Академический Документы
Профессиональный Документы
Культура Документы
and Logistics
Special Attention(重点与难点)
重点 Strategic ,Manufacturing and Logistic
Make or buy decision
难点 Where to manufacture
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International Business Huang Huiping
Opening Case
What was the bottle neck when Ling & Fung needed to develop faster
globally?
What is the key point in an efficient logistic system?
Is production in home country better than in oversea plant? Why or why
not?
manage the global supply chain efficiently to better match supply and
demand
To improve quality,
quality, firms can:
eliminate defective products from the supply chain and the manufacturing
process
Improved quality will also reduce costs
To increase product quality, most firms today use the Six Sigma program
which aims to reduce defects, boost productivity, eliminate waste, and cut
costs throughout a company
Six Sigma, a direct descendant of total quality management (TQM), has a
goal of improving product quality
In the European Union, firms must meet the standards set forth by ISO
9000 before the firm is allowed access to the European marketplace
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9.2.3
9.2.3 Product
Product factors
Two product factors impact location decisions:
(1). the product's value-to-weight ratio:
If the value-to-weight ratio is high, it is practical to produce the product in
a single location and export it to other parts of the world
If the value-to-weight ratio is low, there is greater pressure to manufacture
the product in multiple locations across the world
(2). whether the product serves universal needs:
When products serve universal needs, the need for local responsiveness
falls, increasing the attractiveness of concentrating manufacturing in a
central location
Since there are few national differences in consumer taste and preference
for such products, the need for local responsiveness is reduced, increasing
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9.4.3 Trade-Offs
The benefits of manufacturing components in-house are greatest when:
highly specialized assets are involved
vertical integration is necessary for protecting proprietary technology
the firm is more efficient than external suppliers at performing a particular
activity
• While such alliances can help the firm to capture the benefits associated
with vertical integration firms may find their strategic flexibility limited by
commitments to alliance partners
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Assignments
Problem sets:
● Page 451,
451, Q1-3
Q1-3
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●Closing case
1. An electronics firm is considering how best to supply the world market for
microprocessors used in consumer and industrial electronic products. A
manufacturing plant cost approximately $500 million to construct and
requires a highly skilled work force. The total value of the world market for
this product over the next 10 years is estimated to be between $10 and $15
billion. The tariffs prevailing in this industry are currently low. What kind
of manufacturing strategy do you think the firm should adopt - concentrated
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or decentralized? What kind of location(s) should the firm favor for its
plant(s)?
Answer: The firm should pursue a concentrated manufacturing because (1) the
tariffs prevailing in the industry are low, (2) the cost of building a plant to produce
the microprocessors is high, and (3) the product's value-to-weight ratio is high.
All of these factors favor a concentrated vs. a decentralized manufacturing
strategy. In terms of location, the company should consider three factors: country
factors, technology factors, and product factors. First, in terms of country factors,
the firm should locate its plant in a country that has a highly skilled pool of
workers available. That criterion probably limits the firm to developed nations.
Second, in terms of technology factors, the firm is compelled to limit the number
of its manufacturing facilities because of the high cost of constructing a plant.
Third, in terms of product factors, the firm can manufacturer its product in a
central location due to the relatively high value-weight ratio and the universal
appeal of the product.
2. A chemical firm is considering how best to supply the world market for
sulfuric acid. A manufacturing plant costs approximately $20 million to
construct and requires a moderately skilled work force. The total value of
the world market for this product over the new 10 years is estimated to be
between $20 and $30 billion. The tariffs prevailing in this industry are
moderate. Should the firm favor concentrated manufacturing or
decentralized manufacturing? What kind of location(s) should the firm seek
for its plant(s)?
Answer: This question is a tougher call than the scenario depicted in Question #1.
The firm should probably pursue a limited decentralized manufacturing strategy
(meaning that the firm should not set up a plant in every country that it sells to,
but should set up plants in several "regions" of the world). This strategy makes
sense because (1) The tariffs prevailing in the industry are moderate (rather than
low), (2) the cost of constructing a facility is relatively modest ($20 million), and
(3) only a moderately skilled work force is needed (which is probably available in
many low-cost regions of the world). The firm should select its location based on
country factors, technology factors and product factors. In terms of country
factors, the firm should find locations where semi-skilled labor is inexpensive. In
terms of technology factors, the firm is not constrained by a high fixed costs
associated with its product, so technology is not a pervasive issue. Finally,
product factors favor the firm locating in several locations throughout the world.
The company's product has a low value-weight ratio, making it unattractive to
produce the product in a central location and export it across the world.
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