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B207 - TMA02 Competing In A Global Context (Internationalisation…
B207 - TMA02
Competing In A Global Context
Supply Chain Management
Supply Chain Efficiency
Throughput Efficiency = Total Value-added Time / Total Throughput Time x 100%
Better to Optimise The Supply Chain as a Whole, Rather Than Optimise Each Individual Element Within The Supply Chain
Bullwhip Effect
Supply Chains Are Inherently Unstable
Demand Fluctuations Magnify Through The Supply Chain
The Instability Creates Constraints on How Supply Chains Are Managed
Main Source of Waste is Delay of Resource in a System
Improving Efficiency Can Be Simple To Do & Yield Excellent Results
Outsourcing
Advantages
Ability To Focus On Core Internal Capabilities
Access To Supplier Capabilities
Reduced Need For Capital Investment
Fewer Direct Staff
Outsource Suppliers Usually Have Lower Unit Costs
Clear, Identifiable Supply Chain Costs
Can Be Used To Expand Overall Capacity
Disadvantages
Some Loss of Control
Costs Involved In Managing Suppliers
Reduced Economies of Scale
Potential Closure of Existing Facilities
Need to Share Sensitive Information With 3rd Parties
Risk of Being Dependant on a Supplier
Increased Supply Chain Risks
Globalisation
Convergence
An Organisation That Works The Same Throughout All Of Its Parts
Allows An Organistion To Have A Model Set Up With Clear Direction & Purpose
Can Be Inflexible & Puts An Organisation At Risk Of Failing On A Large Scale
Divergence
An Organisation That Reacts & Adapts To The Target Countries Needs
Allows An Organisation To Avoid Ethical Pitfalls
Takes The Organisation Away From The Initial Brand Image
Crossvergence
Crossvergence is A Mixture Of The Two Forms Above
Allows Organisations To Work Fluidly & Have Clear Ideas Set Out
Global Trade Environment
Increasing International Trade
Push Towards More Specialisation
Business Gain More Profits Investing In New Areas
impossibility of Completely Reversing International Agreements
Barriers to International Trade
Increasing Populist Pushes Against The Global Trade Environment
Risk of Being a Loser Country in The Trade Game With The Other Countries
Cost of Bad Economic Performance Could Convince Some Countries To Limit Global Trade
Internationalisation
Benefits
Cost
Availability of Goods
Implications
Carbon Footprint
Time Delay
Hidden Costs
Room For Error
Dell's Call Centres In Mumbai
Benefits
Lower Wage Costs
Time Difference Benefits
Implications
Poor Customer Service
Poor Working Conditions
Manufacturing Networks
Domestic Sourcing
Sourcing Locally
Ease of Control
Lack of Complexity
Reactive International Sourcing
Lack of Domestic Supply
Forcing Some International Purchasing
Proactive International Sourcing
More Sophisticated Purchasing Practices
Better Prices & Quality
More Awareness of Price Opportunites For Buying Internationally
Global Sourcing Networks
Collaborate Supply Networks
Supply Chain Works Towards A Common Goal
Manufacturers & Suppliers Work Together
International Operations Strategies
Home Country Operations With Exports
Traditional Approach
Large Domestic Operation
Exports Overseas in Fully Produced Form
Delivery Is Achieved Using Staff Based At The Domestic Operation
Multi Domestic Operations
Separate Self Contained Operations In Each Country They Work
Extreme Difficulties in Market Characteristics
Practical Reasons, Such as Language Barriers
Support Functions Have To Be Duplicated
Other Scale Economy Losses
Regional Operations
Balance Between Local Specialisation & Economies of Scale
Operations in Each Region
Good Balance
Serve Local Markets
Logistics Costs of Transporting Goods
Global Coordinated Operations
Truly International Operation
Facilities in Many Countries & Operate In Most Regions
Transfer of Goods & Services Across Country or Regional Boundaries
Export Their Products & Services When Local Demand is Lower
Tax Considerations
International Tax Rates
Over 190 Countries Provide Data to PwC & World Bank Group
Provide Information To Give Insight into How Governments Chose to Tax Companies
Transfer Pricing
Transfer Pricing is Legal
Two Companies Within The Same Organisation Do Business With Each-other
Can Be Abused When Organisation Distorts The Price For Tax Benefits
Base Erosion & Profit Sharing
Refers to Gaps In Global Tax Law
Large Multinationals Manipulate Gaps To Shift Profits to Low Tax Areas
New Global Legislation in Place Trying To Remove Gaps
Tax Policy is Very Technical & Achieving Cross-Border Tax Cooperation is Difficult
Exchange Rates
Foreign Exchange Markets
Known as Forex & Is Where Exchange Rate is Determined
Demand From £'s Abroad Comes From Foreign Organisations Who Want To Buy UK Goods & Services
Supply of £'s to Foreign Market Comes From UK Organisations Buying Foreign Goods
Exchange Rate Fluctuations
Exchange Rates Between Currencies Fluctuate A Lot
Can Fluctuate Due To Global Events (For Example, Brexit)
Affects Small Businesses Greatly
