International Trade and Logistics Issues - Assignment Example

School: Topic: International Trade and Logistics Lecturer: Question Competitiveness has been d to be a very important variable in the management of global supply chain (Chang & Qin, 2008). Such competitiveness comes about as all other players within the global market become equally engaged in the quest for competitive advantage (Chen, Lai & Wen, 2006). As a result of this, global supply chain managers are always tasked with the need to ensuring that they can achieve effective trade-off which does not only search as a mechanism for meeting production schedules and demand but also as a tool for building competitive advantage. In the vivid estimation of Ballou (2004), one of the best means by which such effective trade-off may be achieved by global managers of supply chains is by making effective use of the supply chain and production concepts of lean and agile manufacturing. Meanwhile, trade-off is said to be achieved when a form of quality or an aspect of something is loss in return for gaining another quality (Lin & Ho, 2008). To use lean to achieve effective trade-off that therefore, it is important that the aspect that is lost within the supply is the part considered less valuable or a waste whiles the aspect that is gained is the one that is of higher quality. When it comes to agile manufacturing, there is an underlining need to create process, tools and training that ensures that customers get their items quickly (Chen, Lai & Wen, 2006). For this provision to lead to effective trade-off, Waters (2010) recommended that global managers of supply chain must develop an overall manufacturing support which ensures that designers, production personnel and marketers are all given a common platform to share information in a way that minimises cost of correcting quality issues so that what is traded off becomes unwanted defects with manufacturing. Question 2 (a) Figure 1: Supply chain for tablet computer production The figure above represents a very simple supply chain process that functions in a linear and non-bureaucratic manner. This is done as a means of ensuring efficiency by reducing the amount of time and money spent in getting raw materials from the Far East to final sellers. It would be noted that that the production is done in the Far East so as to avoid the payment of huge taxes and duties in transporting the raw materials to Europe and North America. Cost is therefore saved on transportation of materials because lesser taxes and duties are expected on the finished products. What is more, cost of labour is expected to be cheaper in the Far East. Distribution is expected to be on a national and regional basis so as to ensure that there is effective monitoring and tracking of products. (b) Based on the supply chain propose in (a), virtual warehousing could be made to play a role in obtaining strong competitive advantage by ensuring that regardless of the distance involved in the outsourcing, the company is able to reach its North American and European sales markets ahead of other competitors using traditional inventory management methods. This will be achieved because through virtual warehousing, offices within the sales markets will readily be fed with hands-on business data that are relevant for specific purposes of supply chain decision making (Hervani, Helms & Sarkis, 2005). This way, it is possible to achieve a form of efficiency that those using traditional inventory management cannot achieve. This is because instead of searching through several physical sources for information about the supply chain, the virtual warehousing ensures that by the click of a button, a snapshot of the condition of business occurring at different points within the supply chain are made known (Lin & Ho, 2008). Question 3 (a) Within the wider global market, there are macro and micro perspective of marketing planning and strategies. These two perspectives are formed from the macro and micro environments that businesses find themselves (Richardson, 2000). The micro environment basically involves the immediate environment of any organisation, which impacts directly on business processes (Krugman & Obstfeld, 2008). This means that the categories of organisations and stakeholders involved at the micro perspective include suppliers, customers, local government agencies, and regulatory bodies. The overall action taken at the micro level is direct business engagement through supply chain management. The macro environment comprises elements which impact the organisation but are outside the control of the organisation (Bagwell & Staiger, 2002). These include categories such as industry and economic standpoints. Actions taken at the macro perspective influence overall trends in demand and supply as well as determination of bargaining power and purchasing power on the market (Harrington, 2005). (b) Whiles writing on the environmental impact of changing logistics structures, Aronsson and Brodin (2006) suggested that achieving lower emissions and lower costs come about as a result of consolidated strategic efforts rather than relying on a single modality of change. To implement such an all-round and consolidate strategic incentive, it is necessary that a cross-functional approach to implementation is adopted. The reason for suggesting cross-functional approach is that each of the individual strategies requires unique expertise and competences that can be developed at different levels of functional engagements (Dixit & Norman, 1980). This means that all stakeholders, particularly those found at the micro environmental level must be tasked to equally contribute to the implementation process. It will be important that the internal stakeholders who are involved in the day-to-day operations at the organisation will be targeted as it is easier to monitor and control these people (Nunn, 2007). Question 4 (a) The first attribute of growth within the global industry is due to the expansion of the global marketplace due to globalisation. Today, there is ease with the flow and movement of goods and products from one point of the world to the other, bringing about expansion for logistics (Chang & Qin, 2008). Another external issue has to do with the extent to which governments are now focusing on foreign investment as the backbone of national economic development. Because of this, there are more foreign direct investments, which have led to expansion in the number of outsourcing undertaken by companies, and for that matter growth in logistics (Arvis et al., 2007). What is more, the carrying capacity of the external environment of most companies has improved and expanded due to availability of technological infrastructure (Ballou, 2004). Because of this, the maximum population size that most organisations could support has now increased. Last but not least, the global economy is not off its recession state, leading to massive supply chain activity among multinational companies and other global businesses. (b) Focusing more on the post-2008 global economic crisis, one would find a trend where most multinational companies and other international firms engaged in rigorous post-recession investment and trade as a way of making up for losses made during the crisis (Hervani, Helms & Sarkis, 2005). Any form of rapid growth and expansion that has been associated with multinational companies and other global firms has been linked to the logistics market as this is the market responsible for transporting and keeping inventory within the supply chain of the companies (Nagarajan & White, 2007). The implication of this relation is that the logistics market is seen as a major global industry player and stakeholder, which benefits from any form of growth in the global market. Question 5 (a) International trade relationships are seen to revolve greatly round human beings because the relationships are largely established through interactive human engagements. This means that human factors including those suggested by Huang et al (2003) such as process, inventory, order, and planning are very important for ensuring that the kind of international trade relationships built are quality. Indeed these factors ensure quality because they are based on the fact that they ensure that at all levels of international trade relationships, the collective bargaining interest of all stakeholders can be equally represented (Krugman & Obstfeld, 2008). (b) Global competence is very important for succeeding with international trade relationship. Such global competences that may be needed in addition to domestic business include competence in international business development, which deals with the manager’s ability to clearly identify new integrative trade opportunities that are fundamental for the international business plan of the organisation (Bagwell & Staiger, 2002). Again, international business operations and planning is necessary to ensure that the manager is able to incorporate international trade strategies into the business plan so as to make the organisation have an international competitive appeal (Yeh, 1999). Also, competence in intercultural trade, political and policy environmental analysis, international risk management, and international investment are all required. (c) Expansion of a business into a new international market requires greater understanding of the local business culture behaviour of the targeted market. Using the example of Hofstede’s cultural dimensions, it is possible to argue that different local business destinations have their own cultures that affect the overall organisational culture (Dixit & Norman, 1980). It is therefore always relevant that there will be a balance between what is practiced by the prospecting company and what is accepted in the local business culture. Deeper understanding of intercultural trade is needed to attain this. Question 6 (a) Sustainable and non-sustainable environmental development comes with different implications to the current generation and future generation. For example, as far as the current generation is concerned, the acts of environmental sustainability implies an account of good stewardship to future generation, whiles non-sustainable development means inefficiency with supply (Harrington, 2005). For the future generation also, sustainable development means hope for continued trade and manufacturing whiles non-sustainable development means a collapse of the same. Relating this to international trade and logistics, an example can be given where non-sustainable development to the management of natural resources within a given country would mean depletion of the said resource such as lumber. In such a situation where the country that used to serve as a destination for raw materials in wood products can no longer take place, international trade as well as logistics from that country will significantly be affected. (b) The environmental Kuznets curve can be used to explain the unequal relationship that exists between environmental quality and economic development, where environmental degradation has been noted to be growing worse in a wake of increased economic growth (Asafu-Adaje, 2004). This situation can be related to what Asafu-Adaje (2004) lamented about by stating that "an inverted U-shaped relationship exists between pollution levels and income growth." Explaining this statement, it can be said that industries have taken undue advantage of the presence of natural resources to grow whiles neglecting the application of best practice when it comes to the usage of these natural resources. With reference to trade growth in Sub-Saharan Africa, one notices a rush in resorting to this part of the world for raw materials in the form of natural resources because of governmental incentives for business growth. There is neglect for environmental pollution when compared incentives African leaders give to investors (Asfu-Adaje, 2004). Question 7 (a) There are different international trade organisations such as EU, COMESA, ECOWAS, and ASEAN, each of which strive to achieve some levels of economic development for a defined region of people. On the whole, it would be noted that the status, scope and activities of these blocs differ greatly based on a number of factors. On the whole, regional location and demography are an important factor for determining the overall outlook of the bloc. That is, each bloc ensures that it promotes trade agenda that benefits the needs of the people forming part of its membership (Feast, 2002). (b) Unlike the blocs and similar ones like those mentioned in (a), the World Trade Organisation (WTO) acts as a parent boundless organisation that seeks the collective interest of growth of global trade. It is not surprising that Salvatore (2005) saw the WTO as the government for international trade, tasked with the responsibility of ensuring that there is fair and equitable distribution of resources and trade power in the world. This is done through the use of several interventions and modalities including regulations such as fair trade rules. (c) Regardless of the global nature of the WTO, it has often been criticised as being biased towards the wishes of richer countries and multinational corporations. In fact such claims can only be said to be perceptions and assertions as bias in trade is something that can hardly be measured. Having said this, it would also be stated that in a global marketplace where different countries have different values of trade commodities and operating capitals, one can hardly expect that all countries will be treated exactly the same by the WTO. Certainly if the WTO had a single mechanism for dealing with all countries, some countries would certainly over benefit whiles some will under benefit. Question 8 From international trade perspective, absolute advantage will be defined as a situation where a multinational company or a country can use a relatively same amount of resources available to other competitors to produce more products or services than the competitors can produce. Comparative advantage on the other hand refers to this same multinational company or country producing any given products with lower opportunity cost than will be produced by other competitors. (a) In the strategy to centre the manufacturing of new product range in Brazil by the German-based car manufacturer, the company may be seeking to gain comparative advantage rather than absolute advantage. This is because the decision to manufacture in Brazil may not come with any significant labour based production advantages that will ensure that the number of employees that will be producing the cars in Brazil can produce more cars than employees of the same number used by other competitors in other parts of the world. However, comparative advantage can be guaranteed because the cost of producing the cars in Brazil for the South American market will come at a lower price as determines of cost such as transportation and inventory may be minimised. (b) From the strategy described above, the German-based car manufacturer may be winner if it not forced to use more employees in producing the same quantity of cars that its competitors manufacturing cars for the South American market would use. In other words, the ability of the company to use the same number of employees as its German manufacturing competitors will ensure that the company going to Brazil wins whiles its competitors manufacturing in Germany losses. This is because it would take those in Germany extra cost to get their finished products to South America to sell. The advantage will come based on proximity. Question 9 (a) As much as difference may be important in international trade and in ensuring competitive advantage for manufacturers, it is important that differences will be sought within ethically acceptable standards of practice. Example of this is the need to avoid paying employees in low wage economies far lesser than what those in high wage economies will take for doing the same amount of work (Richardson, 2000). Even though it will be appreciated that the minimum wage in these two economies may be different, it is important to look at the ethical implications of such an act. From an ethical perspective, the company in question must be looking at the gain it makes from the work output of workers from the two economies. Certainly if the gains are measured to be the same, the wages must also be the same. With this said, some safeguards such as the introduction of incentives packages may be used to motivate employees based on the economies in which they find themselves. (b) Two important models that may be used to achieve market success are Hofstede’s cultural dimension and Trompenaar’s model. The rationale for suggesting these two models is that they help managers to relate regional and national cultures with organisational culture (Waters, 2010). That is, managers entering the Chinese market for example can be aided to know how the people of China behaves when it comes to such dimensions of individualism, gender, long term planning, risk taking, among others. As these are known, it will be easier to predict the outcome of the human resource, who would serve as the backbone for growth in the market (Yeh, 1999). Knowledge of the national culture as manifested through the guanxi will make it possible to know the best ways to deal with other external stakeholders such as customers. Question 10 (a) Non-tariff barriers to trade are restrictions that are put on imports but do not come in the form of taxes or duty (Feast, 2002). Rather, these non-tariff barriers may include such restrictions that are put in place to ensure anti-dumping measures and countervailing duties (Nunn, 2007). Tariff barriers on the other hand come as tax and duty restrictions that are put on imports entering a particular country. Indeed as the WTO has strongly discouraged the use of tariff barriers, most countries have resorted to the use of non-tariff barriers. Some of these include specific limitations on trade such as embargoes, minimum import price limits and licensing; customs and administrative entry procedures such as valuation systems, documentation requirements and tariff classifications; and standards such as packaging, labelling ad testing methods (Salvatore, 2005). (b) In the study by Seidenfuss and Katahwala (2005) which sought to find the impact of voluntary export restrain (VER) on Japanese car manufacturers to the European Union (EU), it was found that there was a lower than expected market growth for the Japanese car manufacturers, leading to the need to ask for cut of quota in some years. Today, the case may be very different for the same relationship between Japanese car manufacturers and the EU. This is because the former is now performing better with the success story of companies like Toyota and Nissan in the EU (Boschert, 2006). The VER used can therefore be seen as a means by which the Japanese government wanted to appease the EU but there was a real value from this when the Japanese carmakers got to know of their strengths and weaknesses within the EU market (Seidenfuss and Katahwala, 2005). Today VER may not be preferred as recent growth levels have outnumbered that which was during era of the VER. Question 11 (a) Figure 2: Flow chart for supply chain The flow chart above for supply chain is made up of five major processes, comprising several internal and external stakeholders of the clothing retailer. The first point of call is the production plants in the Far East, where the manufacturing takes place. After the manufacturing, there is a UK agent responsible for wholesale and warehousing, who further releases required quantities to the retail managers of the clothing retailer. There is then a point of sale system which may comprise traditional brick stores or the internet where electronic commerce may take place. Once buying is done, the supply chain becomes complete when the product gets to the consumer (Arvis et al., 2007). The efficiency in the flow between Far East and UK is achieved with the limitation on the number of third parties used in the whole process, allowing more of a linear flow. (b) Lean supply chain basically refers to a continuous improvement process that is built on the basis of team-based approach to eliminating non-value or waste (Nagarajan & White, 2007). In the supply chain flow given above, lean can be achieved at every process level by ensuring a strong coordination between all stakeholders who matter in the process. For example at the production plant, there could be a cross-functional team that includes suppliers, designers, and plant workers. Such collaboration will ensure that there is a better understanding of the needs of the market so that all forms of wastes related to producing non-desirable products can be eliminated. There can be guarantee of eliminating waste through this means because instead of one group during something that will later be rejected by the other team, they all agree on one thing to do. It was for this reason that Arvis et al. (2007) pointed to functional teams as requisite for lean. References Aronsson H. & Brodin M. H. 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