Deck 17: Global Production and Supply Chain Management

Question 1

What criteria drove Amazon's decision of where to produce the different components that go into the Kindle Were these the right criteria

Answer 1

The criteria which drove Company A's decision to produce different components that go into Company K are listed below:
• Design elegance
• Low price
• High reliability
• Functionality
These were some of the parameters that helped company A to promote variety of K products across the world.
The criteria set by the company A turned out to be successful as more and more competitors were introducing new product features to give tough competition to company A.

Question 2

An electronics firm is considering how best to supply the world market for microprocessors used in consumer and industrial electronic products. A manufacturing plant costs about $500 million to construct and requires a highly skilled workforce. The total value of the world market for this product over the next 10 years is estimated to be between $10 billion and $15 billion. The tariffs prevailing in this industry are currently low. Should the firm adopt a concentrated or decentralized manufacturing strategy What kind of location(s) should the firm favor for its plant(s)

Answer 2

The firm should adopt a concentrated manufacturing strategy; $500 million up front fixed costs when the entire market over a decade for all companies in the industry is $10 to $15 billion makes a single factory a good idea. Since tariffs are low, this single factory could supply a lot of markets at little higher cost than multiple factories could.
The firm should favor putting the factory in places where there is little chance the factory will be nationalized or disrupted, where there is a highly skilled workforce, near the firm's industrial/consumer electronics customer's factories, and/or near significant transport nodes like railways or ports.

Question 3

Global Production, Outsourcing, and Logistics
Use the globalEDGE website (globaledge.msu.edu) to complete the following exercises:
The globalization of production makes many people aware of the differences in manufacturing costs worldwide. The U.S. Department of Labor's Bureau of International Labor Affairs publishes the Chartbook of International Labor Comparisons. Locate the latest edition of this report, and identify the hourly compensation costs for manufacturing workers in China, Brazil, Mexico, Turkey, Germany, and the United States.

Answer 3

not answer

Question 4

Some have argued that the fact that only $40-$50 of the value associated with manufacturing the Kindle goes to U.S. companies is a sign of the decline of American competitiveness. Do you agree with this assessment

Question 5

A chemical firm is considering how best to supply the world market for sulfuric acid. A manufacturing plant costs about $20 million to construct and requires a moderately skilled workforce. The total value of the world market for this product over the next 10 years is estimated to be between $20 billion 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)

Question 6

Global Production, Outsourcing, and Logistics
Use the globalEDGE website (globaledge.msu.edu) to complete the following exercises:
The World Bank's Logistics Performance Index (LPI) assesses the trade logistics environment and performance of countries. Locate the most recent LPI ranking. What components for each country are examined to construct the index Identify the top 10 logistics performers. Prepare an executive summary highlighting the key findings from the LPI. How are these findings helpful for companies trying to build a competitive supply chain network

Question 7

If Amazon had decided to design and manufacture the Kindle and all its components in the United States, what do you think the consequences would have been for Amazon

Question 8

A firm must decide whether to make a component part in-house or to contract it out to an independent supplier. Manufacturing the part requires a nonrecoverable investment in specialized assets. The most efficient suppliers are located in countries with currencies that many foreign exchange analysts expect to appreciate substantially over the next decade. What are the pros and cons of (a) manufacturing the component in-house and (b) outsourcing manufacturing to an independent supplier Which option would you recommend Why

Question 9

Reread the Management Focus on Philips in China, then answer the following questions:
a. What are the benefits to Philips of shifting so much of its global production to China
b. What are the risks associated with a heavy concentration of manufacturing assets in China
c. What strategies might Philips adopt to maximize the benefits and mitigate the risks associated with moving so much production capacity offshore

Question 10

Explain how an efficient logistics function can help an international business compete more effectively in the global marketplace.