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OUTSOURCINGAUDIOSCRIPT

ListentoabusinessstudieslecturertalkingabouthistoryofoutsourcingintheUnitedStates.

Optionalexercise (Theanswersareatthebottomofthepage).

Listenandputthesepointsintheordertheyarementioned.

Subject Order
a)aircraftmanufacturers
b)electronicgoodscompanies
c)foreigncarmakers
d)sportsshoemanufacturers
e)UScarmakers

Intodaysprogramme,wellbetakingalookatthehistoryofoutsourcingintheUSA.Themanufacturingsector,
inparticular,hasbeenoutsourcingprocessessuccessfullyforseveraldecades.Inthepast,ofcourse,
companiesusedtheexpressionsubcontractingbutthishasbecomeknownasoutsourcingsincethe1980s.

ThenewBoeing787isaninterestingexampleofhowaircraftmanufacturersareoutsourcingproductionaround
theworld.Onlyabout10%oftheproductionofthe787isdoneintheUS.TherestiscarriedoutbyBoeings40
partnersintheprojectasfarapartasJapanandItaly,FranceandAustralia.

However,theaircraftcompanyisanewcomertooutsourcingonalargescale.Americancarmakershavebeen
outsourcingproductionformuchlonger.Inthelate1970s,UScarcompanieswerefacingadesperatefinancial
situationandconsequentlyneededtofindwaysofcuttingcostsandincreasingprofits.Inthemid1980s,in
responsetothecrisis,GeneralMotorstooktheunusualdecisionofclosing10factoriesintheUSandmoved
themtoMexico.Today,allthebigthreeUScarcompanies,Ford,Chrysler,andGeneralMotors,havemoved
substantialpartsoftheirproductionabroad.

Sincethe90s,foreigncarmakerssuchasToyota,Nissan,Hondaandotherinternationalmanufacturersarenow
doinggoodbusinessbymakingandsellingvehiclesintheStates.Sotodayan"American"carcould"foreign"
andaforeigncarcouldbeAmerican,suchistheironyoftheglobalizationofproduction.

Toturnnowtootherindustries,NikewasalsooneofthefirstUScompaniestosendproductiontoother
countries.Inthe1980s,thecompanyinitiallysentthemanufacturingofitssportsshoestoitssubcontractorsin
JapanandChina.Thisprocesshasbecomeknownasoffshoreoutsourcing.Itsarguedthatthisapproach
allowsNiketofocusmoreonwhatitdoesbest:brandbuilding,marketinganddesign,anditleavesthe
manufacturingtooffshorethirdparties.

OneconsequenceofoutsourcingNikedidnotanticipatewasthebadpublicityitreceivedinthe1990s,following
reportsofpoorworkingconditionsinitsoutsourcedIndonesianfactories.Thecompanysresponsehasbeento
monitoritssubcontractorscloselyindifferentcountriestoavoidanyfuturescandals.

DellComputersandApplearejusttwomanufacturersofconsumerelectronicgoodsthatgetsuppliersin
countriessuchasTaiwanandChinatomaketheirproducts.TodaymostUSmanufacturersoutsourcesomeor
alloftheirproducts.Infact,companiesthatareinthemanufacturinganddistributionsectorsallovertheworld
aremovingtowardstheNikemodel.Outsourcingmayhaveitscriticsanditsdisadvantagesbutthereisno
doubtthatitisheretostay.

Answers1a,2e,3c,4d,5b

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TheBritishCouncil,2007

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