Texas A&M University-Commerce - Essay Example

? [Insert Case] EXECUTIVE MBA FINAL EXAM [Insert Texas A&M Commerce In partial fulfillment of the requirements for [Insert Subject] [Name of Professor] [Date of Submission] Table of Contents Abstract………………………………………………………………………………………...3 1 Key Issues For Sourcing Production Abroad……………………………………………….4 2 Strategies for Dealing With Difficult Workers……………………………………………...7 3 Executive Traits…………………………………………………………………………….10 4 Factors that can draw a Company to International Trade…………………………………..13 5 Costs and Benefits of Globalization………………………………………………………..15 References……………………………………………………………………………………19 Appendix A………………………………………………………………………………….20 Abstract In the course of the Executive MBA, and in this subject of Global Competitiveness, it is of utmost importance that as students of the subject, one has an in depth working knowledge on the works on the world industry and economy. In order to make sound decisions in a global perspective, it is therefore an imperative that a person has a good grasp on the challenges and obstacles that can and will be faced in globalization. With many companies gearing for global competitiveness, a working understanding on critical decisions such as outsourcing of business aspects is necessary. Yes, risks are part of business, but it should be educated and calculated so as to avoid grave consequences. While there are many advantages in the international arena, there are also as many pitfalls for the unwary and unprepared. One must carefully weigh all the options and evaluate all the current plans in order to position the company for better competitiveness. It is also important that employees are also in the same page as the management in order to ease the transition and stability of the company. therefore, a strong and decisive leadership is required for this to come into fruition. How to handle difficult employees is also very critical for success, for it is in the right blend of these different employees that the company can develop unique business advantages that will have a more strategic impact on its operations. EXECUTIVE MBA FINAL EXAM 1. What are the key issues for consideration before sourcing production abroad? Provide explanation for each key issue. In the advent of globalization and modern trade, outsourcing other operational aspects to other countries has been common practice. Every country has its unique advantages in the field of global trade, and every company seeks to optimize its business potentials by driving their costs to a minimum while also acquiring value-adding activities which will then ultimately increase their profit margins. Thus, it is not surprising that countless of companies are trying to take advantage of what companies in other countries can offer in premium. Appendix A shows the current status of the industrial outsourcing. Aside from financial services, it is not surprising that manufacturing firms lead in Global Revenues in terms of outsourcing in the industry. It should thus be noted that in the manufacturing industry, per unit price of their production operation are a variable relative to many factors like resource availability, labor, proximity of supply chains, and the like (Washburn & Huang, 2008). But through outsourcing, one must first evaluate whether expanding and extending the company’s operations outside the scope of its national area should really prove to be highly beneficial. Shoring off and being dependent to another country for an aspect of their operations could be very crippling, and even fatal, for a company in its entirety. Therefore, one must delve into a deeper understanding of the risks and the factors involved before outsourcing operations to other countries. Since the primary objective of outsourcing is to minimize costs for an operation, it should also thus be the primary consideration for the outsourcing decision (Ireton, 2012). China has been a primary option for such outsourcing mainly because of its very low labor costs wherein it is only 4% compared to the labor rate of that in the United States (Banister & Cook, 2011). While unit cost is the prevailing measure for the outsourcing production decisions, there are other costs which need to be considered. Factors for the whole supply chain are also very crucial. For one, the geographical location proves to be very important. The proximity between the two countries involved would dictate the transportation costs. It is important to note that neighboring countries are most often each other’s largest trading partners and outsourcing associates. Such is the case for USA, Canada, and Mexico, wherein Canada is the US’s largest trading partner and Mexico is the second largest importer of US goods (Ireton, 2012). Dealing with nearby countries also eliminates problems such as transacting with different time zones, language barriers, and cultural differences since nearby countries would also tend to have very similar cultural preferences. Aside from costs, it is very important to consider that the quality of the product being produced in the external company shall not compromise the desired quality of the product (Ireton, 2012). This should be defined and agreed upon properly by the supplier and buyer. The trade-off in outsourcing operational aspects should not include a trade-off in terms of quality. With poor quality, everything downstream is affected. The satisfaction of the end consumers remain to be the dictating point whether the outsourcing decision is logical enough. This snowballs into the return of investment wherein defective products might prove more harm by the amount and costs of rework just to remedy the fault of outsourced production and the dissatisfaction of customers shall have broader effects which cannot be simply reflected on the balance sheet of the company. It is also essential in a supply chain that quality is observed in all aspects of the product process (Meredith & Shafer, 2010) and faulty quality will thus dampen the operational capabilities of the whole mechanism of the company. Also, with regard to the supply chain, it is important to consider in the decision the logistics capabilities of the country where it will be outsourced. However costs we save and the quality that we obtain in the production of goods would all be just put to waste if the product is not efficiently delivered to the consumers. Therefore, the infrastructures of the nation should be put into consideration. Transportation options should be evaluated and properly put into perspective. While hard cost savings will dictate the unit production price, opportunity losses because of lateness and inefficiency in the logistics department might ultimately be a more taxing expense for the company. Another aspect would be the trade regulations of the country. Government regulations and international trade rules and policies might be detrimental to the expansion of the operation of the company to other countries. The company must be aware of trade exemptions and quota restrictions of the target company. This could also then cost the company if there are additional policies which are adding expenses for customs and duties, brokerage services, and other financial impediments. The communication and technological capabilities is also vital to business operations (Kotler & Keller, 2009). Since a great risk in outsourcing is the trade-off on relatively losing a sense of control in that particular operation, this should be augmented by good communication lines between the buyer and the supplier. This also is a logistical issue since a good supply chain is well updated with the movements of its good through the whole system. And communication most often than not usually goes in hand with technological capabilities since technology is the vessel of information and thus communication. To reiterate, what really needs to be the focus of the company is to see to it that the most fundamental objective in outsourcing is still basically increasing the profit margin. This is achieved by lowering the costs and/or inculcating value adding activities. The very premise is that by outsourcing, the company addresses several weak points in its operations, where another offshore company might prove to not only gain but also remedy such shortcomings of the company. But, like any other decisions in business, this must be carefully assessed and its risks and repercussions should be calculated. Outsourcing, especially in the manufacturing industry, does not only encompass measurable statistics such as the trimming down of per piece unit production cost, but it is rather more complicated. The geography and the laws regarding trade will be key factors in outsourcing. What must also be really imperative is that the company should maintain a good grasp and execute a well-established connection and control over the cooperating company. 2. What are the strategies for dealing with three types of difficult workers? First, you have to identify the type and then provide the strategies. Every Human Resource manager would want all of his employees to be a team player, be self-driven, highly motivated, and sufficiently skilled. Although technology now is the prime factor for industrial competitiveness and efficiency, it should be well noted how the role of the human resource can vastly and significantly affect the company. For all the virtues of advanced technology, it is still different to have a working system of cogs that will ensure the gears to be continuously refitting. In cases of very bad performing individuals, firing and replacement should only be sought after for a grave offense or violation and not as a mere act of reflex. instead, as a good manager, one should be able to address the situation by properly handling the employee in order for the organization to not have wasted resources on it, and not wasting further by replacing it. It must be remembered that the employee is qualified for the job, the main reason he was hired in the first place (I assume), it is now up to the management that he lives up to the expectation, since they were the ones who decided to accept him anyway. As when faced with any kind of dilemma, one of the most crucial procedures in order to solve it is to properly identify and recognize the problem. By not being able to do so, by not having a clear grasp on what we are really dealing with, recommended solutions will only just falter and become infinitely useless. In like manner, in dealing with difficult workers, we must also know and properly identify what kind of delinquent employees we are dealing with in order to come up with the soundest solution. The diversity and types of employees is a good component for any kind of organization if handled in the best kind of way. Yes, handling employees can be tough, but once these types are identified it should be fairly easy to address their bad behavior. For the first difficult employee, it is the dominant personality. Difficulties arise from this type when they are behaving insensitively to others behaviors, desiring change, needing to lead, taking control, creating explosive confrontation, seeking risk, making hasty decision, appearing impatient, communicating unclearly, and seeking revenge (Wood, 1998). While they may not all look like troublesome behavior, if they are done in a wrong context or shown in the wrong kind of scenario, this creates disruption and disturbance in the workplace. Before remedying this type, we must first then identify the nature of this type of person and understand the premise on how he works. Whatever the virtues, or lack thereof, of dominant types, it can be said that they are always goal and task oriented, they are creative and innovative, and they welcome change because it means progress (Wood 1998). These altogether are very positive traits, only one must realize how to satiate them for the dominant person not to be difficult. The management should then give this type of people an avenue where his inputs are easily heard and acted upon, perhaps in a development or improvement sort of team. They want to be treated in a no nonsense manner; short and straight-forward instructions are best for these types. The next type is the extrovert. It is important to note on these kinds of employees that they are not task-oriented, but rather, they are people oriented. This means that they love to meet people and they have good interpersonal skills and they have a sincere and compelling desire to help others. They may become difficult because they can use others for support and become very influential to other employees in order to rally for his cost, creating disorganization and clutter, arriving late and listening poorly and making errors, and refusing to comply with instructions, rules, or policies (it is in their nature to address their creativity to beat the system). These negative traits can be avoided and remedied by appealing to their nature. As the management, it is important that one should act pleasant, positive, and energetic to these employees, for they are drawn to these people. They also seek a lot of attention and are seeking a sort of gratifying compliment for their achievements, so this must also be addressed and make sure that they are given sincere compliments on some of their achievements and action. They don’t necessarily have to “win”, but they are up for challenges and light competition, so this scenario should also be given to him in order to have him be more effective. The third type is the patient employee. They become difficult because they are resistant to change, they avoid risks, they become overloaded with information (because they don’t know how to resist additional workload), they allow delayed reactions therefore building up stress and bitterness, and they adopt innovations quite slowly. On identifying their strong points, patients are; excellent listeners, they tend to want to know others’ opinion first so they can mold their opinion in a way that it is not offensive to the other party, they also keep their emotions low-key, allowing for a very calm demeanor, and they are also very patient in tasks and highly value loyalty. For these people, it is important that they witness fair treatment for although they dislike attention all they seek is that everyone is having more or less the same grounds. They must also be eased properly regarding changes and therefore must be informed beforehand. They work best in low-pressure work environments and in activities where they feel trusted with responsibility (Wood 1998). Ultimately, as top management, it is of the best interest of the company to cultivate different kinds of employees. It is through the diversity of human resources of the company, and how they will be fit to complement one another, where the key to achieving the optimal performance of the company lies. An open attitude must be needed in order to adopt the perspective that these people are not altogether detrimental. Instead, they only just need to be properly identified in order to derive their full potential. Each type of the aforementioned difficult employees has certain and specific strengths and they must be given the right avenue to showcase such of those. Like gears in the clock, they just need to be put in each of their proper places for the whole company to mesh together and function in harmony. 3. What are the executive traits? Apply these traits to a global perspective. In the advent of globalization, the company also needs to adapt and gear their people towards the proper mindset and traits which are needed for global competitiveness. According to Hay Group Research, leadership exerts direct influence on 21% of a corporate performance (Urlaub, 2011). In any statistic, this is a very significant number to be dealt with and not taken lightly. Therefore, in light of this idea, the following are the traits needed for executives that will prove valuable in a global perspective: • Realistic optimism – it is an important trait that executives have a certain air of confidence and optimism while not sacrificing goals with delusions of unattainable ideas. They should be able to identify only the realistic objectives, although grand, and act upon them and deliver. Proper optimism is required since global expansion deals with several uncertainties so they must also be resistant to blunders along the way and be steadfast in a commitment to achieving what they have set to be realistic and attainable. • Subservience to purpose – executives must also have a sense of purpose that their professional achievements are worth their meaning in life. The goal of the company and its objectives should be their raison de ‘etre, and must come to comprehend that they are the bearers of success or failure to the whole company. their level of dedication must be unfaltering and unquestionable especially to the taxing, and even daunting, tasks of global competition. • Finding order in chaos – they must be able to discern and have good problem solving skills. They must be very decisive in coming up with solutions to problems that may arise. Especially if we put into perspective the global arena, wherein variable problems are encountered on a very consistent and constant basis. They must have the proper composure necessary to withstand the challenges. The company is heavily anchored on strong leadership and therefore it cannot be afforded to have leaders who cannot hold their ground it times of trouble and chaos. They must be able to find a sound and appropriate course of action when everything is in disarray. • Curiosity – the executive should have an open mind in entertaining ideas that might benefit the company. With the vast array of probable expansion decisions ahead in the global playground of the economy, one must not be resistant to new ideas but instead look and embrace new ones that might prove beneficial. They must constantly seek for innovations that will put the company in more strategic positions for its global operations. They must be able to imbue and incorporate necessary changes and at the same time explore new possibilities. In the arena of the road untraveled, while the company is expanding its operations, the curiosity trait will lead them to have the ability to have a wider perspective in dealing with it and therefore, ultimately, making more educated decisions for the company. • Experimentation – “Chance favors the prepared mind”, as Louis Pasteur once quoted. In the field of business, more experience and more knowledge is never a disadvantage. In the same light, the goal of sustainability and even consistency is achieved in the principle of looking for and adapting to circumstances where it shall lead to such. • Engagement – engagement is a crucial factor in leadership. Executives must be very engaging and aggressive in dealing with the people who are related and connected to the business. They must have good communication lines with the stockholders, the Board members, his employees, and the whole of the company. This is of utmost importance because one needs to have good and effective communication in order to properly steer the whole company into the global field. (Urlaub, 2011) A sound executive for the global operations of the company must have the right kind of attitude which will cultivate the whole interests and catapult the capabilities of the company for world competitiveness. He must have the appropriate drive to be optimistic but practical, goal oriented and steadfast, and decisive in dealing with arising problems. Without the following traits, it shall be then questionable as to how he shall handle and steer the company in the challenging tides of international trade. 4. What are the factors that can draw companies into the international area? Expand with detail explanation for each of the factors. There are two major factors that draw companies into the international area and global trade: these factors are (1) outsourcing of operational aspects for cost reduction and (2) tapping a wider global market (Meredith and Scott, 2010). Of course, whatever company decisions are profit oriented. This must be taken into perspective for one does not venture into whatever decisions if it shall not be profitable in nature. Either it is to drive costs to a minimum or to maximize its revenues, the goal is to make money. And this goal is especially addressed by going into the international arena. For the first factor, as was discussed in the first question, outsourcing is a means for driving costs down for the company (Kotler & Keller, 2009). By outsourcing, the company is taking advantage of the specialized capabilities of other countries. Other countries might have advantages in terms of labor and resources. This drives companies to integrate such countries in its operations. This is very beneficial since they do not have to risk their resources in developing technologies that are already available and offered in prime from other countries. Such countries like China has emerged as the global leader in the manufacturing industry since they offer the lowest labor rates as compared to the western counterparts, offering them at 4% compared to the rates in the United States. They also differ themselves from other Asian countries since they also have the technological capabilities for more advanced methods of production and in producing higher level of commodities (Fung et al., 2002). Also, by outsourcing the manufacturing industry to other nations, it can further easily capture the market that is already waiting in other countries. The supply chain system will be more efficient and practical for its operations. This leads on to the second factor of why companies are drawn to the international area, which is global marketing. Global marketing has been a “trend for the past decades since it utilizes the advantages of other nations, in an exchange of trade of commodities which will hopefully promote healthy competition and stimulate economic development of the parties involved. The rationale behind global marketing is that the world has no center and no boundaries. Therefore, this encompasses the participation of all countries with other countries. This does not discriminate between powerhouse economies and emerging markets. This market internationalism then links and ties up the international interest of the market and also influence the global consumer preference, thus resulting in a similar experience and demand of consumer wants and desires” (Lee, 2012). This is a very alluring opportunity since a larger market size directly correlates to more foreseeable income and profit opportunities. For globalization, it is of importance to realize that opportunities are infinitely expanded and this is what captivates companies into expanding and furthering their reach. The business potential domestically might not be the real niche for the company, and the weaknesses of another country might be what could prove to be the optimal market for another. Therefore, such opportunities must be explored. Certain products show to have more allure in other countries where they are limited of such goods. The global market is so vast with how operations can then be carried out for the expansion of the company. Yes, the appeal of a greater market to cater to is very captivating, much more with the promises of riches and gold. It is also a very different and fulfilling achievement to be able to conquer the world in terms of surviving and achieving stability in doing business around it. And, as like in all strategic decisions, one must play with their strengths and try to patch whatever weakness that their company has by hiring and imbuing the help of others in order to come up with the best product that the company can offer and also in order to cater to other markets that are not available in the domestic setting. The supply chain will thus be more effective if manufacturing is outsourced nearer the end consumers. The company must realize these opportunities and act accordingly on what it really needs for its whole operations to flourish. They should not also be greedy and tap all the possible allures of business possibilities in the international arena, but rather only incorporate what is necessary and then tread carefully in dealing with later expansions if they might prove to be also very critical to the company. it might also not be wise to offshore much of the operational aspects of the company all at once for it may risk control over its operations. Also, communication is key in dealing with geographical barriers so as to pave way for a more efficient and effective company. 5. Discuss the costs and benefits of globalization. Provide examples of how globalization has helped or harmed individual nations and the world economy. Globalization has revolutionized have come to manage its operations and its outlook on its operations. Globalization is the process of increasing the integration of different economies from other nationalities (Pettinger, 2009). There are many benefits of globalization which is why many companies are allured by expanding in the international market, but a company must also be wary of the trappings and cons of globalizing its operations. A company must tread carefully in this arena and factors that might prove detrimental to its operations must not be taken lightly. Globalization involves greater free trade for companies. It also involves greater movement of labor, increased capital flows, increased integration of global trade cycle, and increased communication and improved transport, reducing barriers between countries (Pettinger, 2009). These are the benefits of globalization: • Free trade – this simply means that countries have the liberty in exchanging its goods, services, and resources. Countries that specialize in particular products can be tapped to fulfill the needs of a particular country with a relatively lesser capability of producing those products. specialized products can then be made available to several countries and this shall then augment the weaknesses of countries in fields that they are lacking. A country with limited technology or resources, could tap another company in a different country for the sourcing of such lacking elements. This then translates to lower prices for the consumers since the specializing country could provide the particular product at a premium price as compared to doing it in the local country. this also will cater a wider variety of goods and provide more choices for its consumers. The domestic economy could also flourish because of the new export markets that will be opened because of global trade. Furthermore, with an increased level and quantity of competition, the companies will be driven to further develop and improve its operations in order to outclass competition. These are all beneficial to the wider picture of economic activities • Free movement of labor – globalization provides the opportunity for vast communication possibilities for other countries. This will also pave way to oneness in the whole world since it promotes migration of workers and employees from both recipient countries. In countries with high unemployment rates, they can be helped by countries with shortages in labor capabilities. The pooling of resources is greater in globalization in augmenting the weaknesses and taking advantage of the strengths of others. And as they say, one man’s garbage is another man’s treasure. Also, with the expansion of domestic operations to cater international needs, manpower will have more use and development of this resource will further the development of the whole country in its entirety. • Increased economies of scale – the production would then be increasingly specialized; like as stated earlier, the capabilities and strengths of a certain country will be taken advantage of and thus its weaknesses covered. With production being specialized, the global economy can be ensured that the products produced are in the best method that they can be produced globally. Globalization also enables lower cost of unit production and therefore lower costs for its end market. • Greater competition – competition drives an economy to a healthy state, since companies would aggressively pursue innovative ways to perform well. This shall also foster advancements technologically and operationally. However, with all the advertised benefits, there are also great costs that globalization could also toll. These are the following: • Environmental costs – with increased economic activities and demand, it is inevitable that it shall also consume larger quantities of resources for its operations. A very critical factor that is affected is the environment. Non-renewable resources are consumed in much faster rates. Other countries choose to outsource more environmentally harmful operations to lesser countries. It is a harsh reality of the rich taking advantage of the poor. • Labor drain – such is the case of many lower countries wherein their best workers are pirated by other countries with the allure of much greater pay for their services. Such countries would then have very depleted and incompetent employees left at their disposal. This can cripple their ability to competitively compete in the globalized economy since their human resource advantages had already been taken away from them. Upon the conceptualization of globalization, it was idealized to promote greater trade and involvement with other nations. Thus, taking advantage of this development will most likely expand the horizons with international commerce which was then less popular. But although world trade has always been associated a wider horizon for businesses to flourish, it also rather has its share of negative effects that are destructive to the people construct. Since the objective in globalization is to “globalize” and unite the whole world as one entity free of whatever trade boundaries it had, we must also consider that every participating country in the trade stand to gain from the whole practice. Environmental issues and labor drain stand to destroy what the good of globalization has created. Other countries might become wary of dealing with other countries because of the feel of being cheated and they might revert back to closing their economies for international trade if that would be the dominating case that they continue to be in the short end of the bargain. References Banister, J. and Cook, G.. (2011). China’s Employment and Compensation Costs in Manufacturing Through 2008. Monthly Labor review. March 2011 issue. Fung, K. et al. (2002) Foreign Direct Investment in China: Policy, Trend and Impact. Hong Kong. Ireton, S. (2012). 10 Factors to Consider When Sourcing Globally. JPMorgan Global Trade Services. Retrieved from http://www.joc.com/2010/10-factors-consider-when-sourcing-globally Kotler, P. and Keller, K. (2009). Marketing Management, 13th Ed. Pearson/Prentice Hall. Lee, K. and Carter, S. (2012) Global Marketing Management (3rd ed). Prentice-Hall. Meredith, J. R. and Shafer, S. M. (2010) Operations Management for MBAs, 4th Ed. John Wiley & Sons. Pettinger, T. (2009). Costs and Benefits of Globalization. Helping to simplify Economy. Retrieved from http://www.economicshelp.org/blog/81/trade/costs-and-benefits-of-globalisation/ Washburn, J. and Huang, S. (2008). Key Issues for Consideration Before Sourcing Production to Abroad. Industry Week, Feb 2009 ed. Wood, H. (1998). Supervising Difficult Employees. Coastal Training Technologies Corp. Urlaub, J. (2011). What are the Executive Mindsets and Traits Every CEO Needs to Propel Sustainability? Taiga Company. 12 May. Retrieved from http://blog.taigacompany.com/blog/sustainability-business-life-environment/what-are-the-executive-mindsets-and-traits-every-ceo-needs-to-propel-sustainability Appendix A Outsourcing & Offshoring Industry Overview   Number Unit Date Source Global Outsourcing Revenues, 20111 500 Bil. US$ 2011 PRE Global Outsourcing Revenues, 2010 425 Bil. US$ 2010 XMG Global Outsourcing Contracts: Annualized Revenue Based on Active Industrywide Contracts with TCV > $25 Mil. 93.1 Bil. US$ 2010 TPI Americas 40.4 Bil. US$ 2010 TPI Europe, Middle East & Africa (EMEA) 42.2 Bil. US$ 2010 TPI Asia-Pacific 10.5 Bil. US$ 2010 TPI Industrywide Contracts with TCV > $25 Mil. Manufacturing 17.1 Bil. US$ 2010 TPI Financial Services 25.2 Bil. US$ 2010 TPI Energy 8.5 Bil. US$ 2010 TPI Healthcare & Pharmaceuticals 5.1 Bil. US$ 2010 TPI Telecommunications & Media 6.0 Bil. US$ 2010 TPI Business Services 5.2 Bil. US$ 2010 TPI Travel, Transportation & Hospitality 7.5 Bil. US$ 2010 TPI Retail 4.8 Bil. US$ 2010 TPI Trade in Private Services, U.S. 483.9 Bil. US$ 2009 Census Education 19.9 Bil. US$ 2009 Census Financial Services 55.4 Bil. US$ 2009 Census Insurance Services 14.7 Bil. US$ 2009 Census Telecommunications 9.3 Bil. US$ 2009 Census Business, Professional & Technical Services 116.6 Bil. US$ 2009 Census Contract Electronics Manufacturing, Global 376.7 Bil. US$ 2011 IHS iSupply India IT-BPO Revenues, 2011* 88 Bil. US$ 2011 NASSCOM India IT-BPO Revenues, 2015* 130 Bil. US$ 2015 NASSCOM Indian IT Services Exports* 33.5 Bil. US$ 2011 NASSCOM Indian IT-Enabled Services & BPO Exports* 14.1 Bil. US$ 2011 NASSCOM Indian Engineering, R&D & Software Products Exports* 9.0 Bil. US$ 2011 NASSCOM * Estimated. BPO = Business Process Outsourcing 1 Estimated for BPO, KPO, Human Resources and IT KPO = Knowledge Process Outsourcing PRE = Plunkett Research Estimate IT = Information Technology TPI = Technology Partners International TCV = Total Contract Value NASSCOM = National Association of Software and Service Companies XMG = XMG Global   Source: Plunkett Research,® Ltd.  Copyright © 2011 Plunkett's Outsourcing & Offshoring Industry Almanac 2012 www.plunkettresearch.com Read More