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Globalization of the Production Chain - Literature review Example

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This paper will begin with the statement that the supply chain is a critical management function of an organization and its efficiency directly affects the success of the organization. Globalization has enabled the most efficient and effective linkages with customers maximizing value for them…
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Globalization of the Production Chain
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Download file to see previous pages As the paper outlines, technology has facilitated competence and the most efficient and cheap labor is hired due to globalization. With globalization, computer production has become global and its production is spread to over 40 countries. Dell, Microsoft, IBM etc. are brands known in every part of the world. Globalization has enabled such global brand recognition and brand awareness amongst the customers (Ding and Akhtar 2001, pp.946-65). Ding and Akhtar (2001), claim that this industry has had revolutionary changes because of globalization and all the giant players have production chains that are spread across major regions of the world. A focus on the market leader Dell reveals the influence globalization has had on the production chain and the human resource. Dedrick & Kraemer (2002), claim that the personal computer industry shows the impact globalization has had on the business world. However, Dell has shown remarkable growth and is the current market leader when it comes to reaping the advantages of globalization. Dell has been able to maintain its business model even in the globalizing industry through its smart planning and strategies in line with globalization. Dell made the best use of its resources and has the most efficient supply chain and thus has been able to excel its competitors IBM and Microsoft (Rosenau and Earnest 2004). Hudetz (1998) says that initially, supply chains of the PC industry were vertically integrated and required the firms to undertake the major tasks of product design, structuring, innovation, customer relation, and operations internally. With such a production chain the costs were high and the process was time-consuming (Ding and Akhtar 2001, pp.950-65). Even market leaders like Dell initially produced complete systems and was based in the United States while it outsourced some of the components from other manufacturers (Rosenau and Earnest 2004). According to Ardnt (2001), these were the initial phases of the PC supply chain at Dell and in the entire industry at large. IBM which was also a big brand at the time also imported minor parts from other regions and had a relatively wide supply chain network. Gradually the industry realized that importing parts from other regions and countries cut down the costs and thus intermediary firms sprouted up which supplied such parts to the industry at competitive rates (Rosenau and Earnest 2004). Although Dell was technologically more advanced and had a strategy that would enable them to pierce the global market, they could not do so. This was because their costs were high when compared to the competitors like IBM who were outsourcing supplies from cheaper, developing nations and were more cost-effective and were able to reap more profit (Dowling 1999, pp. 30-42). According to Rosenau and Earnest (2004) with globalization strategies, Dell and other MNC's including the IBM and Microsoft set up their branches within other countries. In 1990s Dell was the first to surge the global markets especially the developing countries like India, China, Pakistan, and Malaysia, paving the way for the other big brands to follow in its footsteps (Rosenau and Earnest 2004). Globalization enabled them to get the cheapest rates and a competitive quality (Arndt 1997, pp. 695-707). ...Download file to see next pagesRead More
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