Global Production Network - Essay Example

Global Production Network Course: Professor: College: Date: Production is the analysis of the social processes which are involved in the production of services and goods and reproducing capital, labor power and knowledge. GPN allows the geographical and complexity variations the relation of producer and the consumer. Dicken & Peter (1998) explains that GPN should be able to show how the knowledge flows between the producer, intermediaries and the consumer with ease. GPN is a framework that is able to grasp the local, regional and global dimensions of the activities involved in economic as well as the social dimensions. Still we can define it as a concept which refers to interconnected operations, transactions, and functions to describe how certain service or product is produced, ways of distribution and consumed. The beneficiaries of global industries are the network flagships, they are provided with many choices for them to choose for entering the market by liberalization. Liberalization also reduces the problems encountered in the value chain i.e. the geographical dispersion; still it provides the flagship with the access to the external capabilities and resources they do need for complementing their main competencies. Suppliers are required to maximize their profits from the network by taking active method and participation. Flagship ensures competitiveness is strengthening in global production network by placing orders to suppliers and transferring knowledge to the suppliers. These local suppliers should be able to develop, tap and maintain human resources which have the best skills for the purpose of developing the knowledge the already have. Global production network changes the production and the knowledge from economic change Coffee industries use cheap labor in production from the farmers which are paid fewer wages and still their product are bought at a low price. Most of the farmers are small scale with a small piece of land that live in poor rural areas, they use manual work for their production such as pruning, spraying, sorting and also picking. The main problem with coffee production is that the price is not determined in the plantation but by the stock exchange which mostly end up with low prices. This price causes the workers to work exploitive such as to get some income for their families Globally child labor has been involved in coffee production industries where they are not employed officially; this is done so as the industries to avoid the giving labor protection to the young people. Child labor is brought by the low wages to the parents so they have to combine their effort with the children for their survival. The end result is the children terminating their education and psychologically and physically exposed to the laboring hazards. These hazards are like overworking, lack of accommodation, and at the same time, the salaries are less. Global production network uses knowledge to change the production so as to change the economic theory. GPN faces the problem of poor communication or lack of the research, i.e. on local capability and international knowledge. The networks help to combine value chain and the international boundaries; this has brought the impact of new opportunities for suppliers to exploit such as international knowledge. Global production network connects firm territorially and functionally and also connect the aspect of spatial arrangement and social in which they affect the values and strategies, managers expectation and priorities and workers. Different agencies have ways of establishing and performing connections to other firms. Nature of training, labor systems and education and the organizing corporate finance and resources have much impact. Global production network is one of the major organizations that innovates much in operations which affect the whole world.it has brought so many opportunities, like local ability foundation in relatively low cost compared to the other industrials. We have a network under global production network called the network flagship which helps in integrating knowledge, customers basing their production globally and the dispersed supply and integrate. Under GPN, we research on geographical dispersion functionality, services linked with production, support of knowledge –intensive, and chain management globally and the act of knowledge management (Gereffi, 1999). There are emerging economies which have shifted their developing strategies to emphasize from export-oriented so as to access higher value operations. Entrepreneur and the policymakers have been convinced by the ongoing interpenetration and dispersion of activities involved in the production. For a firm to upgrade it requires insertion of not only global value but also local value chains, this enables maximization of learning and value creation. Some firms upgrade by changing the type of product they are producing a sophisticated products so as to increase the unit values, or may do so by using the latest technology in their production process. Up gradation of a firm gives it a framework that enables in firm analysis and understanding other countries tries to move their development strategies into higher levels in the global market so as to high value (Borrus, Ernst & Haggard, 2000). Institutional arrangements These are the rules that guide the interaction of the human structure. Where there are informal constraints, enforcements and rules. Its main aim is to take control of resource allocation, firm behavior, completion rules and shape the institutions. Globalization is affected by the changes in the institutional brought by the liberalization. Liberalization elements include privatization, the flow of capital, foreign direct investment policies, and trade. The main aim of liberalization is to reduce the international risks in transactions, increasing international liquidity and cost reduction. Global production network gives the flagship the rule to take control of monopoly positions, specialize so as to generate power of the market, restrict the entry barriers, improving efficiency and they also facilitate innovation. Most of the developing countries integrate their capacity with GPN for strengthening their local capabilities.it helps in integrating hierarchical networks and shaping the scope of knowledge diffusion (Gereffi, 1999). International trade and global production network are organizing production which is geographically dispersed and fragmented and use the transactional corporations to break up the process of production and locate them differently either in different logical areas or countries. These transitions have worked so much developing the global network by supporting the networks for manufacturing and exporting. This has well been in corporation with the information technology and advancing in means of transport. Other countries the integration GPN has not brought back success as we experience in many countries. Sparrow & John (1998), says, Despite use of global production network there are some other factors to consider such as marketing, manufacturing capabilities and the stage of production.in he production of coffee we find that its market and returns are all controlled by the exchange bodies so even if the country might be incorporating all these requirements the results of better returns are not assured. In developing countries we need to integrate into GPN and move from low value added to much higher value added operations across and within it. Buyers and sellers contribute to the trade proportion. The demand side is the core driver of the global value chains; the role of buyers globally is strengthening by the concentration of the retail in GPN. For better gains quality standards ensures better returns despite the place of production, how and when the product will be supplied. Different GPNs are found in different markets with varying value. The view of value in economic integration says that many companies and industries that are able to access the international market are not through the making, marketing or designing new products but through entering the market through international production, marketing, and designing which consist the combination of different industries. The knowledge on how the operation of value chains is used by the policymakers and developing countries since the structure for the chain has many effects on the newcomers. The local supplier capability is extended by the flagship offering encoded knowledge such as manuals, service specifications even training handout. Local suppliers still require other tacit knowledge for translation and performing actual operations. This is done so as to ensure the services and products are produced are of good quality with expected price. The knowledge gained is translated to actual activities and still used to internalize how to manage the production systems and organization. The GNP architecture has three elements which include; we start by try to figure out how the value generated can be tapped and all conditions which affect its supply. Value- the main issues are how the labor power is turned into actual labor also other includes working conditions, the technology used in production, employment, and skills. We still consider the possibilities of capturing the value. Its creation and enhanced does not matter much like capturing the benefits brought by it. The capturing of the value depends on in so many conditions which include a policy of the government, corporate governance, and firm ownership questions. The property rights and the type of laws that govern the rights of ownership and resulting profits should also be considered. Some firms are foreign owned either partly or fully, equity of shares in case of joint venture, shareholder governing principles and locally completely or partly owned they have effects to the value generated whether to be left in the location produced or moved to other locations (Borrus et al. 2000). Now we have to check on the power i.e. its source and how it can be exercised to enable value capture and enhancement, here some issues to consider; Corporate power- it’s obvious that the firm which led to global production network has the control in resources dispersion and decision making. This reason is why we encourage small firms to incorporate with firms which dominate the networks so as to improve their situations. Institutional power- capability to exercise power so as to manage the investment and making decision for leading organizations ant the firms which are integrated to global production network varies between how credit is rated internationally, UN agencies and trade organization worldwide, Collective power- this helps to define the actions that can be performed by collective agents who’s their intension is influencing the companies in certain GPN. These agencies can be specific in either locally or nationally. These agencies end up engaged in trying to attempt the exercise of countervailing power directly or indirectly to either a group of firms or a particular group within a network in international agencies or national government Conclusion Digital convergence, global competition, and linearization have brought about innovations in the organizations which integrate knowledge, supply, and customer basing on GPN. These networks helped in boosting and providing opportunities in developing countries to local suppliers and diffusion of international knowledge. The local suppliers are so absorptive which has determined their capability also they are able to get knowledge from the international knowledge conversions (Kaplinsky & Morris, 2001). The economic globalization is analyzed and mapped by conceptual models as outlined in this article. This can help the company to control and organize global activities. This approach tries to attempt and breaks from state-centric and on the other extend utility (policy and analytic) of cognate formulations. The success associated with the GPN frameworks depends on the capabilities of stimulating research which is able to deliver the analysis which is theoretically and empirically richer than the existing. Local suppliers have to choose active methods which ensure that they get maximum benefits from their participation in the global network. For one to enjoy this approach global network, the firms involved should detect new opportunities available for knowledge diffusion in their local firms in developing countries (Porter, 1990). Antonelli, (1998), states that the research produced should be able to contribute so much to the improvement of the human situation in the economy as well as to the geo-political in which we exist. REFERENCES Borrus, M., Ernst, D. and Haggard, S. (2000) International Production Networks in Asia: Rivalry or Riches?, London: Routledge. Dicken, Peter (1998) Global Shift: Transforming the World Economy, 3rd ed., New York: Guilford Press Gereffi, G. (1999) ‘International Trade and Industrial Upgrading in the Apparel Commodity Chain’, Journal of International Economics48: 37–70 Kaplinsky R. and Morris, M. (2001) A Manual for Value Chain Research, www.ids.ac.uk/ids/global/ (accessed 2001) Porter, M.E. (1990) The Competitive Advantage of Nations,New York: Free Press. Williamson, O.E. (1975), Markets and Hierarchies: Analysis and Antitrust Implications, New York: The Free Press Sparrow, John (1998), Knowledge in Organizations: Access to Thinking at Work, London: Sage Press Antonelli, C., 1998, The Microdynamics of Technological Change, Routledge, London Dicken, Peter (1992), Global Shift: The Internationalization of Economic Activity, London: Paul Chapman, 2nd edition. Porter, M. (1990) The Competitive Advantage of Nations. 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