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Rationale Behind Companies Moving Operations Into or Out Of the USA - Essay Example

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Summary
The United States is the world’s largest economy. Thus, The US does not operate in isolation and effectively companies from the country move operations out and into the country. Conversely, there are different reasons for companies to move their operations out and into the country…
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Rationale Behind Companies Moving Operations Into or Out Of the USA
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Rationale Behind Companies Moving Operations Into or Out Of the USA

Download file to see previous pages... One of the reasons that companies move their operations out of the country, especially the manufacturing processes, is to take advantage of lower wages poor countries. This process is labor arbitrage, which is “taking advantage of lower wages abroad, especially in poor countries” (“Moving back to America”). China is amongst the countries that provide cheap labor. Essentially, companies from the USA move their manufacturing plants to the country to operate under lower production cost while improving their profit margins. A study by Judith Banister in 2002, to determine the manufacturing industry’s compensation of workers in China, found that, “The cost of Chinese factory labor is a paltry 64 cents an hour” (“Just How Cheap is Chinese ...Download file to see next pagesRead More
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