MGTA05H3 Lecture Notes - Lecture 6: Outsourcing
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MGTA05H3 Full Course Notes
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Document Summary
Financial markets are much larger and more integrated. Financial markets are more complex and volatile. Financial markets do not follow product markets, but have their own logic. Governments bail out failing businesses to save local jobs. Worldwide coordination, with production in lower cost jurisdictions. Worldwide spread of products, and especially of brands, makes local cultures more cosmopolitan. But strong resistance to this trend, with militant local cultures. Need for new ways to profit given the economic situation in the developed world. Expansion of wages and benefits eroded profits. Economy contracted and tax base shrank, making government programs difficult to sustain. Cannot raise taxes in period of falling profits. Spending more was approved way of stimulating economy. But spending merely led to more inflation. Oil shocks of 1974 and 1979 increased global economic ties and limited local power. Corporations needed a way to grow in a stagnant economy.
