1. BA 447 Agenda –Film on Wal-Mart (PBS, Frontline)Film on Wal-Mart (PBS, Frontline) –Discuss chapters 5, 6, 7, 8 Insights from Wal-Mart film Major points of each chapter Are there conflicting information? How can we resolve these? –Summary of issues (my opinion)

2. Ch 5: America and Free Trade Focus of this chapter is whether outsourcing/off-shoring is good or bad for the country. His views are obvious Global view –US receives outsourced jobs from other countries, e.g. services –Outsourcing is a global phenomenon: lots of jobs from different countries looking for lower cost locations

3. In small groups... What are general conclusions made by author? Important assumptions? Your opinion.

4. Chapter 5 Benefits of offshoring to a US company? –Retain competitiveness in US and foreign markets –Flexibility –Differentiation –Long-term survival Benefits/harm to society? –Cheaper goods –Lost jobs –Foreign exchange

5. NIKE Example Categories oRunning oBasketball/Brand Jordan oTraining/Walking oSoccer oCleated/Golf oOutdoor oTennis oActive Life oKids Factories oKorea oTaiwan oChina oThailand oVietnam oIndonesia oItaly

6. Jakarta, Indonesia Bangkok, Thailand Guangzhou, China Fuzhou, Putien and Shanghai, China Taichung, Taiwan Pusan, ROK/China Ho Chi Minh, Vietnam Where We Manufacture Qingdao, China Italy

7. oCurrently contract approximately 37 Factories o5 Manufacturing Leadership Partners (T2, PC, FT, PA, CS) Represent Approx. 50% of NIKE Capacity oFootwear Demand in FY04 = 202 mil pr Avg. PO 16.8 million pr. oAvg. 265 new Footwear Projects per Season Our World - The Manufacturing Pie

8. oLN (made up of 4 sub-factories) oAverage Capacity 1.2 million pr/mo o25 Lines oModels per PO: 60 SKU oAverage Daily Output 43,000 prs per day oNumber of Employees 25,000 + A Factory

9. Offshoring: general comments Does it result in net loss of jobs? –Claim: 3.3m jobs lost to outsourcing, over several years –Jobs may also be created in the sense of company remaining competitive, other jobs becoming more practical –Jobs may also be lost because of productivity improvements, e.g. reengineering, rightsizing –Scale: there are 150 million jobs in US economy and it creates a couple million jobs a month

10. The beat goes on... India now outsources

11. Chapter 6 What is America’s source of competitive advantage? –Industrial/scientific base –Individual ambition, drive –Universities –Immigrants Are these advantages being eroded? Effect of foreign exchange regimes and trade practices are suggested in Wal-Mart film

12. In small groups... What are general conclusions made by author? Important assumptions? Your opinion.

13. Chapter 7 & 8 Quiet crisis? –The gap between the knowledge base relative to rest of the world is narrowing What is the challenge? –Consumers vis employers? –Aspirations and opportunities Easier to make a living here In developing countries, limited opportunities to make money, usually in manufacturing or exports

14. Offshoring, global competition, etc. As we discuss chapters 5, 6, 7, 8 Insights from Wal-Mart film Major points of each chapter Are there conflicting information? How can we resolve these? Also think of this as part of a process of understanding China Film on Wal-Mart (PBS, Frontline)

15. Comments on film Premise behind opening of US-China relationship – market for US goods. Reality is a bit more complex: –Disparity in incomes between the two countries –Profit opportunities for industries with few players – the retail industry is not an example of perfect competition –Chinese markets could be served by production from within China and neighboring countries, with participation of US companies –Foreign exchange regimes in both countries –Comparative advantage evolves over time Other comments?

16. In-class Friedman: countries like China will (eventually) consume US products if they have not already doing so. Wal-Mart film: the Clinton administration assumed that China would provide a market for US produced goods. However because the disparity of income, the US ended up to be a net importer of Chinese-made goods. Resolve

17. Suggested issues for further study There seems to be a focus on India and China as far as outsourcing is concerned. Are there others? What do they do? Political risk and doing business in these developing countries. Governance and corruption: are these countries truly democracies? what rules apply? how can we understand these? Role of multinationals (American, Taiwanese, Korean, Japanese, UK, etc.) and entrepreneurs like overseas Chinese.

18. Related Topics China in the WTO: –The WTO is a major agreement among trading partners to facilitate trade. –Product or raw material affected by tariff reduction discussions – positive or negative Managing expatriate managers: problems of managing managers from different countries Energy/Crude oil outlook and other raw materials; implications on trade and movement of products

19. Broader issues Changing geopolitical roles of the US and developing countries like China Increasing role of a country’s economy and its link to global business in political decisions Limits to growth in Chinese economy

20. Issues - continued Will a developing country like China be a net importer of US goods or will it always be a net exporter to the US? Show how other industries have actually been moving from low-wage and “friendly” location to another since the 1950s. What challenges, opportunities do large Chinese or Indian firms pose to US firms? (Pick one, for example, in automobiles.)