MGMT 4300—Managing A Virtual Workforce

Instructor: Ed Martinez
Weight: 50 points - No partial credit. All questions must be answered in order to receive a grade.

Assignment #3
Instructions: Read Case 3.1 and Case 3.2. Then, answer its respective questions as shown at the bottom of the case.
After this assignment is complete, please submit the WORD document to Blackboard.
Note: While I am primarily interested on your analysis, spelling check is appreciated.

Case 3.1. Chinese are moving to Africa to make shoes

Shoemakers are the wildebeests of global trade, migrating to wherever the grass is greenest—or in their case, labor costs are
lowest. Huajian Shoes, one of China's leading shoe exporters, employing twenty-five thousand workers, makes ladies' shoes for
Tommy Hilfiger, Guess, Naturalizer, Clarks, and other Western brands. When Huajian Shoes launched its first overseas
operations last year, it was following a well-trodden path. Only the destination—Ethiopia—was surprising. A handful of
Chinese supervisors at the Huajian factory watch hundreds of Ethiopian workers trim leather, glue soles, and lace up boots in
the Eastern Industry Zone in Dukem, 30 kilometers (20 miles) south of Addis Ababa, the Ethiopian capital. Helen Hai, the
Chinese group's vice president who oversaw the Ethiopian move, says the gradual appreciation of the Renminbi and rising
labor costs are squeezing margins and forcing many Chinese shoemakers to consider similar moves. But most have stuck
closer to home in Asia. "Thirty years ago the Chinese had no idea how to make shoes for international markets," says Ms. Hai.
"It was the Taiwanese and Hong Kong people who came to China to set up factories—because 30 years ago it was 20 percent
cheaper to produce shoes in China compared with Taiwan."

When the late Ethiopian prime minister Meles Zenawi put his country's case to a gathering of Chinese manufacturers in late
2011, Ms. Hai says it was a relatively easy decision to make in terms of cost calculations, although representing a somewhat
daunting leap culturally. "Locally the labor is very competitive, and also the electricity cost is actually only half of the cost
compared with China. And then for shoemaking there is also the advantage in Ethiopia where there's a great supply of sheep
and goat skin," she says. The biggest incentive of all, however, were the preferential tariffs in Ethiopia, which in some cases
give companies a 27.5 percent advantage over manufacturers in China.

Despite this, the group's ambitions in Africa go against the grain. There is growing concern among African officials that the
flood of cheap imports that has accompanied China's expanding role in the continent is contributing to its deindustrialization.
Trade between China and Africa rose above US$200 billion in 2012, twenty times what it was in 2000 when Beijing committed
to a policy of accelerated engagement. But booming relations have coincided with the relative decline of African
manufacturing. Ms. Hai believes Ethiopia, which already has its own homegrown footwear sector, could become a global hub
for the shoe industry, supplying African, European, and American markets. "When you have thousands of shoe factories, you
will have thousands of suppliers providing all the material. And that's when you have economies of scale and you see the costs
coming down," she says.

For now, one of the biggest constraints to doing business, she says, is the logistics, high transport costs and the need to import
many of the inputs. Cultural differences, the language barrier, and a poor work ethic among the locals also pose hurdles, says
Paul Lu, Huajian's HR manager, but he also noted that the availability of labor and raw materials were key attractions. Their
greatest asset, Ms. Hai emphasizes, is their willingness to take a leap into the unknown. "There is a big difference between
Chinese and European entrepreneurs. You see a tiger, you study its characteristics and work out how to overcome it. You do all
kinds of feasibility studies before you take any action," she says. "Chinese entrepreneurs ... look at the tiger, they jump on top
of the tiger and they think OK, what am I going to do next? This kind of mindset helped China grow so fast in the last 20 years."

Sources: Adapted from William Wallis, "Chinese Shoemaker Takes Road Less Travelled to Africa, Financial Times, June 3, 2013;
Jenny Vaughan, "Ethiopia Shoe Factory Widens Footprint of China in Africa," China Post, May 21, 2012.

QUESTIONS FOR CASE ANALYSIS AND DISCUSSION

1. Why are Chinese shoemakers moving their manufacturing factories to Africa?

The reason Chinese shoemakers are moving their manufacturing factories to Africa is because they are moving in a place
where it has cheaper labor costs, and importing is cheaper, they are basically moving to save money on all their costs, and
Africa is the way to go. For example, in the case it was mentioned that “Trade between China and Africa rose above US$200
billion in 2012, twenty times what it was in 2000 when Beijing committed to a policy of accelerated engagement. But booming
relations have coincided with the relative decline of African manufacturing. Ms. Hai believes Ethiopia, which already has its
own homegrown footwear sector, could become a global hub for the shoe industry, supplying African, European, and American
markets. "When you have thousands of shoe factories, you will have thousands of suppliers providing all the material. And
that's when you have economies of scale and you see the costs coming down,"”. After reading this it makes us see the reason
why Africa was a good choice for Chinese shoemakers it basically all went down, to saving money, and making more money.

2. What are some examples of the rising tensions between China and African countries as Chinese investments into Africa
continue to rise along with its cheap imports?

Well after reading the case, it mentioned that one example of the rising tensions is the logistics side. Which is high transport
costs and the need to import many of the inputs. For example, another rising tension is in its Cultural differences, which is the
language barrier, and a poor work ethic among the locals also pose hurdles, which Paul Lu, Huajian's HR manager had said, but
he also noted that the availability of labor and raw materials were key attractions. Their greatest asset, Ms. Hai emphasizes, is
their willingness to take a leap into the unknown.

3. What are particular practices and activities that Huajian Shoes HR managers can engage in to overcome challenges in
managing African workers?

Well as reading the chapter from the book, and reading this case some particular practices or activities that Huajian Shows HR
managers can engage is by giving the African worker a provided training on the ethical work that they need to do in the
factory, whether it is training them on certain rules the company has, teaching them some words of the Chinese culture, and as
well policies of what it is expected, but teach them in a nice way, because as experience every culture is different so if the
company Huajian Shoes shows humility in their overcoming these challenges it make a great difference and Huajian can
overcome a very big challenge of managing the African workers.

CASE 3.2. India is sending jobs abroad

One of the constants of the global economy has been companies moving their tasks and jobs to India. But rising wages, demand
for workers who speak languages other than English, and competition from countries looking to emulate India's success as a
back office—such as China, Morocco, and Mexico—are challenging that model. Many executives acknowledge that
globalization will increasingly spread a company's jobs around the globe. The future of offshore sourcing is "to take the work
from any part of the world and do it in any other part of the world." To beat emerging rivals offering lower prices and
geographic advantage, Indian companies are hiring workers and opening offices in other developing countries, before their
clients do. In May 2008, Tata Consultancy Service, which already had five thousand workers in Brazil, Chile, and Uruguay,
announced the opening of a new back office in Guadalajara, Mexico. Wipro, another Indi an technology services company, has
outsourcing offices in Canada, China, Portugal, Romania, and Saudi Arabia, among other locations. And last month, Wipro said
it was opening a software development center in Atlanta that would hire five hundred programmers in three years. The
company was even considering additional hubs in Idaho and Virginia to take advantage of American "states that are less
developed."

Infosys, another Indian outsourcing giant, is trying to become a global matchmaker for outsourcing: any time a company wants
work done somewhere else, even just down the street, Infosys wants to get the call. To achieve this goal, it recently opened
offices in the Philippines, Thailand, and Poland. In each outsourcing hub, local employees work with minimal supervision from
Indian managers. Infosys says its outsourcing experience in India has taught it to carve up a project, allocate each part to
suitable workers, double-check quality, and then export a final, reassembled product to clients. The company argues it can
replicate its Indian back offices in other countries and develop Chinese, Mexican, or Czech employees to be more productive
than local outsourcing companies could make them.

Some analysts compare such an offshore outsourcing strategy to the Japanese penetration of the U.S. auto market in the 1970s.
Just as the Japanese learned to make cars in America without Japanese workers, Indian vendors are learning to outsource
abroad without Indians. In one project, an American bank wanted a computer system to handle a loan program for Hispanic
customers. The system had to work in Spanish. It also had to take into account variables particular to Hispanic clients: many,
for example, remit money to families abroad, which can affect their bank balances. The bank thought a Mexican team would be
the best for this task due to the language proficiency and cultural familiarity. But instead of going to a Mexican vendor, or to an
American vendor with Mexican operations, the bank retained three dozen engineers at Infosys, which had recently opened
shop in Monterrey, Mexico. Such is the new offshore outsourcing: a company in the United States hires an Indian vendor
headquartered seven thousand miles away to supply it with Mexican engineers working 150 miles south of the U.S. border.

Source: Adapted from Anand Gindharadas, "Outsourcing Works, So India Is Exporting Jobs," New York Times, September 25,
2007: A1.

QUESTIONS FOR CASE ANALYSIS AND DISCUSSION

1. From this case, how would you describe this new wave of offshore outsourcing?
Well after reading this case I would describe the new wave of offshore outsourcing as an inspiration to all business owners, for
example the case said it best this new wave of offshore outsourcing is like “to take the work from any part of the world and do
it in any other part of the world.” I loved the way they put it, because this is how offshore outsourcing is coming into play right
now as we speak. Another way to put it as well is the beating of emerging rivals, which involve offering lower prices and
geographic advantage.

2. Why did Indian outsourcing companies have to change their strategy?

The reason Indian outsourcing companies had to change their strategy is because they knew, that if they wanted to expand
worldwide, they couldn’t just be speaking Indian or English for the rest of their lives, and as an example of them seeing many
companies changing their methods and strategies it makes us see that it is vital to change strategy in order to progress in the
business, and for example, Infosys, an Indian outsourcing giant, is trying to become a global matchmaker for outsourcing, for
example any time a company wants work done somewhere else, even just down the street, Infosys wants to get the call. To
achieve this goal, the case says that it recently opened offices in the Philippines, Thailand, and Poland. And In each outsourcing
hub, local employees work with minimal supervision from Indian managers. Infosys says its outsourcing experience in India
has taught it to carve up a project, allocate each part to suitable workers, double-check quality, and then export a final,
reassembled product to clients.

3. What kinds of challenges do you anticipate that Indian companies will face in implementing this new outsourcing strategy?

Well, some challenges Indian Companies might face, is their cultural differences in the businesses, for example they might face
language problems, in how to communicate with their clients, as well as learning the costs and businesses in each country is
going to be very different so their logistics side is going to be another challenge for the Indian companies, but as a result if they
try different things in each country and focus on their goal, there is no surprise they will succeed in implementing this new
outsourcing strategy of To beat emerging rivals offering lower prices and geographic advantage, and opening offices in other
developing countries, before their clients do.