Final MGMT 1035: Week 12 Flashcards
Service Industry
Service Sector makes how much of the world’s GDP and Global employment?
making up two-thirds of global GDP
50% of global employment
Birthplace of the automobile industry
Detroit, led by Ford, Chrysler, and General Motors
What caused Detroit’s bankruptcy in 2013?
Social issues like poverty and inequality culminated
job losses and depopulation
What did Pittsburgh transfer to?
Steel to Healthcare
Which state was the centre of U.S. steel production, driving population and economic growth.
Pittsburgh, Pennsylvania
Steel boom was led by…
Andrew Carnegie, Founder of U.S. Steel Corporation
The big three global cities in the 1980s are..
New York, London, and Tokyo
Two main groups in Global cities?
- High-income earners: Professionals like bankers, lawyers, and consultants made a lot of money.
- Low-income workers: Support workers like cleaners, cooks, and childcare providers earned much less.
What is the Service Sector?
Is characterized by “non-material” activities such as transportation, a haircut, or hotel and restaurant visits intangible goods
How much bigger is the service sector compared to others?
- Twice as big as the industrial and manufacturing sectors combines 63.6% of global economy
Which country is the largest service sector worldwide?
US
Intangibility?
Services are not manufactured and can’t be transported from seller to buyer
What are the 5 I’s
Definiton of Services
- Intangibility
- Inseparability
- Inventory
- Inconsistency
- Involvement
Inseparability?
delivery and consumption of a service can’t be spilt up produced and consumed at the same time (can’t save a haircut for later)
Inventory
services can’t be stored for future use
Inconsistency
each service is unique (two haircuts are not the same)
Involvement
both service providers and consumers must participate in the service provision
How does the
Service Sector Impact the Environment?
o Transportation: Contributes over 14% of global greenhouse gas emissions.
o Tourism: Causes pollution and natural resource degradation
Example of a Service Industry that Pollutes?
Cruise;
200,000 gallons of sewage per week (about 10 small swimming pools).
1 million gallons of greywater per week (e.g., sink, shower, and laundry water).
How many deaths does o Shipping-related air pollution cause worldwide?
84,000 deaths annually worldwide
What other activities other than transportation, haircuts, hotels, and restaurants does the service sector consist of ?
quaternary and quinary activities
quaternary and quinary activities are heavily focussed on?
on knowledge, information, and decision-making
Quaternary Sector
knowledge-based part of the economy, focusing on information, innovation, and expertise.
Quinary Sector
top-level decision-making roles, often influencing large populations or entire countries
Offshoring
the location of productive facilities outside a firm’s home market, for the purpose of making goods to be sold in that home market
Primary difference between offshoring and outsourcing?
Primary difference is in corporate control so managing facilities in a foreign country
Outsourcing
get products from a foreign supplier outside
Foreign Direct Investment (
produces goods for sale in the host country
when a company or individual from one country invests money in a business or asset in another country with the intention of having some control over its operations.
Offshoring gained momentum after WWII due to
Institutions: IMF, GATT, World Bank
Technology (transportation): Jet planes, radar, streamlined shipping
Communication: undersea cables, teletype technology, direct dialling
To bypass U.S. trade restrictions, Japanese companies like Sony and Sanyo offshored by?
production in Hong Kong: low-wage countries
What in particular is difficult to offshore?
Research and development (R&D)
Panama Papers (2016)
- Leak of millions of documents from a Panamanian law firm exposed widespread use of offshore entities by 140 politicians, corporations, and public officials.
- Sparked debates on financial transparency and tax justice.
how the rich use legal loopholes to avoid paying taxes
found in some cases, commit tax fraud, tax evasion, and avoiding international sanctions.
Egyptian Delta Land and Investment Company move to and what was significant about its relocation?
Cairo, sparking the trend of relocating corporate headquarters to avoid taxes
De Beers Consolidated Mines
Operated in South Africa but had decision-making meetings in London
British courts ruled it as a British resident for tax purposes, prompting companies to relocate headquarters
The ADDAPT Framework
A framework of six capabilities to build supply chain resilience
companies can better manage supply disruptions and minimize their impact on critical relationships.
COVID-19 pandemic
ADDAPT
- Anticipate: Plan for known risks and identify unknown-but-knowable risks.
- Detect: Use trip wires and alerts to identify disruptions in real-time.
- Diagnose: Analyze disruptions to understand causes and plan recovery.
- Activate: Deploy resources quickly to stabilize operations.
- Protect: Learn from disruptions to prevent future issues.
- Track: Continuously monitor performance and risks.
Whats Canada’s largest supermarket chain, operating 2,400 stores and 20 distribution centres?
Loblaws
What is the efficiency and fragility trade-off in global systems?
Global systems focus on cost savings but are vulnerable to failure from disruptions.
How can companies get ready for the next supply chain disruptions?
- Strategic Supply Chain Management:
o Elevate supply chain as a strategic function under senior leadership. - Emergency Playbooks:
o Prepare prioritized plans for suppliers, distribution, and labor capacity. - Collaboration:
o Work closely with key suppliers to identify and mitigate risks.
David Ricardo
comparative advantage economic theory.
- for international trade, countries most benefit from producing goods with low production costs
- It argues that countries can benefit from trading with each other by focusing on making the things they are best at making, while buying the things they are not as good at making from other countries.
In 2020, what sector accounted for half of all employment worldwide?
service sector
In 1867, 50% of the Canadian workforce was employed in
agriculture
Which city is often considered a “poster child” for deindustrialization in the U.S.?
Detroit
What was Detroit’s population during its peak in 1950?
1.8 million
What led to Pittsburgh’s transition from steel manufacturing to a healthcare-based economy?
Demand for medical care by an aging population
What type of jobs replaced many of the manufacturing jobs in Pittsburgh during its transition?
Precarious, low-wage, often part-time jobs in healthcare
What was one factor driving the rise of global cities in the 1980s?
Increased need for face-to-face interactions in advanced services
What type of work dominates the U-shaped income distribution in service economies?
Low-wage and high-income roles
What is deindustrialization often considered the flip side of?
Rise of the service sector
What factor significantly drove deindustrialization in developed economies after the 1970s?
Mechanization and mass production
Which organization estimated that the service sector accounts for half of global employment?
World Trade Organization
What major event occurred in Detroit in 2013 as a result of long-term economic decline?
Bankruptcy of the city itself
What major historical shift in the U.S. caused a decrease in steel manufacturing in the 1970s and 1980s?
Oil crisis and economic recession
What caused New York, London, and Tokyo to rely more on each other economically rather than on their national economies?
Growth of globalization and multinational corporations
What is one major historical difference between offshoring and outsourcing?
Offshoring keeps operations within a single multinational enterprise.
When did offshoring in manufacturing significantly accelerate?
After World War II
Which international institution promoted currency stability, facilitating offshoring?
International Monetary Fund (IMF)
What was one transportation innovation that enabled global production networks after World War II?
Jet engines
Which industry pioneered offshoring in the 1960s?
Electronics
What key factor drove the offshoring of semiconductors in the 1960s and 1970s?
Demand for cheaper labor
What economic inequality resulted from offshoring practices?
Rising inequality between skilled and unskilled workers
What is the primary purpose of offshore finance?
Minimize taxes and escape regulations
What event in 2016 revealed widespread offshore financial practices?
Panama Papers leak
Which jurisdiction is known as a tax haven due to its lack of corporate taxes and duties?
Cayman Islands
Which company’s case in 1906 highlighted the early use of offshore finance?
De Beers Consolidated Mines
What are the effects of offshoring finance?
Controversial practise
Lost tax revenue: 130 million
Panama Papers 2016
How is offshoring and on shoring related
Technology, communication, end of Breton woods system, decolanization
