Week 12

Question 1

What is the service economy?

Answer 1

The service economy involves industries that provide services, such as healthcare, education, tourism, and finance, and is characterized by intangible goods like advice and experience.

Question 2

How has the service sector changed over the last 30 years?

Answer 2

The service sector has grown significantly, with agriculture shrinking as a part of the economy, and services now make up a large portion of global GDP and employment.

Question 3

What sectors make up the service industry?

Answer 3

The main sectors in the service industry include education, healthcare, tourism, and finance.

Question 4

What were the historical views on services in the economy?

Answer 4

Historically, raw materials and manufacturing were considered more important, with services seen as secondary. However, technological advancements have made services a crucial part of modern economies.

Question 5

How did David Ricardo contribute to the understanding of services?

Answer 5

David Ricardo argued that advancements in technology have made it easier to trade services globally.

Question 6

What is deindustrialization?

Answer 6

Deindustrialization refers to the shift away from manufacturing and industrial sectors, making room for services in the economy.

Question 7

What are the causes of deindustrialization?

Answer 7

Technological advances, such as mechanization and mass production, reduced the need for labor in agriculture and manufacturing, leading to the rise of the service sector.

Question 8

How did Detroit exemplify deindustrialization?

Answer 8

Detroit, once a thriving industrial hub for automobile production, saw a decline in its population and economy as the auto industry and manufacturing jobs moved elsewhere.

Question 9

What happened to Pittsburgh as it transitioned from steel to healthcare?

Answer 9

Pittsburgh shifted from a steel powerhouse to a major center for healthcare due to the decline of the steel industry and the rise in healthcare demand.

Question 10

How did the decline of steel in Pittsburgh impact employment?

Answer 10

The decline led to job losses in steel, while healthcare became the new primary employer, although many new healthcare jobs were low-paying and non-unionized.

Question 11

What are global cities, and what role do they play in the service industry?

Answer 11

Global cities like New York, London, and Tokyo are centers of advanced service sectors such as law, finance, and accounting, driven by globalization and telecommunications advancements.

Question 12

What was the impact of globalization on global cities in the 1980s?

Answer 12

Globalization increased the interconnectedness of economies, and global cities became hubs for both high-wage, specialized jobs and low-wage, service sector jobs.

Question 13

What is the size of the global service sector?

Answer 13

The service sector makes up 63.6% of global GDP, making it the largest sector of the global economy.

Question 14

What are the defining characteristics of services, known as the “Five I’s”?

Answer 14

The “Five I’s” are Intangibility, Inseparability, Inventory, Inconsistency, and Involvement.

Question 15

What is intangibility in the context of services?

Answer 15

Intangibility means that services cannot be physically touched, stored, or owned, unlike tangible goods.

Question 16

What is inseparability in services?

Answer 16

Inseparability means services are produced and consumed simultaneously, like a haircut or a hotel stay.

Question 17

What is the environmental impact of the service sector?

Answer 17

The service sector, particularly industries like tourism and transportation, can have significant environmental impacts, contributing to pollution and resource depletion.

Question 18

What is the impact of the cruise industry on the environment?

Answer 18

Cruise ships are major polluters, generating large amounts of waste, including human sewage and hazardous materials, and contributing to oceanic petroleum pollution.

Question 19

What is the quaternary sector?

Answer 19

The quaternary sector includes knowledge-based industries such as IT, education, research, and cultural/media industries, focusing on intellectual and specialized work.

Question 20

What is the quinary sector?

Answer 20

The quinary sector involves high-level decision-making roles, such as CEOs, government leaders, and senior executives, and often involves top-tier professionals.

Question 21

What role does the service sector play in developed countries?

Answer 21

The quaternary and quinary sectors play a central role in developed economies, with the quaternary sector often becoming the largest economic contributor.

Question 22

What is offshoring?

Answer 22

Offshoring is the practice of relocating production or services to another country, typically to reduce costs, but can also apply to financial services and other business operations.

Question 23

How does offshoring differ from outsourcing?

Answer 23

Offshoring involves relocating production or services to a foreign country, while outsourcing refers to contracting services to an external supplier, which may or may not be overseas.

Question 24

How did offshoring evolve post-World War II?

Answer 24

Offshoring expanded after WWII due to institutions like the IMF and World Bank supporting economic development and global trade agreements.

Question 25

What were the technological advancements that facilitated offshoring?

Answer 25

Improvements in transportation, communication technologies like telecommunications, and undersea cables allowed for more efficient management of global production.

Question 26

How did Japan lead in offshoring electronics production?

Answer 26

Japan pioneered offshoring by setting up factories in East Asia for labor-intensive tasks like assembly, while retaining design and fabrication in Japan.

Question 27

What is the strategy behind global production?

Answer 27

The strategy of spreading production across multiple countries aims to increase efficiency by placing each stage of production in the most suitable location for cost or skill.

Question 28

What challenges does offshoring pose to global production?

Answer 28

Offshoring can make production more efficient but also creates fragility due to the complexity of coordinating multiple stages of production across various countries.

Question 29

Why is research and development harder to offshore?

Answer 29

R&D requires proximity to markets and customers, as well as specific skills, making it difficult to offshore these tasks to lower-cost regions.

Question 30

What are the social consequences of offshoring?

Answer 30

Offshoring can lead to lower wages, weakened labor unions, and poor working conditions in certain regions, while creating inequality in developed countries.

Question 31

How has offshoring impacted developing nations?

Answer 31

While countries like Taiwan and Hong Kong benefitted from offshoring, many developing nations have lost manufacturing jobs, leading to economic inequality.

Question 32

What role did tax havens play in offshoring finance?

Answer 32

Tax havens, such as the Cayman Islands, allow corporations to avoid taxes by shifting profits to jurisdictions with minimal or no tax rates.

Question 33

What was the significance of the Panama Papers?

Answer 33

The Panama Papers exposed the widespread use of offshore accounts to evade taxes, implicating many wealthy individuals, corporations, and politicians.

Question 34

What are some of the financial effects of offshoring?

Answer 34

Offshoring finance has resulted in tax revenue losses for many countries, with U.S. corporations alone losing an estimated $130 billion annually due to offshore tax practices.

Question 35

What is the role of multinational enterprises in offshoring?

Answer 35

Multinational enterprises are central to offshoring, leveraging advances in technology and regulatory loopholes to optimize global operations and profits.

Question 36

What is the historical overlap between offshoring production and offshoring finance?

Answer 36

Both offshoring production and finance became widespread in the 1970s, driven by the end of Bretton Woods, decolonization, and the expansion of multinational enterprises.

Question 37

What does "tax neutral" mean in the context of offshore finance?

Answer 37

"Tax neutral" refers to jurisdictions that impose no taxes on incoming or outgoing funds, facilitating the movement of capital without tax liabilities.

Question 38

What role did decolonization play in the rise of offshoring?

Answer 38

Newly independent countries sought offshore strategies, such as tax havens, to attract foreign capital and improve economic growth opportunities.

Question 39

How does offshoring affect global supply chains?

Answer 39

Offshoring makes supply chains more complex and vulnerable to disruptions, as seen during the COVID-19 pandemic when global production systems were severely impacted.

Question 40

What is the ADDAPT framework?

Answer 40

The ADDAPT framework (Anticipate, Diagnose, Detect, Activate, Protect, Track) helps companies manage supply chain disruptions by providing a systematic approach to risk management.

Question 41

What role did Loblaw's experience with the pandemic play in supply chain management?

Answer 41

Loblaw's experience highlighted the need for better preparation for global disruptions, leading to improvements in risk management protocols and supply chain resilience.

Question 42

How does the ADDAPT framework help manage disruptions?

Answer 42

The ADDAPT framework helps organizations anticipate, diagnose, detect, activate resources for, protect against, and track disruptions to minimize their impact.

Question 43

What are the challenges in detecting supply chain disruptions?

Answer 43

Disruptions can be difficult to detect in real time, and organizations must set up proactive measures like trip wires and dashboards to track product flow deviations.

Question 44

What does "Anticipate" mean in the ADDAPT framework?

Answer 44

"Anticipate" involves using past disruptions and simulations to prepare for potential risks, improving readiness and awareness within the organization.

Question 45

What is the importance of engaging external stakeholders during a supply chain disruption?

Answer 45

Engaging external stakeholders ensures a complete risk assessment, providing valuable insights from suppliers and customers to better understand the disruption's impact.

Question 46

How can companies "Activate" resources effectively during disruptions?

Answer 46

"Activate" involves quickly deploying resources, including materials, personnel, and information, to manage a disruption in real time and minimize operational losses.

Question 47

What strategies can companies use to "Protect" against future disruptions?

Answer 47

Companies should refine short-term responses into long-term protection mechanisms by updating contingency plans and improving sourcing strategies.

Question 48

How do "Track" capabilities help organizations manage supply chain risks?

Answer 48

"Track" involves monitoring supply chain performance in real time, using dashboards to track key indicators and quickly identify emerging risks.

Question 49

Why is collaboration important for managing supply chain disruptions?

Answer 49

Collaboration across the supply chain allows for more effective risk management and responses, ensuring that resources and knowledge are shared to mitigate disruptions.

Question 50

What is the significance of the ADDAPT framework for future-proofing supply chains?

Answer 50

The ADDAPT framework helps organizations strengthen their supply chains by anticipating risks, detecting disruptions early, and ensuring quick recovery, making them more resilient to future challenges.