Outsourcing: This is the practice of hiring an external party or another company to perform services or create goods that were traditionally performed in-house. It is often used to reduce costs by utilizing specialized firms that can produce components more efficiently.
Offshoring: Unlike outsourcing, offshoring specifically refers to moving a business process or manufacturing facility to another country. A company might offshore its own factory to take advantage of lower labor costs or more favorable tax regimes while maintaining ownership of the facility.
Deregulation: Governments often remove or simplify regulations and restrictions on business to encourage competition and attract FDI. By reducing 'red tape,' countries make it easier for foreign companies to enter their markets and stimulate economic activity.
| Concept | Focus | Primary Goal |
|---|---|---|
| Outsourcing | External Expertise | Efficiency and Specialization |
| Offshoring | Geographic Location | Lower Labor and Operating Costs |
| FDI | Physical Investment | Market Entry and Infrastructure Control |
Analyze the 'Shrinking World': When discussing globalisation, always link technology to the concept of 'time-space compression.' Explain how the time taken to travel or communicate has decreased, effectively making the world feel smaller and more connected.
Use Precise Terminology: Avoid vague terms like 'big companies' or 'sending work away.' Instead, use TNCs, Outsourcing, and Offshoring to demonstrate a high level of geographical and economic understanding.
Evaluate Winners and Losers: Exams often ask for the impacts of globalisation. Remember that while TNCs and consumers in HICs often benefit from lower prices, workers in LICs may face poor conditions, and domestic industries in HICs may decline due to competition.
