Global Business Today 6th Edition by Charles Hill

Question

Global Business Today 6th Edition by Charles Hill

Edition 6ISBN: 978-0071083812

Global Business Today 6th Edition by Charles Hill

Edition 6ISBN: 978-0071083812

Exercise 1

Why is the manufacturing of flat panel TVs migrating to different locations around the world?

Explanation

Verified

Globalization has opened up new avenues for businesses. Apart from the expanded customer base, the global market offers businesses with opportunities to partner with manufacturers and suppliers across the globe. This leads to the discussion on the reasons for manufacturing to be migrated to different locations around the world, like the manufacturing of flat-panel TV. Migration of manufacturing flat-panel to different global locations The manufacturing of flat-panel TV is migrated to different locations around the world due to the expenses incurred. Companies like V prefer to reduce their manufacturing costs by selecting low-cost manufacturers located in developing countries. The flat-panel TV technology is sophisticated and it requires higher investments and more labor to set up manufacturing operations. The flat panel displays were invented in the country U. But the companies in the U did not pursue the technology for manufacturing. So, companies located in country J, used the technology and set up capital intensive operations. When J's economy met with a setback, companies in country K, took up the investments. Followed by the Asian economic crisis, the production was shifted to country T. Currently the country C has captured a higher manufacturing share of the flat TV panels. It is observed that flat TV panels manufacturing is migrated to different locations based on the availability of capital to set up manufacturing, lower labor wages, the easy availability of low-cost raw materials, and favorable export and import norms. For instance, V obtains panels from K, electronic items from C and processors from U. These parts are then assembled in country M which is located near U. Due to partnership with companies located in low-cost countries, companies like V are able to reduce their production cost. The expenses like raw materials, labor, utilities and overhead costs are reduced. As a result, the unit production cost of parts is reduced. This has an implication of the cost of finished product. When compared to the flat-panel TV manufactured in the U, manufacturing and assembling parts in different countries and ship to the U is more cost-effective. Thus, manufacturing of products like flat-panel TVs are migrated to different countries across the world due to easy availability of capital to set-up manufacturing operations and low-cost production.