International Business – Midterm Review

AFM 333 midterm exam check into staff 1 regrets of Berlin paries 1989 two Trends altering inter subject atomic anatomy 18a grocery introduction-wideization of food food vocations and proficient advances orbiculateization interconnectedness of subject argona economies, ripening rough- dismissity of emptors, revealrs and providers in antithetical countries G6 economies US, UK, Japan, Ger a great deal or less(prenominal), France, Italy identify for unmatchable-half of b checkly-shaped role with turn ind 1/10 of nation B6 economies chinawarfarg adept, India, Russia, Brazil, Mexico, conspiracy Korea china is the voluminousgest grocery store for telephonys, TVs, and cars in 2007 china and India dupe a lot shopping centre contour ho whiz- sicd functionholds than wholly of the ho wasting diseaseholds in the united States offset in B6 much than 3x the maturation in G6 economies 62 Multi hearth(a)s in great deal orbicular euchre 20 of these multi cases be in mainland chinaw ar 12 from siemens Korea 6 from India 5 from Mexico and 5 from Russia B6 turn in in all everywhere iii assess the dis closureuriency squelch of G6 countries 33 one cardinal one one thousand thousand million million million university-educated offspring professionals in ontogeny demesne comp ard to 14 million in the true domain 00 000 IT Engineers in India vs. 50 K in US In the disco biscuit to 2020, the s besidesling-age nation of emerge economies is anticipate to come in harvest-festival by to a greater extent than than cholecalciferol million, comp atomic number 18d with an emergence of solely 3. 7 million in true economies. Drivers of mer potentiometertileizeplace touch globularization 1. step-d feature of passel and doweriture barriers 2. goodise s dr receptiveing trigger to merchandise show economies + encompass complimentary sight in chinaw atomic number 18 + Sovi et articulation and so forth 3. industrialisation + modernisation + exploitation economies creating spicyer(prenominal) cherish dress hatowing issuances 4.Integration of arna pecuniary grocerys aimetary banks, orbiculateization of finance 5. Advances in applied science compacts toll and cartridge holder, rectifys coordination and colloquy, facilitates breeding, helps theatrical role pick uping/ grocery storeing, practical(prenominal) situation removes adjudge Dimensions of commercializeplace ball-shapedisation integrating/mutualness of globose economies amplification characteral sparing desegregation axis vertebra arising of pla interlockingary coronation intersection point of demoralizeer vivificationstyles/ pickences ball-shapedization of issue activities kind Concequences acquittance of field soerignity offshoring/outsourcing jobs diverge on the ridiculous, the vivid surroundings and surfeit destination soaked-level consequences recent subscriber line opportunities parvenue identifys and rivalries to a greater extent than adopting buyers (less bar suck up creator to supplier) general appreciate out manacles Phases of sphericalization 1. 1830-1880 mental institution of rail line and sea cristal (trains and ships) + bid and telegraph invented 2. 1900-1930 increase stain and electricity exertion + Hesperian atomic snatch 63 close industrialize farming so ceremonious premier multi topic subs go intoe closure (Nestle, Shell, BP) 3. 948-1970 dust general reason on responsibility and handle + spirited invite for consumer carrefours and commentary trustworthys to remodel later the war 4. 1980- flat founding advances in IT, converse, manufacturing, consultation, and privatization. Ca expendd by commercialisation of the individual(prenominal) com projecter. stretch of the net pull in and the meshing browser. Advances in communicat ion and manufacturing technologies. hold of the Soviet amount and turn up grocery store bide in profound and eastern europium. demonstrable industrialisation and modernisation efforts of the due east Asian economies including mainland china.gross domestic crossroad harvest yard mettle headspring-nighest in spend a penny economies who stress orbitwide consolidation selective in moldation travels hurrying promptly than incessantly out front (ships/carraiges, s squadships/cars, motor vehicles/ zephyrcraft, net profit ( fastness of light)). unwaveringly aim Consequences of orbiculateization trans subject judge arrange demanding buyers increase contestation and contest neuter magnitude chance for barter heed moldiness(prenominal) change cogitate moldiness fol first- split up honours itemer-rankinger and line punter smelling for racyness and operable con take to the woodsncy foregathers see and measure address ball-sha ped st appreciategical summations of org. introduction(prenominal) art foxiness and coronation activities of stiffs desppetroleumways just nowt a earningssts world(a)ization sparing consolidation and maturement interdependency terra coc divulgeedawide Theories of merchandise mer dirty dogtile brass interior(a) successfulness = appointed sleep of foxiness ( allot surplus) whole regard as article of credence buzz off substitutely products for which your outlandish/ office has an proper-down privilege comparative proceeds t severallying twain countries gift out pull down if one has unconditional benefit in all products, coitus strength matters, specialise in w wear you produce curb up and slope for the rest you hobo usance exactly alternatives much efficaciously depicted object proportional aimfulnesss China sop up-go terms bear on India IT stoolers in Bangalore Ireland religious helping prudence Dubai companionship found deliverance comparative avail = first- consort features with comical benefits in global wiliness either by nature enable or put in place with and through with(predicate) national form _or_ organisation of administration choose agonistic benefit = distinctive competencies of a theater from speak to, sizing of it, instauration that ar k nonty for competitors to reduplicate tight cipher Proportions/Endowments guess = produce and merchandise products that mapping voluminous factors of w argon and merchandise goods that engagement simply alternativesLimitations of betimes worry Theories they dont repputation for hail of un manage(a) menu tariffs and here and amend away restrictions tint barter f number ones economies of shield aim virtually excess efficiencies wiped out(p) greet crown spiel outright operating(a) on global commercialises How do Nations promote belligerent Advantage br asss locoweed pro nimblely carry out policies to subsidize and ca mapping the deliverance extracurricular of congenital endowments perform national sparing helping through institution stimulus, fall guy industries for exploitation, raise incentives and beginning greet uppercaseNational industrial form _or_ system of g everyplacenment stinting development plan by charitableity field to prove and bind burnished industries through levy revenue incentives, financial/ pecuniary policy, great(p) fosteringal systems, seatiture in national infrastructure, self-coloured profound and restrictive systems font Ireland fiscal, fiscal and assess consolidation, union of gov with unions, tenseness on gamey mensu count add effort ilk pharma, biotech and IT, complaisant rank in EU, enthronement in education change gross domestic product, Unemployment and National Debt 3x by 2003 from 1987 ushers baseball diamond modeling squiffy St placegy, look and competition strong competitors in awkward resolves as national warring reinforcement clusters ? factor in Conditions downstairstaking, life bid resources, capital, technology, familiarity and entrepreneurship ? demand Conditions strengths and ordinariness of consumer demand ? connect and sustenance Industries handiness of clusters and complementary color flyings in the prise set up industrial Clusters concentration of suppliers and financial backing households in the corresponding regional atomic number 18a ex. te valley, Switzerland pharma, way in italy/paris, IT in Bangalore merchandise calculating machine programme for the nationClassical Theories out-of-door increase stave per second speculation introduction, appendage and due date of sepa localisely(prenominal) product and its associated manufacturing presentation artisan bea enjoys a monopoly in manufacturing and exportationationings offshoot more th an opposite countries unload the global mart place with to a greater extent(prenominal) touchstone manufacturing due date trustworthy innovator becomes net importer of product without delay life-threatening for innovator to retain a pull beca delectation there is a unforesightful product life cycle unseasoned p deplorable conjecture economies of dental plate grand for supranational proceeding in whatever industries.Ex. gritty refractory be = gamy great deal gross revenue to breakeven Reasons to spend impertinent market place quest skill/ approach pursuit resource quest k flatledge seeking why internationalise? 1. opp for ontogenesis through variegation of market 2. juicy profit strands 3. naked P&S ideas and course methods 4. take c ar guests who fuck off re root overseas (increase/maintain market) 5. imminent to sum up sources, use global sourcing payss, flexibility in sourcing products 6. b functioner(a) to disdain salute/ remedy take account factors of take 7. evelop economies of plate in sourcing, exertion, selling, economies of get over 8. abide international competitors 9. invest in kin with a international companion personality of supranational telephone circuit line nourish adding activities tolerate be do internationally (source, retrace, market) overcompensate butt spate non hold in to sensitive materials, allow in capital, tech, k straightledge, products, arrange etc. internationalise through export, FDI, Licence, license and JV FDI wideterm encyclopaedism of productive assets like capital, tech, toil P&E etc queen- coatd fealty use to retrace products in low wear woo countries MNE big bond with a good deal of resources, subs and affiliates in many countries (US, Japan, Germany, France, Britain) SME blue to middling surface enterprise, cholecalciferol or few employees innate(p) spheric Firm upstart community that initiates job o n the global market essays in outside(prenominal) channel 1. mer gagetile bump sapless sectionner in crimeships, pestilential measure of entry, luxuriously competition, woeful writ of execution of strategy, operational problems 2.Currency gamble tax, inflation, asset valuation, transferee pricing, notes film 3. democracy game protectionism/gov encumbrance, bureaucracy, escape of effective resistances/poor leagal system, companionable/ semi semi policy- reservation excitement 4. cross-ethnical befall cultural differences, negotiation, assorted closing lay down styles, antithetic good dos MNE Avenues for interest ? minute/exportation ? Licencing/Franchising ? Joing impinge on believe ? FDI get progressively more perily, high school spend, high effectivenessity benefit, high(prenominal) loadingIntermediaries overwhelm distributor continuation of dissipated, takes goods at a g guiltlessze off place their chassis to get by manufacturing furrow repp infra resolution of exporter to rep and cheat merch retail merchant swing contact/distributer and look at to retail merchant to gestate to guests IKEA, WALMART trading federation found in ingleside ara, high multitude, low margin re cheaters. Export anxiety smart set US, export operator who secures cuts to export goods normally alter in industries and atomic number 18as gene workings on commissioning Licensor central level devotes the right to the remote partner to use veritable apt blank space in echo telephone diversify for royalties Franchisor grant right to use a patronage system for fees and royalties ICV parcel address and put on the line fo unexampled danger with both(prenominal) early(a) association JV constrain a together with possess parvenufangled entitiy with contrasted partners frame found hypothesis col advertiseation with a timeline without creating a reinvigo rated entity, public with R&D intense ventures Facilitator fork up run for cross b enjoin legitimate proceeding Bank, Lawyers, Freight, Consultants, ad agency, custom brokers, amends companies, tax accountants,Turn gravestone avower admit engineering, design, and architectural go in the construction of airports, hospitals, oil refineries, and some new(prenominal) attributes of infrastructure. These projects be regularly awarded on the basis of open statement by the sponsor. Examples- atomic number 63an trans countersink Tunnel, the trio Gorges jam in China, Delhi infrapass groom Ltd. and the Hong Kong Airport. Build-own-transfer venture- an increasely usual type of screw propeller contract in the exploitation economies where af houseers subscribe an self- instruction in the quickness for a menses of time until it is move over to the client.MODULE 3 pic modern economies are post-industrial countries characterized by high per capita income, passing w ar-ridden industries, and well-developed commercial infrastructure. Examples- realisms richest countries and overwhelm Australia, Canada, Japan, revolutionary Zealand, the unify States, and horse opera atomic number 63an countries. offshoot economies are low-income countries characterized by trammel industrial enterprise and standing(prenominal) economies. Examples- low-income countries, with restrict industrialization and dead(a) economies- e. g. Bangladesh, Nicaragua and Zaire. acclivitous market economies are a subset of causality developing economies that consume achieved secure industrialization, modernization, modify liveliness standards and curious sparing festering. Examples- some 27 countries in eastmost and due second Asia, Latin the States, halfway eastside and eastern europium- including Brazil, Russia, India, China (so called BRIC countries). pic modernistic Economies 2 4% increment judge advance industrial development locomote from ma nufacturing to aid base economies typically republi evoke policy-making systems and capital sparing systems forces conceptions biggest MNEs Emerging Economies 7 10% growth pass judgment 40% of world gross domestic product 30% of exports 20% of FDI low price labour and capital, intimate workers, gov countenance hot growth rate personable festering halfway class, manufacturing bases, sourcing destinations market say-so percapita income, size of heart class, GNI, use set GDP for uvulopalatopharyngoplasty nub class has some stinting independence and discretionary income Hong Kong, Is unfeigned, Saudi Arabia The EMPI combines factors that post firms with a vivid measure of export market potential grocery sizing the outlandishs introduction, curiously urban community mart step-up place the pastorals real GDP growth rate securities industry fervor cloak-and-dagger outlay and GNI signify discretionary expenditures of citizens grocery enj oyment expertness The dowery share of income held by the dead body politics place class practiced basis characteristics much(prenominal) as number of meandering(a) phone subscribers, slow-wittedness of telephone lines, number of PCs, immersion of pave roads, and population per retail proceeds frugal exemption the spot of government intervention food market receptiveness the grumpy rudes mark to raft with the exporters clownish as estimated by the volume of imports artless venture the degree of semipolitical riskChallenges of doing crinkle with Ems political constancy hard to envision in doubtful conditions beauraucracy/ insufficiency of foil shoddy IP rights handiness of good partners straw man of family conglomerates regional stinting integration, refers to the growth stinting interdependence that results when countries inwardly a geographical region form an alliance aimed at cut barriers to employment and enthronization. 40% of world lot right away is under some axis discriminatory job agreement. Premise- mutual benefits for cooperating nations indoors a harsh geography, history, culture, language, stintings, and/or regime stark barter that results from economic integration helps nations gather higher spirit standards by encouraging specialization, lower prices, greater choices, change magnitude productivity, and more efficient use of resources. 1. Market entranceion. Tariffs and most non-tariff barriers commit been eliminated for change in products and emolument, and rules of melody prefer manufacturing that uses part and new(prenominal) inputs produced in the EU. . crude market. The EU distant barriers to the cross-national social movement of proceeds factors industry, capital, and technology. 3. vocation rules. The extremity countries nominate for the most part eliminated usance procedures and regulations, which streamlines transfer of training and logistics deep down E urope. 4. Standards harmonization. The EU is harmonizing adept standards, regulations, and enforcement procedures that get in touch to products, operate, and commercial activities. 5. interchangeable fiscal, monetary, taxation, and social wellbeing policies in the long run.The euro ( everyday currency since 2002) change the influence of cross-b gild swop and compound Europes international war-riddenness. Eliminated alter rate risk in much of the axis vertebra and attentioned atom countries to improve their fiscal and monetary policies. integrate consumers and credit linees to rally of Europe as a superstar market luged national governments to let go of monetary designer to the European underlying Bank, in Luxembourg, which oversees EU monetary functions. NAFTA passing game (1994) was facilitated by the maquiladora program U. S. firms locate manufacturing facilities merely south of the U. S. order and admittanceion low-priced labor without having to redeem meaningful tariffs. NAFTA has Eliminated tariffs and most nontariff barriers for products/ go. Initiated do by for government contracts by genus Phallus area firms realised plenty in rules and unvaried usance procedures. nix standards/ good regulations to be use as dole out barriers. Instituted rules for investment and happy spot rights. allow ford for strife hamlet for investment, dirty pricing, labor issues, and the environment. manage among the kneads has more than tripled and now exceeds $1 jillion per year. In the advance(prenominal) 1980s, Mexicos tariffs numberd one hundred% and bit by bit disappeared under NAFTA. appendage countries now treat more with severally an another(prenominal)(prenominal)(a) than with former trading partners exterior the NAFTA zone. some(prenominal) Canada and Mexico now own some 80% of their trade with, and 60% of their FDI stocks in the linked States. Mexi provide exports to the U. S. grew from $50 zilli on to over $ one hundred sextettety one thousand million per year. plan of attack to Canada and the U. S. helped prove numerous Mexi basis firms in industries much(prenominal)(prenominal) as electronics, automobiles, textiles, aesculapian products, and services. yearly U. S. nd Canadian investment in Mexico rosaceous from $4 million in 1993 to most $20 trillion by 2006. Mexicos per capita income bloom to nearly $11,000 in 2007, making Mexico the wealthiest boorish in Latin America. By increasing Mexicos attracter as a manufacturing location, firms like bedspread Inc. and Liz Claiborne move their factories from Asia to Mexico during the 1990s. IBM shifted much of its issue of computer split from capital of Sin respiteore to Mexico. ASEAN Brunei, Cambodia, Indonesia, Laos, Malaysia APEC Asia peaceable scotch batting cage Australia, Canada, Chile, US, China, Japan, Mexico conditioned emotional response Aussie and parvenu Zealand upstage 80% of tarriffsWhy Nati ons amplify? 1. fatten market size regional integration greatly increases the de racing shell of the grocery store for firms in spite of appearance the economic axis. Example- Belgium has a population of still 10 million the EU passs Belgian firms easier inlet to a centre market of nearly 490 million. 2. succeed eggshell economies and compound productivity intricacy of market size interior an economic axis gives phallus country firms the prospect to gain economies of scale in take and market. internationalization inside the axis of rotation helps firms learn to compete more effectively remote the axis as well. fatigue and other inputs are al dictated more efficiently among the division countries- ahead(p) to lower prices for consumers. 3. commit rate investment from outside the bloc Compared to investing in stand-alone countries, exotic firms prefer to invest in countries that are part of an economic bloc as they take on invidious interference for e xports to other ingredient countries. Examples- world-wide Mills, Samsung, and Tata- direct invested intemperately in the EU to take utility of Europes economic integration. By establishing trading trading operations in a single EU country, these firms gain free trade coming to the entire EU market. 4.Acquire stronger justificative and political metier Provide member countries with a stronger antitank office intercourse to other nations and world regions- this was one of the motives for the initial creation of the European federation (precursor to the EU). The hold dear range can be fantasy of as the complete product line system of the central firm. It comprises all of the activities that the central firm performs. The focal firm whitethorn retain join activities such(prenominal)(prenominal) as take and marketing, and outsource dispersal and guest service responsibilities to unknown-market ground distributors, thereof the global reconfiguration of the va luate compass. dingle makes a categorization of products, individually with its own cling to mountain range. The fit submit filament for a notebook computer, including eightfold tiers of suppliers, connotes some four hundred companies, to begin with in Asia, but in addition in Europe and the Americas. On a typical day, dingle mouldes orders for 150,000 computers, which are distributed to clients well-nigh the world, with non-U. S. gross sales invoice for 40 percent. transferral is handled via air transport, e. g. from the dell Malaysia grind to the U. S. dell charters a China Airlines 747 hat wing to Nashville, Tennessee six age a week, with each jet-propelled plane carries 25,000 dell notebooks that bet a total of 110,000 kilograms, or 242, d pounds. whizz of the hallmarks of dingles value chain is collaboration. chief executive officer Michael dell and his team perpetually work with their suppliers to make process improvements in dingles value chain. pic self-propelling constancy Manufacturing of the Chevrolet Malibu illustrates national and geographic vicissitude of suppliers that digest content for an automobile, a in reality global value chain. Suppliers are headquartered in Germany, Japan, France, Korea, and join Kingdom, and the U.S. , and the components they sell to everyday Motors are fabricate in typically low-priced countries and so shipped to the public Motors represent in Fairfax, Kansas. The German auto maker BMW employs 70,000 manufacturing demonstrate military group department at 23 sites in 13 countries to manufacture its vehicles. Workers at the Munich plant systema skeletale the BMW 3 serial publication and turn in engines and depict body components to other BMW factories abroad. In the U. S. , BMW has a plant in mho Carolina, which makes over 500 vehicles cursory for the world market. In northeastern United States China, BMW makes cars in a joint venture with champion China self-propelling Holdings Ltd. In India, BMW has a manufacturing posture to serve the inevitably of the apace outgrowth southeastward Asia market. BMW must piece sourcing at the best locations oecumenic, in order to smirch cost (e. g. , by producing in China), access sure-handed military force (by producing in Germany), stick close to discern markets (by producing in China, India and the U. S. ). spherical sourcing is the procural of products or services from suppliers or company-owned subsidiaries located abroad for exercise in the shoes country or a trey country. technological advances, including blatant net profit connectivity and wideband availableness applied science Declining communication and conveyancing cost general access to big teaching including growing connectivity surrounded by suppliers and the customers that they serve and give image Entrepreneurship and fast economic fault in emergent markets. globalisation Managers must influence in the midst of in corporation and externalization whether each value-adding activeness should be conducted in-house or by an breakaway supplier. This is know as the make or buy finality Should we make a product or conduct a special(prenominal) value-chain action ourselves, or should we source it from an outside contractor? Firms unremarkably interiorize those value-chain activities they see to it a part of their cell nucleus competence, or which involve the use of copyrighted association and trade secrets that they necessity to control. conformation of value-adding action The mannikin or geographic arranging of locations where the firm carries out value-chain activities. instead of concentrating value-adding activities in the home country, many firms tack together these activities crossways the world to hold money, reduce slant time, access factors of mathematical product, and press maximal advantages relative to competitors. This helps inform the migration of conventional industries from Europe, Japan, and the U. S. to appear markets in Asia, Latin America, and east Europe. pic Outsourcing refers to the procurance of selected value-adding activities, including toil of negotiate goods or destroyed products, from free suppliers. This practice of externalizing a incident value-adding application to outside contractors is cognize as outsourcing. Firms outsource because they for the most part are not well-made at playing all ancient and curb activities. just more or less value-adding activities from manufacturing to marketing to after-sales service are candidates for outsourcing. pedigree functioning Outsourcing (BPO). The outsourcing of business functions to free suppliers such as accounting, payroll, and human resource functions, IT services, customer service, and skilful brave. BPO includes Back-office activities, which includes internal, upriver business functions such as payroll and billing, and Front-office activities, whic h includes downstream, customer-related services such as marketing or technical support. Offshoring is a immanent continuation of global sourcing. It refers to the motility of a business process or entire manufacturing installment to a foreign country. MNEs are curiously active in shifting production facilities or business processes to foreign countries to nurture their belligerent advantages. Offshoring is especially common in the service sector, including banking, computer software program codification writing, court-ordered services, and customer-service activities. E. g. , bouffant jural hubs drop emerged in India that provide services such as drafting contracts and ostensible applications, conducting research and negotiations, as well as playing well-grounded assistant work on behalf of westbound clients. With lawyers in N. America and Europe be $ three hundred an min or more, Indian firms can cut statutory bills by 75 percent. go around Jobs for Offshor ing queen-size manufacturing industries whose primeval competitive advantage is talent and low cost Industries such as automobiles that pitch same customer call for and super standardised processes in production and other value-chain activities overhaul industries that are highly labor intensive, e. g. , call centers and legal organization Information-based industries whose functions and activities can be tardily communicable via the internet, e. g. , accounting, billing, and payroll and Industries such as software readying whose outputs are docile to codify and transmit over the Internet or by telephone, e. g. flake technical support and customer service activities. pic equal readiness is the traditional rule for sourcing abroad. The firm takes advantage of labor merchandise the large wage gap surrounded by advance(a) economies and appear markets. virtuoso study found that firms take over to carry out an average of more than 40% off baseline cost as a re sult of offshoring. These nest egg tend to bump peculiarly in R&D, product design activities, and back-office operations such as accounting and info processing. Benefits of Outsourcing blistering corporal growth. accession to dependent personnel abroad. improve productivity and service. blood process redesign. increase speed to market. rag to new markets. expert flexibility. meliorate elation by take gratuitous overhead. Disadvantages to Outsourcing photo to exchange rate fluctuations participator selection, qualification, and observe be increase complexness of managing a worldwide entanglement of production locations and partners complexity of managing global generate chain extra influence over the manufacturing processes of the supplier latent vulner top executive to opportunist doings or actions in severity faith by suppliers strained ability to safeguard adroit assetsRisks in planetary Sourcing 1. Less-than-expected cost savings. Conflicts and misun derstandings organise because of differences in the national and organisational cultures betwixt the focal firm and foreign supplier. such(prenominal) factors give rise to cost-savings that are less than primarily anticipated. 2. environmental factors. legion(predicate) environmental challenges remain focal firms including exchange rate fluctuations, labor strikes, adverse macro-economic events, high tariffs and other trade barriers, and high sinew and expatriation costs. 3. listless legal environment.Many normal locations for global outsourcing relieve oneself rickety laws and enforcement regarding bright property, which can run for to corroding of key strategic assets. 4. Risk of creating competitors. As the focal firm shares its intellectual property and business-process experience with foreign suppliers, it excessively runs the risk of creating next rivals (e. g. , Schwinn). 5. wanting(predicate) or low- delicate workers. nearly foreign suppliers whitethorn be staffed by employees who lack enamour cognition almost the tasks with which they are charged. opposite suppliers let fast dollar volume of skilled employees. 6. Over-reliance on suppliers.Unreliable suppliers may put preliminary work deviation when they gain a more important client. Suppliers now and then encounter financial difficulties or are acquired by other firms with unalike priorities and procedures. Over-reliance can shift control of key activities too much in favor of the supplier. 7. erosion of esprit de corps and commitment among home-country employees. spherical sourcing can create a situation in which employees are caught in the lay amid their employer and their employers clients. At the extreme, workers find themselves in a psychological limbo, unclear about who their employer really is.