Globalization and the Electronics Industry

GLOBALIZATION AND THE ELECTRONICS INDUSTRY 1
EST 450 Management Problems in the Electronics Industry
Assignment Number Three
Globalization and the Electronics Industry
Prepared for
Craig T. Neville
ESTIS Visiting Assistant Professor
By
Garland Anderson
Southern Illinois University
Abstract
Globalization has a powerful influence on the electronics industry today, companies that
use this influence will thrive those who don’t will fail. In our global economy leaders
must have a plan and focus to exploit the positive effects of globalization while reducing
its negative impact. Retaining talent, maintaining the competitive edge and promoting a
company’s internal success will be supported by globalization.
April 27, 2013

Globalization and the Electronics Industry
Since the agricultural revolution, technological and industrial improvements have
influenced growth in our economy. Globalization has had a profound impact and will
increasingly be an important consideration for electronics companies. The biggest
challenge for leaders, business owners, and CEOs is to understand the effect of
globalization. It influences the electronics industry in several arenas including economic,
political and employee relations. It is paramount for electronics companies of today to
have a corporate vision and plan to use the effect of globalization to their benefit, those
who do will succeed, and those who don’t will inevitably fail.
The global political climate driving business practices today has ever changed
the landscape. Outsourcing for cheap labor oversees, buying cheaper products from
Asia and the development of multinational corporations have helped several electronics
firms’ bottom lines, but at what cost. The lack of true national goals and gains without
responsibility has gutted our competitive edge here at home. We must return to a
unified internal vision and business strategies that not only improve business but also
ensure we will have an edge in the future.
Kearney, (2012, para. 1) found the information and communication technology
(ICT) sector in Europe is in decline. The United States is also experiencing the same
trend. What does that mean for the US electronics industry? Changes must be put in
place to combat it. A recent study suggests a strategy that relies on long term desirable
and emerging high tech products, planning investments and taking advantage of high-
tech regions.

The disturbing thing is demand for computing products and consumer electronics
is on the rise. Statistics (McGregor, 2012, para. 5-6) show demand in developing
countries will be going up because of population growth and improved economic
conditions. Though the computing segment has slumped in the past, it usually has
rebounded to double in size every four to five years. If demand for high-technology is
going up why is the U.S. market declining? McGregor (2012) goes on to say our
optimism about continued growth in the computing sector may be unwarranted. How
long can the rapid growth in the sector be sustained (para. 11-14)?
According to U.S. Bureau of Labor Statistics, (2013, p. 1) electrical and
electronics engineer opportunities are on the decline. Why? Cheap labor in developing
countries is desirable in this economic downturn many corporations are outsourcing off
shore which leaves a vacuum here at home. Also a shift from manufacturing to services
in the United States has deleted many entry level manual labor jobs.
Schraeder, (1999, para. 3) describes the lack of qualified workers as an
important factor impacting employment policy. Butz, Kelly & Adamson, et al. (2004)
posed a question “Is the Federal Government facing a shortage of scientific and
technical personnel?” If the government is experiences a shortage of technical specialist
what does that say about the US high-tech industry?
The research points to problems in the U.S. high tech industry that must be
addressed. My objective is to gather information from various sources to determine the
long term impact of globalization and ways it can be used to benefit the electronics
industry in America.

Political Impact of Globalization
The World Trade Organization (WTO), (Fischer, 2000, p. 3-4) United Nations (UN),
General Agreement on Tariffs and Trade (GATT) and North American Free Trade
Agreement (NAFTA), have all made it increasingly difficult for countries to have a
nationalistic approach. Separationist attitudes are counterproductive to growth and
gaining a competitive advantage. The electronics industry has been a forerunner in
developing international requirements and procedures to make electronics components
and services available to countries throughout the world. No longer can there be a
national economic policy that ignores global pressure in the three major trade blocs
including the Americas, Europe and the Pacific Rim.
International and domestic influences. Fischer (2000) remarks, “The lines
have been blurred between public and private international law, when the government
enters into a GATT with the intent of creating jobs, stimulating the economy, and
protecting business, there is fundamentally no difference between the two.” and “no
national interest can long hold out against a contrary global interest” (p.4).
In fact, “Since the U.S. has lost it position of hegemony and is unlikely to regain
it, it needs partners. Co-venturing by nations and companies ought to be encouraged
and the interdepence of people and economies ought to be emphasized. But that is not
always how it works” (Fischer, 2000, p. 33). I agree with this philosophy but would add
that alliances must be beneficial to US objectives at all cost. Alliances must have
specific strategic goals they will help accomplish.
“Destructive independence” is described by Fischer (2000, p. 4) and although I
agree a pure nationalistic approach is counter-productive; corporations must develop

alliances that benefit them and the country long term. “Denationalization” losing national
identity and agenda for a joint international one, what does that mean? Government and
corporate personnel responsible for policies involving foreign powers must make
decision that first of all benefit our country. Anxiety to attain a market share in foreign
markets has blinded many from their greatest responsibility, to remain in business.
The collaboration between business and government is a necessity to effectively
globalize world trade. Key areas corporations must consider are market access,
balance trade and monetary stability. The trade deficit (Fischer, 2000, p.150) in the U.S.
is one reason economic recovery is so slow. It is impossible to borrow and spend a
country out of an economic slump.
The International Monetary Fund (IMF) (Morris, D. & McGann E., 2012, p. 30) is
attempting to control economic conditions in sovereign nations. They recommend
replacing the U.S. dollars as the global reserve currency with Special Drawing Rights
(SDRs). The issue is the IMF has no taxing power so the U.S. taxpayers will be
responsible for backing this new virtual currency controlled primarily by European elites.
John Perkins (2007) author and former economic hit man, describes in minute
detail the interrelation of the corporate sector and the United States Agency for
International Development (USAID). The economic aid countries are receiving is tied to
corporate programs that allow the US to prosper through benevolence. The negative
sentiment many Middle Eastern countries hold for the U.S. is warranted, due in part to
tactics used by the C.I.A. and the State Department to control leadership and political
situations abroad for economic gain.

The China dilemma. The United States is (Morris, D & McGann E. 2012) losing
its’ position of sovereignty due to the increase control of international organizations. In
order to control (Morris, D & McGann E. 2012, p. 35) our destiny at home we must fight
against any control of the monetary system and reduce the influence of the Federal
Reserve Bank. Few citizens really understand the far ranging impact the GATT and
WTO are having on our relations with China.
China has (Morris, D & McGann E. 2012, p. 82) an unfair and criminal advantage
over the U.S. and all markets due to several practices that continue unpunished;
currency manipulation, pirating of intellectual property and spying on the military. The
agreements (Navarro, 2007, p. 3) China has made to open free trade to outside markets
are not being fulfilled but they are still allowed to take part in the benefits of their status
through the WTO.
China promises (Morris, D & McGann, E., 2012, p. 83) to open their markets but
have no intention of doing so, this has caused the loss of 2 million American jobs and
increased the trade deficit. The lackadaisical policy of the Obama administration is to no
effect in changing this trend. To suggest there are conduits to a beneficial trade
relationship with China without confronting the illegal strategy is ludicrous.
To give an (Morris, D & McGann, E., 2012, p. 103) idea of the impact of
espionage on the American business industry, the Office of National Counterintelligence
estimates it costs U.S. companies $50 billion per year. China and Russia are the
primary culprits and are using cyberspace to do their dirty work.
Domestic spies (Morris, D & McGann, E., 2012, p. 108-110) legally residing in
the U.S. have been charged with stealing trade secrets, Hanjuan Jin, a software

engineer was accused of taking hundreds of millions of dollars in trade secrets from
Motorola. In March 2011, a grand jury indicted Steve Liu, on eight counts of exporting
defense-related technology; he has lived in the United States for eighteen years and
worked for L-3 Communications’ Space & Navigation division in New Jersey. In 2003,
U.S. technical giant Cisco Systems sued Huawei a Chinese state supported company
for using pirated software and infringing on their patents. $76 million dollars of
counterfeit Cisco products were seized from government agencies and military
contractors. How did these make into our supply system? Contracts go to the lowest
bidder and who is that…you got it China.
There is an organized and strategic agenda to take America down by any means
necessary. If the American business sector does not learn from past and current
onslaughts on technology they will be unable to compete in the future.
Economic Impact of Globalization
In the United States many manufacturing and production jobs have been lost to
overseas markets due to cheaper labor/manufacturing costs, many jobs have been
produced in the service sector to make up for the loss in manufacturing jobs. In 1950,
(Volti, 2000, p.35) manufacturing jobs accounted for over 20 million workers in the U.S.
while over 28 million were in the service sector. After adding nearly 71 million jobs by
1998, 27 million were manufacturing workers and 93 million were in the service sector.
So there isn’t a job shortage per se but a movement to the services industry, what some
may call a paradigm shift.
Where are the jobs. New job growth drives the economy in a positive direction
so why is this not a priority of the Obama administration. Stimulus packages in the

trillions have had marginal if any impact on the economy. Where are the technical jobs?
The move to the service sector and globalization of business and economy has
decreased the importance innovation. The lack of innovation and focus on maintaining
an edge is causing the U.S. to slide behind competitors like China. I will agree that there
are many information technology (I.T.) jobs in the marketplace but everyone can’t be a
computer type. The lack of hands on manufacturing jobs in the U.S. has destroyed a
positive job outlook for most technical types. Where are the industrial, mechanical,
electronics, and electrical engineers? These jobs have moved to India several tech
companies have research and development hubs in Asia.
These sectors have not disappeared altogether but they are definitely
diminished. Senator Kaufmann (Hunter, 2009, para.9) urges that the government get
back to supporting and seeking out innovation. He comments that 52 years ago he
wanted to be an engineer; programs in the government supported his quest and those
of many others. This focus as a nation allowed the United States to weather the storms
of the time to become a world power. Kaufman implores the government to return to a
culture of innovation and research, to support programs that bring attention and
resources to engineering and scientific sectors. This will help the economy rebound and
produce technology that will give us a competitive edge.
Fundamental domestic error. Job growth increases the tax base which allows
the government to bring in more revenue; it also increases the productivity of the
corporations involved and helps them to prosper. This in turn produces more job
opportunity and gives the businesses involved the human capital to expand. Which
again increases the tax base….and on and on…you get my drift.

If our economy was focused on creating jobs and lowering taxes the revenue
generated would be more than we need. Every time this has been done in the past the
economy has thrived. Totally moving away from manufacturing in the U.S. cost more
that the loss of jobs; technical knowledge passed on by carrier technicians, engineers
and laborers to the new generation is lost forever.
The consumer driven economy in the United States is also a major factor. As a
country the United States of today is entirely different from that of the baby boomers.
They produced more wealth in their work years than any other generation, $44 trillion to
be exact. The reason I bring this up is because the baby boomers advanced U.S.
technical prowess like no other. The space race and cold war were instrumental in
developing the national goals that drove the entire country; business, government,
research and development, all saw massive strides during their work lives. The United
States had to prosper.
The business sector is no longer focused on producing technology for the future;
most sectors are more focused on order taking. This bent has hollowed out the tenacity
needed for innovation and when innovation is sought it is focused on consumer
products.
To lead economically America must lead in production, (Ensinger, 2009) Japan
has passed the U.S. as top car producer, China is the world’s top producer of high-
technology products, including aerospace, computers, pharmaceuticals, scientific
instruments and electrical machinery. America’s failed trade policies are the reason we
are falling behind.

“The global sales (Kearney, 2012) of information and communications
technologies amounted to $2.8 trillion in 2011, of which $815 billion were generated by
the largest segment, IT services, followed by consumer electronics $378 billion,
semiconductors $317 billion and software $297 billion” (para. 3). How much of that pie
should U.S. companies be gathering? We are behind China in about all categories.
No national (Fischer, 2000, p. 5) market can suffer a significant shock without its
impact being felt in throughout the world. It’s clear that not even the United States can
permanently influence market conditions on its own. Inflation caused by devaluing the
dollar has a negative impact on U.S. clout in the global market. China and other nations
are moving away from the dollar due to it weakness and American economic woes.
The U.S. Congress refuses to live on budget, social programs like, Social
Security, Federal Retirement and Welfare equate to 60 percent of the national budget.
The lack of fiscal responsibility in the government is a picture of the attitudes many
Americans have. Delaying the inevitable, U.S. citizens are bankrupting the future. The
U.S. trade deficit and debt load with China is creating havoc on U.S. economic growth.
Business Cultural Impact of Globalization
Although outsourcing to cheaper labor markets helps a corporations’ bottom line, what
effect is that having on the U.S. economy and employment picture? America is
experiencing those negative effects right now, a depressed economy and an
unemployment crisis with no true remedy in sight.
This is having a profound impact on college graduates and young professionals who
believed the story of the American Dream; go to school, get a good education and get a

good job. The problem is where are all the jobs? Shrinking profits and lean initiatives will
call for most of these accomplished professionals to go it alone.
Business leadership considerations. Any real change in an organization starts
with a leader. Good leaders (Drucker, 1992, p. 122) need not be liked but trusted. The
attributes of a good leader is that he has followers. Charisma is overrated and is usually
very deceptive in determining leadership. Leaders are effective at getting productive
results through others. They are also experts at duplicating themselves which further
increase their personal corporate stock. The message of the media and popular culture
is all about looks and charisma, where has that gotten us. Scandals involving personal
issues like infidelity, insider trading, and conspiracies abound.
Drucker (1992) elaborates “What distinguishes the leader from a misleader are
his goals. Whether the compromise he makes with the constraints of reality—which may
involve political, economic, financial or people problems—are compatible with his
mission and goals are lead away from them determines whether he is an effective
leader” (p. 121). Is this description in contrast to the U.S. current business policies?
The corporate policies in the U.S. banking and technology sectors have been off for
quite a while which is the reason so many vital sections of U.S. enterprises are
overseas.
Are American companies sticking to their corporate goals or just aimlessly
following popular culture looking for the next money maker. Speculation is the rule of
the day and the consequences of gambling ways have been shown twice in the 2000s
by the dotcom and housing crashes. Drucker (1992) makes several poignant
observations that must become a measuring stick for leaders in the electronics industry.

In these times of rapid change a strategy that increases productivity and revenue
is of utmost importance. Companies have to properly measure their progress and do
their best to insure success. Eli Schragenheim, (1998, p. 65) describes a case of a
bottleneck caused by a backlog of electronic devices needing repair. The magnitude of
the problem was underestimated by the manager causing him to get further and further
behind. Using the theory of constraints Schragenheim (1998) provides tools to help
determine the root cause and the solutions. It would be very instrumental for
corporations and government agencies to use these planning tools to determine the
need for new programs, areas for improvement or business process changes.
In the future (Jellison, 2012, para. 3) companies may need to develop four or
more business models. Software and hardware companies, who traditionally were
accustomed to a limited business model, must evolve to incorporate the choices
consumers expect. Traditional software companies may need to offer licensed software,
Software as a Service (SaaS), integration of software and hardware into appliances,
and an advertising model for certain customers.
UBM announced Dec 2012, (PRWire, 2012) they had made extensive amounts
of training material available for electronics and design engineers through
techonline.com. This type of initiative allows workers to take the lead on getting the
information as they need it. Provides value added resource that will produce a more
competent employee.
This is a tall order but will open up many electronics firms to the innovation and
new technology the economy and job market are crying for today. Jellison (2012) has
shed light on one key attribute that maybe exploited for the benefit of electronics firms.

Trade deficit impact on business. Globalization has had a negative impact on
job growth in the United States because of the trade deficit with China and companies
moving off shore to cheaper markets. This reduces opportunities for workers here in
America, due to the fact we are not actively combating the trend the economy and job
market continues to suffer.
There are so many different ideas popular today on what America needs to do to
repair the economy. Globalization is contrary to the development of a better economy
here. Forty percent (Morris, D & McGann, E., 2012, p.89) of factories with over 250
employees have closed since China entered the WTO. The most important rule in
business is to stay in business, many corporations have lost focus, making shortsighted
decisions that effectively initiated their ruin.
The U.S. must prepare and find ways (Brown, 2010, p. 160) to increase exports
to Asia. Corporations need to develop plans and determine what the needs will be so
these bases of billions can be exploited. India and China are showing positive growth
numbers but their consumption is less than ten percent of global market. Brown (2010,
p. 161) suggests encouraging China raise consumption faster to benefit their growing
middle class.
Unproductive corporate climate. The trend of rapid employee turnover,
corporate takeovers and selfish ambition have caused workers and corporations to have
an, us against them attitude. Several companies have engendered a positive corporate
climate and thrive because of it. The lack (Goleman, 1998, p.39) of emotional
competence has a serious impact on turnover. The real loss to a company for the loss
of one employee is a full year’s salary. If this loss happens at the executive level losses

can be in the hundreds of thousands of dollars to millions. It was not uncommon in the
past to have an employee complete an entire career at one company. Why is it not that
way anymore? The lack of loyalty in the corporate sector and misunderstanding the
value of one great employee, have caused many to sacrifice productivity for long term
viability.
Companies need to get back to grooming and providing long term career paths
for their employees. This goes for entry level and executive positions. Many times entry
level personnel are relegated to their tasks and that’s the end of it. Many of these skilled
and unskilled workers could be great candidates for management or maybe a CEO in
the future. Upward mobility is a great motivator for those who have ambition to be and
do more.
Electronics industry (Hunter, 2009, para. 10) would gain a serious edge by
developing partnerships with the public and private school system to motivate and
create excite in the country’s future technical experts. Giving back society by producing
informational briefs, speaking about upcoming technology and even requesting the help
of students to solve a problem or improve a product.
Many young people develop their aspirations from contact they had with adults
who were interested in them. What better way to pull young Americans into technical
fields. Government technical agencies would also do well in creating the same type of
partnerships.
Labor relations and legal aspects. The increased use of the Internet,
teleworking, and conference calls have also made it important for companies to monitor
the performance of their workers whether they are in the office or at home. Some

companies are moving away from this laid back work environment while others are
continuing the effort; it all depends on the goals of the company.
Computer software security company Symantec has implemented an effective
telework program and is currently rolling it out all over their international structure. Chief
human resource director, Rebecca Ranninger (Divol, R., & Fleming, T., 2012) describes
in detail what’s working for them. Employees are not held to rigid work schedules but
required to make contact with manage and submit work projects on time. She remarks
that though results are positive, getting together face to face has no equal in the
business world. Relationships are built and true mentoring takes place sitting around a
table working through things together.
The complex (Kuykendall, 2007) culture today requires the due diligence of
corporations to protect themselves. An aging workforce, persons with disabilities,
increase of women in the workplace, and the fight for same-sex equality make it
imperative for human resources personnel are informed and capable of training
employees on their rights and responsibilities. The advances in the medical field have
made it possible veterans severely injured in combat to lead somewhat normal lives,
increasing the number of workers who have disabilities. The laws governing employee
relations are dynamic corporations and employees must stay abreast of changes.
What can clog up a productive team in two days flat? Bad managers avoiding
personnel issue, (McKee, 2007) there are several reasons why the do it.
 It is easy to avoid people
 They haven’t been trained properly
 They believe leadership is full of it

 They don’t care
This may seem kind of odd but all of us have avoided dealing with an unpleasant with
situation. Circumstances do not get better by avoidance; let’s talk about the ugly baby
maybe we can fix it together.
If an organization is implementing fair hiring practices one would expect their
demographics to look much like that of society in general. For many organizations
including the U.S. military that is not the case. So why is there an ethnic gap, age or sex
gap? There are several factors that drive this phenomenon but corporations must
ensure they are not biased, unfairly discharging or refusing to hire a qualified candidate
because of these differences is against the law.
The reduction of employee benefits, like retirement accounts and medical
insurance make it more important for electronics firms to provide training and avenues
for employees to take care of their own business. Classes in personal financial
management would be beneficial in showing employees you care although you are not
providing the service as a part of employment.
Intellectual property as well as specific company trade practices must be
protected. Several companies have dealt with leaks of information and disgruntled
employees exploiting their access to the businesses intellectual property. Policies must
be in place to address how intellectual property and company specific trade practices
must be handled and the consequences if the policies are not followed explained and
recorded.
To maintain the competitive edge, attract and retain talent and ensure longevity
managers in the electronics industry must address the issues detailed. Although there

are negative aspects of globalization businesses that make the correct adjustments can
thrive. Companies who learn how to make globalization work for them will succeed the
ones who don’t will fail.

Summary
The global political culture is having an increasingly important impact on the
American way of life. The United States is a sovereign nation but the WTO, GATT and
IMF are attempting to control policy within the country. This trend along with trade
imbalance with China is threatening political freedom in the U.S. There is increase
pressure on the U. S. to abandon the freedoms we have become accustom to for a
more global agenda.
Due to the interconnection of national economies to the global market, the U.S. is
in a position; it cannot get out on its own. Changes must be made immediately to
combat the negative impact globalization is having on U.S. economy. The consumer
driven and service oriented economy served America well for a few years but, now we
are seeing the consequences poor decisions. The lack of a budget in Congress is a
good picture of the attitudes many Americans are dealing with today.
Electronics companies have moved to the services industry causing a vacuum in
the technical trades in the U.S. The government has moved away from the engineering
field, in part due to out-sourcing and decrees in U.S. manufacturing. To maintain
American top nation status and long term viability U.S. companies must develop a
concerted effort to save it. It will not happen by mistake.

Problem Resolution
There seems to be a runaway influence of globalization going on, and many companies
believe they are at the mercy of it. Although the effects of globalization are strong and
will have an impact on every business in the marketplace, I believe there are several
strategies that will help electronics companies maintain the competitive edge and
flourish no matter the economic climate. For every company that fails to take advantage
of positive influence of globalization there are several that do.
Strategies to Maintain Competitive Edge in Global Economy
Electronics firms must develop a strong mission and internal objectives. All the talk
about the inevitability of globalism has blinded most leaders to the fact they must have a
strategy to win on their own terms. If this is not developed and communicated
throughout the organization the market will drive the business instead of the business
driving the market. Companies must be proactive and write their own destiny, riding the
wave of the market is great when your segment is up, but what happens when it is
down.
Renewing Dedication to National Corporate Goals
We are experiencing the negative attributes of that lack of identity in our country we are
also seeing it in business. Without a strong internal strategy to win companies will ride
the wave in the market up and down, many losing their businesses altogether at the
bottom. The dotcom crash and the recent real estate implosion are two examples of
what happens when business people don’t understand what’s driving their profits.
Understanding business cycles will also help to solidify a great winning formula no
matter the market conditions. Knowledgeable investors make a profit in up and down

markets, they know where and when to invest and are patient enough not to panic when
novices run and hide.
Market strategy economically sound and viable in every market condition
This step will take a lot of thought and planning but will be invaluable to the company’s
success. This is where management and employees must determine their current niche,
where they are different and how that position is equitable to customers and marketed
properly. As an example, the fight between Betamax and VHS for market share in the
late seventies. The two technologies were well received but the VHS message and
niche was communicated and marketed more effectively. Just because you have the
best product doesn’t mean you will be a leader in the market. Electronics firms must
evoke emotion and communicate the need for their product or service, explaining why
they are better and get that message to their target market often.

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