Global Production

In: Business and Management

Submitted By louis0214
Words 5836
Pages 24
Global Production, Outsourcing, and Logistics

Learning objectives

• Explain why production and logistics decisions are of central importance to many multinational businesses.

• Explain how country differences, production technology, and product features all affect the choice of where to locate production activities.

• Recognize how the role of foreign subsidiaries in production can be enhanced over time as they accumulate knowledge.

• Identify the factors that influence a firm’s decision of whether to source supplies from within the company or from foreign suppliers.

• Describe what is required to efficiently coordinate a globally dispersed production system.

This chapter focuses on two major activities—production and materials management, and attempts to clarify how when they are performed internationally, the cost of value creation can be lowered, and how value can be added by better serving customer needs.

The choice of an optimal manufacturing location must consider country factors, technological factors, and product factors.

Foreign factories can improve their capabilities over time, and this can be of immense strategic benefit to the firm. Managers need to view foreign factories as potential centers of excellence and encourage and foster attempts by local managers to upgrade factory capabilities.
An essential issue in many international businesses is determining which component parts should be manufactured in-house and which should be outsourced to independent suppliers.

The chapter also discusses the contributions of information technology to these activities. This is especially important in the era of the Internet.

The opening close explores the production challenges faced by Boeing and its global suppliers in building the 787. The closing case explores Amazon’s manufacturing strategy for its…...

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