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Part Three Cases
Law firms that outsource legal services to foreign countries benefit economically from the legal fees that clients pay. Outsourcing also results in the global growth and expansion of the concerned firms. However, these international operations expose these companies to potential costs and risks. They incur lower costs, although, they are exposed to stiffer competition from companies that do not outsource. The challenge of competition becomes real when the outsourced firm does not attain the desired results.
The most amenable legal services to outsourcing are those that are routine in nature. Some groups gain from outsourcing of legal services whereas others lose. The client group gains from outsourcing of legal services by paying lower costs whereas local law firms lose as legal costs go down in the process. A reduction in the legal costs has positive implication to customers (Hill, 2015, p.288).
On balance, outsourcing is a good thing. This is because the benefits outweigh the risks that firms are exposed to in the course of their operation engaging in it. Some of the risks are loss of suits due to the use of less experienced attorneys by the defendant and loss of clients by law firms among other threats.
Outsourcing of services in this case favored India as opposed to other countries because Indian attorneys demand lower hourly rates when compared to their counterparts in other countries such as China. The production of a steady flow of lawyers with training in common law by Indian universities, who are speaking English fluently and are well-educated coupled with the higher time difference between India and the US explain why the former is favored. The determining factors concerning where to outsource from include the availability of required workforce and adequate difference in timing that enhances continuity.
The Global Financial Crisis and Protectionism
The period beginning in 1986 and ending in 2007 witnessed a reduction in barriers in international trade (Kaur, 2012). Despite the reductions in the obstacles, protectionism mechanisms have also been employed by governments in an attempt to protect local industries. Arguments about calls for protectionism are greater during sharp economic contractions than during boom periods and are based on the need to protect jobs. However, the 2008-2009 contractions experienced minimal increase in protectionism due to the fear of causing another great depression like the one that had been experienced in the 1930s.
Many developed nations subsidized the operations of their automobile producers during the period of 2008-2009. This distorted international trade by giving unfair advantage to the subsidized companies over the unsubsidized ones. This was reasonable as it ensured that more products, of subsidized companies, were sold thereby protecting local jobs. Renewed economic slowdown that would trigger a wave of protectionist actions would, if not checked, lead to economic depression. Protectionist measures in times of economic slowdown would not protect jobs. They, in fact, result in the worsening of the situation (Hill, 2015, p.289).
The sharp rebounding in the volume of world trade and the modest growth rate of the global economy in 2010 offers a number of important lessons to us today. Firstly, the nature of international production in the current global economy of nations should not grow to levels that cause trade tension among partners. Secondly, the vulnerability of the world economy to future trade wars is very high. The developed nations want to continue determining the market working conditions and as such are not willing to let developing economies control trade. Unless free trading conditions are set, more and more tensions are likely to continue.
NAFTA and Mexican Trucking
The trucking provisions in the NAFTA treaty present possible economic benefits. Some of these advantages are creation of more jobs and elimination of higher tariffs that hinder international trade among member states. Mexico is likely to benefit as the United States lose since the existing conditions were unfavorable to it. The NAFTA treaty will result in the allowing of entry by Mexican trucks into the US. The objection to the trucking provisions in NAFTA by the Teamsters could have been motivated by the presupposition that the Mexican truck drivers had poor safety records and lack of adherence of these trucks to the safety and environmental standards of the US (Richman, 2009). These objections were, in my opinion, unfair as the pilot program latter confirmed exactly opposite facts (Hill, 2015, p.290). The initial alignment of the Congress with the Teamsters was due to the belief that Mexican truck drivers had a wanting record with regard to road safety.
The bearing of punitive tariff costs by the United States as permitted under NAFTA did not make economic sense as opposed to the letting Mexican trucks access the US. Most goods that were exported to Mexico by the US were greatly affected. Agricultural products were the hardest hit by the introduction of the tariffs by Mexico. The brokering of a deal by the Obama administration with Mexico that granted the Mexican truck drivers access to the US must have been due to the need to eliminate trade barriers, particularly the trade tariffs that affected the US negatively to a great extent. This was a reasonable deal for economic reasons. The elimination of tariffs by Mexico would mean that the US reaps higher returns from exportation of its agricultural commodities in the long-term. This is so as higher tariffs imposed on agricultural products lower the amount of trade volume between the two states.
The Rise of the Indian Automobile Industry
India has, over the recent past, established itself as a base for producing automobiles for both domestic market as well as the international one. The ability of the Indian automobile engineers to think outside the box together with the availability of professional skills necessary in designing of cars and managing multifaceted manufacturing processes makes the country attractive. The presence of a large home market together with low labor costs also makes India attractive when compared to other global markets (Hill, 2015, p.291).
The setting up of operations in Chennai, a region invested in by Hyundai and Nissan, would be advantageous to rivals in a number of ways. The competitors are likely to benefit from already available low cost labor and raw materials. The company would also be able to take advantage of the existing ready market in the region. Lastly, the rival companies that chose to set up an automobile manufacturing base in the region would also find it easy to benchmark the standards set by the existing players through facilitated interactions.
There are also drawbacks that result from basing automobile manufacturing facilities in countries such as India. Notable challenges are the absence of basic infrastructure and lack of suppliers for local parts who can offer relatively higher quality. The Japanese practice kaizen that encourages continuous improvement in the quality of production makes Japan an attractive base for automobiles (Hill, 2015, p.292).
Continued investments by auto industry players in Chennai region would see the region evolving into a key automobile manufacturing center (Hill, 2015, p.292). Efficiency and effectiveness are likely to be achieved in the region in the long-run leading to a significant drop in the production costs. The quality of auto products produced in the region is also likely to improve thereby meeting the global customer expectations.