Impact of Globalization on Value Chain Management

Question: Discuss about the Impact of Globalization on Value Chain Management. Answer: Introduction In this report we will study the various impacts of globalization on the supply chain management. In other words, it shows the configuration of the company by bringing advancement in the same. there are various types of impact that can be created on the supply chain management due to the process of globalization that are the considerations related to the competitive advantage, financial considerations to the company, technological, cultural, political, economic, and corporate social responsibilities considerations. The supply chain has various types of drivers like production, location, inventory, information and transportation. Globalization refers to the changes that take place in the economy due to the integration of the world economy with the domestic economy. Globalisation leads in open trade for all the companies who want to start their ventures into the other countries. It helps the global economy to strengthen the communication, relations, trade, business relations, etc. between the different countries of the global economy. It helps in improvement in the quality of work. Globalization has a huge influence on the process of supply chain management as it impacts each and every stage of the same. Globalization is challenging the business organization as it resulting in creating issues in the supply chin management of the companies. it has both pros and cons that we will discuss in this study the pros are that the companies can have multi dimensional resources, less restrictions of tariffs and other taxes, easy access to the global markets, better learning, etc. on the other hand globalization has many cons like there is a requirement of close relations with the stakeholders that is not possible in globalised business. Justification of the evaluation of the impact of globalization on the value chain management by including the information related to various factors The evaluation of globalization has great influence on each and every level of supply chain management of the companies. The firms are trying to manage the global trend with the domestic trend of the economy. It is providing various types of advantages and challenges to the companies. The globalization helps the company to fight against the competitors who have effective supply chains in their organization. It is required by an effective collaboration of teams and partners with increase in the speed, innovation, promotion and gains the market share. These all challenges have forced the organizations to change their priority of the cost and financial management also for the entire process. It must be related to the supply chain management and fulfilled the global operations strategies (Knemeyer, Zinn, and Eroglu, 2009). The supply chain becomes very complex in globalised world due to the fact that there are different types of culture of different countries. The companies have to analyses the culture of the countries in which they want to do business operations. Globalization provides new opportunities to the firms that will help to expand the business operations and functions of the same. With the process of globalization, the managers another staff of the firms has to keep eyes on the latest trend of the entire world. It is not an easy task to manage and fulfill the demands of each and every individual. This is the major challenge for the human resource (Walters, and Lancaster, 2000). Competitive advantage considerations Globalization has the capability to foster the market competition in an efficient and effective manner. It helps to bring dynamicity in the organization. It has created higher demand that required expertise in the management of supply chain. To create a positive impact of the globalization on the supply chain of the company it is very relevant o bring flexible work environment. It helps to establish competitive leaders in the organization. The globalization helps the company to fight against the competitors who have effective supply chains in their organization. It is required by an effective collaboration of teams and partners with increase in the speed, innovation, promotion and gains the market share (Zhu, Sarkis, and Lai, 2007). There are various regions in which the globalization has created a positive impact like- The focus of the companies is moved from regions of democratic nations to the global arena. To have competitive advantage, companies are now outsourcing the work from specialized firms of foreign countries Many companies are forming collaborative models of the business to expand their supply chain operations to win economies of scale Besides from all the above points the companies are earning profits form the effective supply chain management, and applying strategic planning into it to cope up with the global world. It is helping in capturing the markets; bring an innovations and opportunities for the growth and development of the firm. The process is taking place through synchronizing of the entire value chain and then makes improvement in to the performance and speed of the products and services, development of processes, delivery of goods, differentiation that can bring uniqueness, etc. so that companies can build market value and shares across the world (Manjra, 2014). Financial considerations With the process of globalization, the companies are facing new priorities of competitive world. It is related to the quality of product and process, reliability of the delivery, speed, and customization and the responsiveness of the organizations towards their customers. These all challenges have forced the organizations to change their priority of the cost and financial management of the entire process. It must be related and fulfilled the global operations strategies. It includes the total quality management (TQM) whose focus is to bring a revolution in the total quality of production and delivery of the goods and services. There are various cost involved in the supply chain management of companies (Meixell, and Gargeya, 2005). Technological considerations The technology has brought a peculiar trend in the supply chain management of the companies. Beside of technology, the companies are using less number of procedures in the process of production and supply chain management. Use of technology help the companies in maintains uniformity in the products and diversity where there it is required. The process of supply chain is become more complex with the process of globalization. The companies are using latest technology in the process of supply of goods. If we observe last year data, the US market is supplying their goods using new technologies that are latest and updated. All the companies should analyze the market before planning for the supply chain management and then apply technology so that the globalised demand can be fulfilled. It helps in lower down the risk of rejection and issues in each and every case related to the risk. Globalization provides new opportunities to the firms that will help to expand the business operations and functions of the same. Technology is one of the major factors that help the organizations to gain competitive advantage against the competitors present in the global markets. As it is not possible for all the companies to invest a hug amount in the technology up gradation or change in the technology. Human resource considerations The human resource of the organization is a great resource because of the special characteristics of the same. The process of globalization in the supply chain management creates a huge burden on the human resource of the companies. The reason due to this the pressure has increased is the change sin priorities taking place. Firstly, the aim of the organization is to fulfill the need and demands of the same country people. It is easy for anyone to analyses the need s and wants of people who live is same country. With the process of globalization, the managers another staff of the firms has to keep eyes on the latest trend of the entire world. It is not an easy task to manage and fulfill the demands of each and every individual. This is the major challenge for the human resource. The other challenges faced by the human resource department of the company are the skills and knowledge. As we know that globalization leads in interaction of different types of people, culture, skills, and creativity together. In this regards, the human resource of the organization have to update themselves according to the requirement of globalised supply chain managers. as they do not have to compete with the local economy but the international economies of the world. It involves many types of risk factors in the management of supply chain and decisions related to the same. The human resource of many companies requires specialized training in which they learn about the global trends in the supply chain management of the firms. This could help them in the effective management and decrease the issues rises in the same. Cultural considerations The culture has created negative as well as a positive impact on the management of supply chain in a globalised world. As we know that the companies who are dealing in the international level of business have to adopt diversified culture in their organization. This can help them to minimize the risk factors that can arise due to the different cultures. The supply chain becomes very complex in globalised world due to the fact that there are different types of culture of different countries. The companies have to analyses the culture of the countries in which they want to do business operations. This can be done though analysis of the culture and proper knowledge. Many companies start their business with the mergers and acquisition so that they can get help from the local people of the same country. Joint ventures are also a good way to enter into a globalised market. The newly expansion of any company has ore risk as compared to mergers and acquisition or joint ventures. Culture is a one thing that defines the needs and wants of the customers. The entire supply chain is affected by the different cultures as there is a need to manage the supply chain according to the culture of the locations where transaction is taking place. Political considerations and Economic considerations the globalization in the supply chain management has created a unique types of risk that includes doubts in the currency of other country, variations, the exchanges rates of the currency, economic rats, tariffs and tax policies, duties, responsibilities, rules and regulations, non-tariffs barriers on the trade, individual income tax, tec. the macroeconomics settings of each and every country is different due to which the international trade has become little risky for the organizations. There is a requirement of risk management in the supply chain process through which it become easy to do business in international markets (Creazza, Dallari, and Melacini, 2010). Risk management has become important part of supply chain management while dealing with the international markets. The changes should be managed and used in the future in the process of decision making regarding the quality, quality and time. In many countries, there is no stability regarding the political parties. The policies and strategies of the parties used to change with the change in political party. It also leads in a huge risk for the business organizations while dealing with international business. It is relevant for the organizations to analyze and study the political situations of the country in which they want to deal with in future. It results in lesser risk and future instability. The global operations managers have to tackle with the unexpected and unreasonable devaluation of the currency. They also have to manage the exposures to the changes (Need, 2006). The risk is depending on the favorability of the economy of the other country. If the economies are favorable then it becomes easy for the supply chain managers to manage in a foreign country. The operations strategies are also influenced by the tariffs and non tariffs barriers and other barriers. The only way to save the organization trough all the barriers is through strategic planning and forecasting (Carter, and Rogers, 2008). Corporate social responsibility considerations With the increase in globalization, the corporate social responsibility is also increasing as one of the famous business concept in the developed and developing economies. It is a typical concept of globalization. The stakeholders policies of the economies emphasize on the corporate social responsibility for all the businesses. The global brands of the economy are managing the supply chain of their company through strategic planning. In multinational corporations, the corporate social responsibility has become one of the relevant parts due to the fact that they have to establish a good image in front of the other MNCs. These companies are already challenged with the management of supply chain (Thun, and Hoenig, 2011). The CSR is an additional responsibility for the companies who are dealing in the global economy. The multinational operations are challenged by the globalization, corporate social responsibility and supply chain. It is observed that the firms have to manage the corporate social responsibility so that the people related to the organization will remain satisfied for a longer period of time. Many of the pressure groups are able to identify these pressures of these firms and try to take advantage from the same. Many groups take the firms for granted and try to make profits for themselves (Britt, 2007). In this way, it is important to analyze the groups and people related to the supply chain management of the company and make policies accordingly. there must be proper code of conduct, culture of the corporate, campaigns related to the anti pressure groups that directly or indirectly affects the working of the firms, training and development programs for the employees and workers related to supply chain of the company, value recognition and reorientation so that the corporate social responsibility can create a positive impact on the and positive moral on the supply chains of the company. Conclusion In the conclusion, we can conclude and emphasize that the supply chain management is the most relevant part of each and every organization. Hence, it cannot be affected due to any process of element. The supply chain management provides various ways through which a company can get maximum output through minimum input. It results in effective and efficient use of resource in the organization. It also provides an advantage of competitive advantage over the competitors to the companies by analyzing the market conditions and tackles them in the best way. The process of globalization has helped in the supply chain management up to an extent but it also creates challenging situations for the companies to tackle the strategic environment. As we know that each and every supply chain has its unique value and beliefs. It set the market demands and challenges regarding the operations. All the companies should analyze the market before planning for the supply chain management. It helps in lower down the risk and issues in each and every case. Globalization provides new opportunities to the firms that will help to expand the business operations and functions of the same. We can say that if companies have the caliber to manage the supply chain management as well as the process of globalization simultaneously in the organization, then it would be the best thing to happen. It will result is a very positive way and the company can enjoy competitive advantage against the competitors. They can earn more revenues and profits. References Britt, D., 2007. Impact of globalization in creating sustainable competitive advantage, [Online], Accessed on: 9 December 2016, Available on: https://www.sdcexec.com/article/10289694/impact-of-globalization-in-creating-sustainable-competitive-advantage Carter, C.R. and Rogers, D.S., 2008. A framework of sustainable supply chain management: moving toward new theory. International journal of physical distribution logistics management, 38(5), pp.360-387. Creazza, A., Dallari, F. and Melacini, M., 2010. Evaluating logistics network configurations for a global supply chain. Supply Chain Management: An International Journal, 15(2), pp.154-164. Knemeyer, A.M., Zinn, W. and Eroglu, C., 2009. Proactive planning for catastrophic events in supply chains. Journal of Operations Management, 27(2), pp.141-153. Manjra, R. 2014. How has globalization impact to supply chain management?, [Online], Accessed on: 9 December 2016, Available on: https://www.quora.com/How-has-Globalization-impact-to-supply-chain-management#MoreAnswers Meixell, M.J. and Gargeya, V.B., 2005. Global supply chain design: A literature review and critique. Transportation Research Part E: Logistics and Transportation Review, 41(6), pp.531-550. Need, W.C.D.H.P., 2006. Human resource management: Gaining a competitive advantage. Thun, J.H. and Hoenig, D., 2011. An empirical analysis of supply chain risk management in the German automotive industry. International Journal of Production Economics, 131(1), pp.242-249. Walters, D. and Lancaster, G., 2000. Implementing value strategy through the value chain. Management Decision, 38(3), pp.160-178. Zhu, Q., Sarkis, J. and Lai, K.H., 2007. Green supply chain management: pressures, practices and performance within the Chinese automobile industry. Journal of Cleaner Production, 15(11), pp.1041-1052.