REVIEW GEO FINAL

REVIEW GEO FINAL Service: A type of economic activity that is intangible, is not stored and does not result in ownership A service is consumed at the point of sale Services are one of the two key components of economics, the other being goods GDP( Gross dometics product) refers to the market value of all final goods and services produced tithin a courtry in a given period GDP per capita is often considered an indicator of a courtry’s standard of living Explain each of Forces driving the growth of services The service industry is rapidly growing, with companies recognizing the benefits of outsourcing activities that are not part of their core business a Rising per capita income: Increase in service employment + Increase in demand for services b Growing demand for healthcare & education services: Greater demand for educational services resulted from the changing labor market, the need for advanced skills and so on c Increasingly complex division of labor: Companies depend on a variety of services, including accountancy, R&D, marketing & advertising, and public relations High-tech equipment requires skilled maintenance, repair and security services d Growing size & role of the public sector: – 1st reason: public sector employees is increasing though there has been a privatization from the public sector (the state or government) to the private sector (businesses that operate for a private profit) or to private non-profit organizations – 2nd reason: The enactment of new laws and regulations  More and more needs for legal and experts to assist companies to negotiate in the complex legal environment For instance: The Consumer Product Safety Improvement Act of 2008 is a United States law signed on August 14, 2008 by President George W Bush PwC’s Law Firm Services (LFS) is a practice made up of professionals dedicated to adding value in the areas of audit, tax, and advisory services to law firms and their partners throughout the world More rules => the need for lawful service will enhance e Increasing international trade in services f Rapid growth in outsourcing service functions – Rapid growth in outsourcing services from core to semi – peripheral countries by both large and small companies has led to the growth in services – India business process outsourcing by service lines: Service outsourcing: Benefits and drawbacks for all? Outsourcing is an allocation of specific business processes to a specialist external service provider Most of the times an organization cannot handle all aspects of a business process internally Additionally some processes are temporary and the organization does not intend to hire in-house professionals to perform the tasks Once the task is outsourced to the service provider, he will take the responsibility of carrying out the tasks and maintaining the organization’s assets However prior to outsourcing any component of your business to a thirdparty vendor, it is essential to understand the advantages and disadvantages of outsourcing Although outsourcing presents a variety of benefits to your organization, it could also pose difficulties if not outsourced to the right service provider Outsourcing refers to an organization contracting work out to a third party, while offshoring refers to getting work done in a different country, usually to leverage cost advantages Outsourcing Reduces Cost of Operations Offshoring Economies of Scale The cost of hiring an external agency or a third party service provider is lower than setting up in-house operations for a number of reasons: When a company sets up office or a factory abroad, it is not just capitalizing on comparative cost advantages on labor but also on existing economies of scale Advantages  An external agency is a separate entity; it is an enterprise that is responsible for its own cost of operations  An external agency has the experience to get the job done according to expectation If you create an in-house department, you will have to invest in the infrastructure and hire the right talent  An external agency does not need additional training expenses An orientation or overview of the project may be required But if you put up an in-house agency, you will have to invest in training, research and development Improves Productivity By outsourcing select business processes you can improve Other cost items such as power, Internet connectivity, rent may be lower in the host country than the country of origin In fact, the expectation of most companies that offshore is to realize at least a cost savings of 70% A company can also take advantage of the comparative cost advantages by diversifying positions or negotiating for volume discounts when purchasing assets or services Close Collaboration Offshoring gives the company greater control through closer physical collaboration Shared space collaboration has the advantage of overseeing the conduct of work without the filters or delays associated with technology While there are software programs that allow clients to view the work of its outsourcing partner, latency issues with the terminating carrier can compromise the productivity because your company can focus its resources on its core functions benefits of real time analytics The cost savings from outsourcing can be repurposed to fund revenuegenerating programs of the company For example, the cost savings can be used to improve business infrastructure or enhance its marketing and promotional program There are some governments that grant special exemptions and incentives to companies that invest in their economy Favorable Government Policies These include tax exemptions and access to cheap credit which could improve the bottom- line of the business Increases Flexibility A company can increase its flexibility with outsourcing by taking advantage of time zone differentials By simply adjusting work shifts, it is possible to have your business managed for 16 hours by an external agency Disadvantage s Cultural and Social Differences Increase Unemployment There will be a period of adjustment needed for your company to accommodate certain cultural and social practices of the third party service provider The biggest criticism versus companies that offshore is that it increases the level of unemployment of the local economy For example, if you contract an agency from the Philippines or India you will have to develop an understanding of their deeply rooted spiritual beliefs the dates of which may conflict with your work schedule The aforementioned companies Caterpillar and Nike have been accused of taking away jobs from Americans and displacing their existing work force in favor of other nationalities These companies argue that by offshoring they are able to improve profitability by lowering costs and increasing revenue Thus, the increased profits can be used to improve facilities and programs of the principal company 2 Communication Problems Cultural and Social Differences Hand- in- hand with cultural and social differences are communication problems There arise because of differences in perspectives The client will be immersed in the culture and social practices of the host country This may have an effect on productivity and communication For example, North American companies tend to business in a straight- forward manner On the other hand, service providers from the Philippines are more introverted They tend not to say much and keep to themselves For the North American client it may be taken as a sign of aloofness, uncertainty or incompetence But in reality, it is just part of their nature as a soft- spoken people Unlike outsourcing, time zone differentials may work against the offshoring company because production could end up being delayed due to changes in manpower availability Security Issues Whenever you are sharing, transmitting data to another party, you are always at risk of security breach and Despite the promulgation of the Data compromised data integrity Protection Act in several popular outsourcing destinations, security There will always be transfer issues breach and data integrity will remain when it comes to data even when there serious issues is shared space collaboration Security Issues Even with tight IT networking protocols and safety measures, concerns on security will always come up in the absence of close collaboration The decision on whether you should outsource or offshore will depend on the size and complexity of your operations, the scope of work that you need transferred and of course, your resources Generally, you will benefit in terms of cost and depending on how operations are managed, you can realize great productivity on either business model One thing is for sure both outsourcing and offshoring will be popular strategies for business development in the years to come Benefits There are several reasons for companies to both offshore and outsource Outsourcing Why companies outsource? There are several reasons why a company might outsource While this can be a politically sensitive topic, management experts generally agree that outsourcing - when done right - increases competitive advantage with a natural division of labor that evolves in any society Reasons for outsourcing include:  Cost advantage: Costs are arguably the chief motivation behind outsourcing Often companies find that contracting work out to a 3rd party is cheaper  Focus on core competency:There are a lot of business functions in a company For example, human resources, information technology, manufacturing, sales, marketing, payroll, accounting, finance, security, transportation and logistics among others Most of these are not "core" to the company A "core" activity is one which offers the company competitive advantage over its competitors It is an activity that the company does better than the competition, which is the main reason its customers business with the company Having to handle non-core functions is a distraction, so many companies outsource them  Quality and Capability:Often companies don't have in-house expertise for certain activities In these cases, it is more efficient to outsource, and resulting products and services tend to be of higher quality when provided by outsourcing vendors  Labor flexibility: Outsourcing allows a company to ramping up and down quickly as needed For example, a company may need a large number software programming experts for 6-8 months to develop an application It would be infeasible to hire people for only months Outsourcing, however, can provide flexibility so the company does not have to worry about hiring and firing Offshoring Offshoring provides many of the same benefits as outsourcing, including:  Cost savings: Companies usually offshore manufacturing or services to developing countries where wages are low, thus resulting in cost savings These savings are passed on to the customers, shareholders and managers of these companies  Skills: The competitive advantage of nations often means that some countries or regions develop a much better ecosystem for certain types of industries This means there is better availability of skilled human resources in that region for specific types of tasks For example, India and the Phillipines have a large pool of English-speaking, college educated youth; as well as a mature training infrastructure; that makes it ideal for business process outsourcing Therefore, many companies choose to offshore certain business functions (e.g call centers for customer support) to these locations These can either be captive or outsourced Note that you not need to outsource in order to offshore Captive offshore units are set up to leverage the benefits of offshoring without having to outsource to vendors This is usually done when companies believe that their offshore centers for production/service will provide them with an edge over the competition Risks and Criticism Offshoring and outsourcing have both been subject to a lot of criticism, especially from a political standpoint Politicians and laid-off workers often blame offshoring for "stealing jobs" Most economists, however, agree that offshoring lowers costs for companies and passes on benefits to consumers and shareholders There are, however, risks associated with offshoring These include project failure due to poor communication; civil or political unrest impacting production or service delivery; arbitrary changes in economic policy of governments may force unncessary restrictions on MNCs; and poor infrastructure in the developing country may affect quality or timeliness While the benefits of outsourcing and offshoring largely overlap, they not face the same disadvantages Outsourcing, when done within the country, does not face the same political criticism of loss of jobs Risks associated with outsourcing can largely be attributed to the vendor's lack of familiarity with the client's business Another risk is a lack of alignment of long-term business objectives of the client and the vendor Offshore Outsourcing When outsourcing is combined with offshoring, not only is work contracted out to a third party, but it is also agreed that the work will be performed in a different country The reasons are usually to take advantage of the benefits of outsourcing and offshoring both Benefits of offshore outsourcing Offshore outsourcing combines the benefits of outsourcing, such as easier resource ramp up and ramp down, and more specialized skills; with the benefits of offshoring, such as lower costs and higher productivity In the past decade and a half of increasing globalization, offshoring has been the fastest growing segment of the outsourcing market This is especially true in the case of manufacturing - with China being a leader - and information technology services, with India leading that space Business process outsourcing is another area of offshoring that has grown tremendously Risks of offshore outsourcing Just as offshore outsourcing combines the benefits, it is also susceptible to the risks of both business practices Critics claim that these risks are magnified because of the complexity being multiplied For example, while it can be challenging to work with an external organization for projects that require knowledge of your business operations, these challenges could increase manifold when members of the external organization are located in a different country Risks include poor communication, incorrect setting of expectations and disconnected control structures Why these services can be outsourced in other/developing countries? Explain The benefits of BPO in developing countries could come directly inthe form of job creation, a positive impact on infrastructure development,and diffusion of technology and ideas in domestic manufacturing and evenin agriculture This applies especially to the provision of information onmarketing and prices, helping business-to-business communications ande-commerce applications, and even the processing of some services of domestic companies Developing countries may also receive substantialamounts of FDI in the BPO sector (Baily and Farrell, 2004) The UNCTADreport (2003) also mentions that once the required ICT infrastructure isensured, ITES will broaden the job prospects for women interested inworking from home Women are also employed on a large scale in differentservices such as call centres and data entry jobs The BPO industry, moreover, has produced a promising niche forSMEs from developing countries as the enterprises require a small amountof start-up capital, basic telecommunication and other ICT infrastructure,and low-wage workers In the absence of largely English-speaking, highlyskilled and professionally trained manpower, national Governments in manycountries with international support can win a slot in the BPO marketespecially in non-voice-based low- to medium-skill segments of BPO such aspayroll and database preparation This is not necessarily true in the case of IT services, which require more advanced skills and infrastructure BPO trends have shown that the comparative advantage of developingcountries will not be limited to standard “back office” services In India cross-border service exports have already started to be transformed from lower-end,disentangled BPO services to more integrated services In the process, com-panies are moving up the value chain by focusing on innovation, consulting,branding and increasingly integrated services such as online training andproduct design The rising wages in the BPO sector in India and the move-ment of Indian service suppliers to higher-value analytical tasks are expectedto induce other countries to step in where wages in BPO are relatively low If the market is unlikely to grow rapidly, then the scope for newplayers is limited unless the market is redistributed Many critics argue that,as in the case of primary products, competition between developing countryproviders of lower-end services will commoditize some of the basic processes.This would drive down the prices and transfer the benefits of low wages tointernational corporations, leaving little behind in the developing world.Moreover, BPO clients typically try to minimize their risk exposure, com-mitting a small amount of investment in developing countries, thus transfer-ring the entire risk to BPO providers It is also expected that BPO businesswill become fragmented into different lines and there is a possibility thatdifferent countries will specialize in different aspects of BPO Spatial proximity: khoảng không gian: Hồng-147.148; Slide  Institutional proximity: nearness created through operating within the same legal and institutional frameworks as others Institutions are the humanly devised constraints that structure political, economic and social interaction They consist of both informal constraints; (sanctions, taboos, customs, traditions, and codes of conduct), and formal rules (constitutions, laws, property rights) Institutional proximity facilitates collective learning by allowing free knowledge transfer among agents based on a common space of representations, models, norms, procedures and rules being applied to thought and action  Cultural proximity: nearness derived from a shared cultural heritage and linguistic background Cultural proximity is used throughout the literature, albeit at a relatively low frequency Culture is the pattern of thoughts, feelings, behaviors, symbols and so forth that give meaning to actions and behaviors, and provide interpretations of situations for people Culture is publicly shared and accepted by a given group at a given time, binding members together and defining or separating one group from others groups  Organizational proximity: nearness engendered through both written rules and codes, and unwritten ways of doing things within a firm or institution (corporate culture of a large TNC) Organizational proximity is often associated with economic coordination characterized by trust-based relations among actors This form of proximity is often regarded as necessary to foster coordination and cooperation by lowering transaction costs, to facilitate the transfer of tacit knowledge and thus, learning and innovation  Relational (social) proximity: closeness derived from informal inter-personal relations Social proximity always refers to actors that belong to the same space of relations Relational proximity – defined as the similarities of two areas in terms of shared behavioral codes, common culture, mutual trust, sense of belonging and cooperation capabilities – plays an important role in the capacity of a region to absorb knowledge spillovers Cooperative learning processes are nourished by spatial proximity (“atmosphere” effects), network relations (long-distance, selective relationships), interaction and cooperation Therefore, while geographical proximity is a good proxy for the “atmosphere effect”, relational proximity measures the potential interaction and cooperation capabilities in knowledge accumulation Relational proximity is therefore at least as important as geographical proximity in order to understand the micro-foundations of knowledge spillovers and the channels through which knowledge diffuses Being geographically close to a region with similar relational capacity reinforces knowledge diffusion between the two areas By the same token, relational proximity reinforces the effects generated by geographical closeness thanks to synergies and increasing returns 7 What are differences of outsources/offshoring in these cluster countries? For nearly a decade, China has been touted as the biggest threat India's supremacy in offshore outsourcing, and its central government has been funneling money into developing the country's growing IT outsourcing (ITO) industry But beyond the obvious similarities (they're both big—really, really big—and cheap in comparison to their Western counterparts), there remain major differences in the two megamarkets for offshore IT services, from language and management skills to industry focus to supplier and customer bases We checked in to find out how the two countries compare today Population: China is the world's most populous nation with 1.3 billion residents to India's 1.17 billion, but experts expect India to surpass China in coming decades Labor Force: China boasts 813.5 million workers and 4.3 percent unemployment compared to India's 467 million and 10.7 percent unemployment GDP (Purchasing Power): It's no wonder everyone wants in: China's GDP is the third largest in the world at $8.748 trillion India's GDP ranks fifth at $3.57 trillion ITO Market Size: India remains the leader raking in an estimated $70 billion annual IT services revenues (both domestic and offshore outsourcing), while China has about $20 billion overall Customer Rationale: Customers look to India and China for low cost, a large available talent pool, and expertise, according to Duke University's Offshoring Research Network But IT buyers rank language requirements and co-location with business process facilities as top reasons for offshoring to India; they list access to the local market and co-location with manufacturing facilities as important reasons for outsourcing to China Average ITO Salary (2008, in USD): China's labor costs are cheaper, according to data from offshore outsourcing consultancy Neo Advisory An entry-level ITO worker earns $7,000 a year versus $8,400 in India while a Chinese team lead with two to five years of experience earns $14,700 compared to $17,000 in India At the manager level, wage disparity increases with Indian manager earning $30,800 a year, 36 percent more than their Chinese counterparts making $22,600 Wage Inflation: India continues to experience strong upward pressure on salaries, while China's wage inflation has been low thus far Scope of IT Services: India continues to climb the value ladder offering IT, business process, and knowledge process outsourcing Consulting services are also on the rise China's focus remains software and product development Management Maturity:India possesses strong project management skills and continues to invest in initiatives to strengthen middle management capabilities China has a shortage of middle- and senior managers with experience managing client expectations, Western business acumen, leading large teams, and communicating with customers Service Delivery Model: In India, traditional third-party outsourcing deals predominate as captive centers continue to be sold or folded In China, captive centers account for more than half of all IT service delivery Supplier Base: India has a robust and competitive provider environment led by a legion of Indian-owned, publicly held suppliers and large local operations of global providers, along with niche players China's market is fragmented and dominated by small to mid-size suppliers, including Chinese owned providers, Western-managed companies, and local operations of global suppliers IT Outsourcing Customer Base: India's most valuable customers are U.S and European buyers of IT services In China, domestic companies make up the majority of the customer base, followed by those from nearby Asian countries such as Japan Process Maturity: India's outsourcers have put years of investment and training into software development and other process maturity programs In China, process and functional skills necessary for requirements analysis, business process design, and use-case development are scarce, say analysts English Proficiency: Hindi may be the India's official language, but English is the unofficial language of business on the subcontinent with 232 million English speakers (226,449 of whom list English as their first language) China has just 10 million regular English users, though as many as 300 million may be learning the language IT Outsourcing "Brand": "India, Inc." is known as the leading offshore outsourcing destination thanks to concerted efforts of providers, trade association, and government China lacks a clear identity or common message with competing government initiatives, regions, cities and technology parks Transparency: More than 85 percent of outsourcing customers cited "Chinese inscrutability" as a concern, according to Gartner, making relationship-building difficult Leading outsourcers in India tend to promote transparency with customers, inasmuch as true openness is ever a part of an outsourcing deal Intellectual Property: China recently enacted IP laws, but security remains a top concern for outsourcing customers India's IP laws are comparable to those in western nations, but enforcement remains challenging PR Problems: This one's a tie India's recent corporate scandals hit close to its ITO home, but did little to dissuade current outsourcing customers China's product recalls made bigger headlines but have less relevance to ITO Signing on the Dotted Line: India has a strong tradition of private contracting and enforcement, similar to leading global providers, while China only recently moved away from trading agreement forms to more mature contracting capabilities Cultural Affinity: A former British colony, Indian retains a strong cultural affinity with Western nations U.S and European customers cite cross-cultural differences as a big barrier to success when outsourcing to China, according to Gartner Chinese workers can have difficulty adapting to collaborative or entrepreneurial environments Infrastructure: China has made major investments in a sleek and modern transportation system, power supply, telecommunications, and high-speed broadband India's infrastructure is weak and has not kept pace with economic growth Government Incentives: India's government was slower to join its own ITO party but has created a business-favorable legal and regulatory environment China's central government has gone into overdrive with a fiscal policy that encourages IT services development Currency Risk: A strong India rupee stills erodes the margins of Indian providers (or gets passed on in higher customer costs) China's currency is also strong, but does not float despite increasing pressure from trading partners to appreciate the Yuan value Legal System For Western customers, India's legal system is familiar-a British-based common law system with an independent judiciary China's civil law system derived from Soviet and continental legal principles; critics warn that it is opaque, complex, and inconsistently enforced -India Vs China for Outsourcing China, being a leading outsourcing destination has always been a major competitor for India However, India is ahead of China in several areas In the following table, AT Kearney compares the two nations for their suitability for outsourcing based on parameters such as government support, education and talent pool When compared to China, India has a large talent pool that is skilled in English and produces high quality services by using high-end infrastructure CLUSTERS: Clusters are geographic concentrations of interconnected companies and institutions in a particular field Clusters encompass an array of linked industries and other entities important to competition They include, for example, suppliers of specialized inputs such as components, machinery, and services, and providers of specialized infrastructure Clusters also often extend downstream to channels and customers and laterally to manufacturers of complementary products and to companies in industries related by skills, technologies, or common inputs Finally, many clusters include governmental and other institutions—such as universities, standards-setting agencies, think tanks, vocational training providers, and trade associations—that provide specialized training, education, information, research, and technical support EXPLAIN: Role of the State  Political-economic geographies: intra-national politics -> intervenes to prevent ‘encroachment’ of foreign companies – High taxes, strict policies, limit the expansion of foreign companies  Reject the ultra-globalist position that polarizes the nation state and the global firm -> firms and markets are engaged with the nation-state in a mutually dependent relationship  The nation-state comes in different shapes and sizes; they cannot all be described as ‘powerless’ – The ultra-globalist story depicting the nation-state as being the same everywhere is clearly a gross oversimplification of reality  Indeed, the nation-state comes in diferent shapes and sizes; there are many different varieties of nation-state and they cannot all be described as “powerless” For example, Vietnamese government always try to negotiate with other countries for the sake of Vietnamese companies through free trade agreements (e.g., TPP, AEC, FTA) Thus, thanks to the help of government, these local companies can be global one day for not only bringing good opportunities but also collaborating with large and small domestic companies on the way integrating international business For exported products, Vietnamese government has done a lot of actions to help companies understand clearly about the exporting procedure, providing finance aid, consulting, certifying qualities… For imported products, Vietnamese government has reduced taxes, establish “Using domestic products” Campaigns, Consulting,… From a realistic perspective, strong states are able to shape the rulesand institutions of the international economy according to their own interests They control, to a certain degree, the pace and nature of their integrationinto the international markets by using protective barriers such assubsidies, import quotas, and tariffs to defend their strategic sectors andintellectual property rights.(for example, The U.S Anti-dumping lawprotects American industries from supposedly unfair import competitions: The"Vietnam Catfish war" case Over one year after the original investigationconducted by the US DOC, the case was finally concluded with theimposition of anti-dumping duties on imports of fish fillets from Vietnam.)For example, Japan, a strong state, has been able to integrate into theinternational economy on its own terms and for its own economic interests Ithas resisted the forced implementation of foreign and international standardsand refused to give up its protectionist policies, denying access to strategicsectors, during several years of WTO negotiations  The nation-state is always remaking itself and undertaking necessary adjustments to new global realities – Subscribe to a more measured view of the nation-state that understands it as always remaking itself and undertaking necessary adjustments to new global realities 10 Explain: The working-life of service:  Productivity of service: suất/ hiệu Strategies for Improving Service Productivity: Increased use of technology: Service sector productivity is heavily dependent on fast developing technologies and automation For eg Customers not only interact with a contact person, they also transact using an ATM or a computer (website) According Normann, there are five main reasons for using information technologies:  Reducing costs by substituting service officers for information technologies  Standardizing services  Increasing availability (24-hour access to services using appropriate machines or computers)  Linking customers into the service system  Affecting customer and personnel relationships and behavior Training and development: The importance of ‘people dimension’ in the service performance cannot be undermined For e.g it is the receptionist who first interacts with the customer or the hairstylist who cuts the hair etc To a large extent, it is on the basis of interaction with this ’employee’ that the customer forms his perception Therefore, employees and staff must not only be trained in functional/technical skills but also in soft skills Training should be looked as an investment and not a cost Universal beliefs: To improve the productivity of services, certain beliefs must be understood, accepted and practiced by all For e.g quality and customer service must be seen as an invaluable partner, not just for gatekeepers or receptionists but even managers and directors Recruitment planning: Improving service productivity requires assistance from human resources It should understand what each department requires so it can find the best employees They can take inputs from each department and design job descriptions which help find the best fit employee Better suited employees lead to increased productivity Reducing service level: By allotting less time to a service offering, productivity can be increased For e.g., a doctor gives less time to his patients so he can see more patients in a given day However, care should be taken that quality does not suffer, otherwise it would lead to customer dissatisfaction Increase or diversify service offerings: This is another way of increasing productivity For e.g a doctor can start a pathology lab in his premises, or hotels can add event planners to their list of service offerings etc 7 Changes in demand and supply: These forces play a role in determining the service productivity For e.g to meet an increased demand, companies can hire part- time employees and where capacity is restricted, companies can promote non peak times 11    Flexibility of service: linh hoạt, đa dạng  Elasticity of service; co dãn tốt hay xấu Limits to service export growth in the semi-periphery and periphery? (explain) The semi-periphery countries are the industrializing, mostly capitalist countries which are positioned between the periphery and core countries The periphery countries (sometimes referred to as just the periphery) are those that are less developed than the semi-periphery and core countries NATIONAL ADVANTAGES When weighing national advantages, consider the following examples:      Geographic advantage For example, Panama is known as a transportation and distribution hub due to the Panama Canal Based on its information and communications technology infrastructure and links for four submarine fibre optic cable systems, it can market itself as the regional hub for e-services Language or cultural advantage Peru has large Japanese and Chinese immigrant communities Human resources advantage Jordan has numerous professionals trained in France, the United Kingdom and the United States, and has extensive work experience in the Arab Gulf countries A reputation for being business-friendly or familiar with other ways of doing business Barbados has a reputation as a politically stable, open economy with more than 8,000 offshore businesses A reputation in a particular sector that can be leveraged as a country image Jamaica has a global reputation for reggae music, which is being leveraged as a lead sector Access to a range of other markets A CARICOM (Caribbean Community and Common Market) country such as Trinidad and Tobago can position itself as the gateway to the Caribbean (and South America through links with Venezuela) for services such as market research – Partnering with institutions in other countries can help to open doors and provide credibility for first-time exporters to those markets, providing access that would otherwise prove difficult Service industry associations can develop friendship agreements with sister associations in target export markets to help service suppliers learn about the market, find foreign partners and develop contact networks They can cooperate to support their members in building multi-service consortia and promoting unique bundles of services – Service opportunities develop primarily through contact networks and referrals, not through market research By expanding the groups of people who know the capabil-ities of their service exporters, trade support institutions can help service suppliers take full advantage of growth opportunities in world markets a Technology and infrastructure: Research labs, universities, and industries interconnected via a fast and reliable communications network Technological Limitation: Information technology (IT) and related services, including computer consultancy, software development, data processing, database management and call centres Infrastructure services, including architecture, engineering, construction, transportation, distribution and financial services b Education and training c Government regulation and policies d Co-operate strategies Traded interdependencies within clusters: Untraded interdependencies within clusters: ... least as important as geographical proximity in order to understand the micro-foundations of knowledge spillovers and the channels through which knowledge diffuses Being geographically close to... relations (long-distance, selective relationships), interaction and cooperation Therefore, while geographical proximity is a good proxy for the “atmosphere effect”, relational proximity measures... between the two areas By the same token, relational proximity reinforces the effects generated by geographical closeness thanks to synergies and increasing returns 7 What are differences of outsources/offshoring