore by outsourcing or manufacturing in a different country.
2、 There are both supporting and opposing opinions for a company to offshore from the company point of view as well as the effect on the country and economy point of view.People who support the policy believe that there are many risks including incomplete laws and regulations related to outsourcing jo
3、bs, talent drain, the limitation of informatization, cultural differences, intellectual property issues, free-running communication, enterprise responsibility off-shoring. Besides, the quality of foreign service provider and the loyalty of sourcing services is are uncertain, the costs may not be rea
4、sonable (Bardhan et al, 2003). For domestic enterprises, business outsourcing may decrease employee satisfaction and do harm to domestic employment. However, the author supports the view that the U.S government should not protect domestic jobs by imposing stiff penalties on companies that transfer j
5、obs offshore by outsourcing or manufacturing in a different country because the advantages is much more than the disadvantages. The author will adopts a series of updated statistics and famous cases to prove.2. Disadvantages of offshore business outsourcing2.1 Potential risks on domestic employmentM
6、any people attribute the weak domestic job market to job outsourcing. For example, in 2004, the Federal Labor Agency in the U.S announced that in the first quarter of 2004, 2.5% job opportunities lost due to business outsourcing, around two thirds job flow came from the manufacturing industry (Edwar
7、d and Mutz, 2013). Among the unemployed people, manufacturing workers occupied one fourth (Harrison et al, 2006). This is the first time that the ministry made assessmenton influence of outsourcing to domestic employment environment.Many American people worry that as white collar jobs are constantly
8、 transferred to developing countries including human resource business and IT business, the innovative ability of Americans will reduce. In the future only basic service positions which cannot be outsourced will be left in the U.S. In 2003, a Senator of the Democratic Party proposed that high-tech i
9、ndustry outsourcing would make the U.S. lose its world leading position in innovative ability (Harrison et al, 2006).The U.S. government has also realized the risks of job outsourcing offshore, so it has already passed several acts which limit the offshore outsourcing. For instance, in December 2003
10、 and January 2004, House of Representatives and the Senate respectively passed the acts that ban federal government institutions to outsource the government projects to foreign companies (Harrison et al, 2006). The congress and over 30 state councils had passed or proposed the acts regarding to limi
11、ting the offshore service outsourcing of American companies(Andrew and Kakabadse, 2005).2.2 Potential risks on domestic enterprisesFirstly, due to lack of enough supervision and regulation of business during outsourcing operation, enterprise responsibility will be moved outside, thus the quality mon
12、itoring and management difficulty will be increased. An example is the failure of Boeing 787 project. As Boeing gave suppliers too much power, and the broad outsourcing caused many mistakes and delays, the quality of these planes are not perfect. Since 2012, over 10 incidents happened in Boeing 787
13、planes including leaking oil, engine problem, battery burning(Stephen, 2013).Secondly, offshore job sourcing may increase the cost risks of the enterprises. During the process of calculating direct cost saving, deciders often neglect the trade cost including negotiating cost and regulating cost, whi
14、ch are connected with the shirking risks and opportunistic bargaining risks. In real conditions, suppliers who provide some certain services are limited, therefore many enterprise have to pay high costs on business outsourcing.Thirdly, offshore job sourcing may make the core competence of domestic e
15、nterprises run off. Quinn(2000) believes that for those service activities or business functions depend on intelligence, making an enterpriseperformance be better than businesses of rivals is the core business of the enterprise, as well as the enterprises core capability. Therefore, if enterprises o
16、utsource the core business to foreign suppliers, the core competency will lose, thus will threat the survival and sustainable development.Besides, service quality of foreign suppliers will also bring domestic enterprises strategic risks. As the word-of-mouth effect is largely determined by the product or service quality of the enterprises. The quality decides the customer satisfaction, cultivates customer loyalty, and creates customer demands. Therefore, when a domest
