globalbusinesstoday-130203075553-phpapp01 (2014_07_04 09_24_38 UTC)

8/11/2019 globalbusinesstoday-130203075553-phpapp01 (2014_07_04 09_24_38 UTC)

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Global Business Today6e

by Charles W.L. Hill

McGraw-Hill/Irwin Copyright 2009 by The McGraw-Hill Companies, Inc. All rights reserved.


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Strategy, Production, and Logistics

Question:How can production and logisticsbeconducted internationally to

1.lower the costs of value creation

2.add value by better serving customer needs?

Productionrefers to activities involved in creating aproduct

Logisticsrefers to the procurement and physicaltransmission of material through the supply chain, fromsuppliers to customers

The Six Sigma system, a direct descendant of totalquality management (TQM), aims to reduce defects,boost productivity, eliminate waste, and cut coststhroughout a company


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Where to Produce

Question:Where should production

activities be located?

When deciding where to locate

production facilities, firms must

consider

1. country factors

2. technological factors

3. product factors


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Outsourcing Production:Make-or-Buy Decisions

Question:Should an internationalbusiness make the component parts togo into their final product or outsource

them?

Make-or-buy decisions(decisions aboutwhether to perform a certain value

creation activity in-house or outsource itto another firm) are important to a firmsmanufacturing strategy


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Making component parts in-house

(vertical integration) is attractive

because it

1. is associated with lower costs

2. facilitates investments in highly

specialized assets

3. protects proprietary technology

4. facilitates the scheduling of adjacent

processes


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Buying component parts from

independent suppliers (outsourcing) is

attractive because it

1. gives the firm greater flexibility

2. helps drive down the firm's cost

structure

3. helps the firm to capture orders frominternational customers


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The benefits of manufacturing components in-

house are greatest when

highly specialized assets are involved

when vertical integration is necessary forprotecting proprietary technology

when the firm is more efficient than external

suppliers at performing a particular activity

Some firms have tried to use strategic alliancesto capture some of the benefits of vertical

integration, without having the associated

organizational problems


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Managing a Global Supply Chain

Question:Why is logistics important to theinternational firm?

Logisticsencompasses the activities necessaryto get materials to a manufacturing facility,through the manufacturing process, and outthrough a distribution system to the end user

In international business, this is complicated by

distance, time, exchange rates, and customsbarriers, etc.

Efficient logistics can have a major impact upona firm's bottom line


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Question:How can a just-in-time inventoryprocess help a firm?

Ajust-in-time (JIT)economizes on inventoryholding costs by having materials arrive at amanufacturing plant just in time to enter theproduction process, and not before

It can result in major cost savings from reduced

warehousing and inventory holding costs It can help firms spot defective parts, take them

out of the manufacturing process, and boostproduct quality


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Question:What is the role of informationtechnology in materials management?

Electronic data interchange (EDI)facilitates the tracking of inputs

allows the firm to optimize itsproduction schedule

allows the firm and its suppliers tocommunicate in real time

eliminates the flow of paperworkbetween a firm and its suppliers

Documents

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