Session 6

Global Production Networks (GPNs)

Supply chains that span multiple countries and continents, relying on transportation efficiency, economies of scale, and minimal trade barriers.

Transportation Networks

Infrastructure systems that facilitate the movement of goods around the globe, crucial for GPNs.

Zero Trade Barriers

An environment where tariffs, quotas, and restrictions on trade are minimal or nonexistent, aiding GPN functionality.

Economies of Scale

Cost advantages gained when production becomes efficient as the volume of production increases.

Geographic Mobility

The ability of companies to relocate their production sites due to reduced trade barriers and lower transportation costs.

Global Model

A corporate location model where a single production facility services the entire global market, benefiting from economies of scale.

Country Model

A location model where production is localized within the country of sale, often used for perishable goods or high transport costs.

Regional Model

A production strategy where facilities are located close to the market to minimize delivery times and logistics costs.

Market-Seeking Strategy

A company approach that prioritizes closeness to consumers and market demand.

Resource-Seeking Strategy

A strategy focused on locating production in areas with abundant natural resources.

Mobility Trade-off

The balance companies must maintain between competitive ability, location advantages, and logistical challenges.

Critical Location Factors

Essential criteria a business evaluates when choosing a production site, including labor quality and political stability.

Multi-Criteria Analysis (MCA)

A decision-making tool used to assess and compare location factors based on multiple criteria.

Cost/Quality Analysis

An evaluation method comparing different locations based on the relationship between costs and quality metrics.

Implementation Phase

The stage in the location decision process where final negotiations, permits, and construction plans are executed.

Project Definition

The stage of identifying a project's key characteristics and requirements before searching for potential locations.

Ineos and Antwerp

An example of a company choosing a production site based on competitive labor advantages and proximity to markets.

Logistical Benefits

Advantages gained in terms of transportation efficiency and cost savings by locating near markets.

Critical Location Factors (CLFs)

Must-have attributes for a suitable project location, including labor availability and cost factors.

Project Characteristics

Specific attributes that define a project, guiding the location search and evaluation process.

Return on Investment (ROI)

A performance measure used to evaluate the efficiency of an investment based on costs and expected returns.

Negotiation Process

The series of discussions and agreements that occur as part of finalizing a location choice.

Utilities Assessment

Evaluation of the necessary utilities (water, power, etc.) for a production facility.

Financial Assumptions

Estimations regarding costs, returns, and financial structures influencing location decisions.

Political Stability

Assessment of a location's social and political coherence that impacts business operations.

Cost-Quality Map

A visual tool used to compare potential locations based on their cost efficiency and quality factors.

Labor Quality

The skill level and availability of workers in a chosen location, impacting production capabilities.

Competitive Advantage

The attributes that allow a company to outperform its competitors in the market.

Timing and Phasing

Factors related to project scheduling and developmental stages that affect location decisions.

Inconsistent Project Strategies

Conflicts that may arise between specific projects and the broader strategic goals of a company.

Intangible Factors

Non-monetary considerations, such as company culture, that affect location choices.

Logistics Costs

Expenses tied to transporting and storing goods, critical in location decisions.

Decision-Making Challenges

Difficulties faced in selecting locations due to various competing priorities and risks.

Consumer Electronics Production

An example of a market-seeking strategy which requires quick and efficient distribution to regional markets.

Project Thinking

A strategic approach emphasizing specific project needs in location decisions.

Return on Investment (ROI)

A financial measure used to assess the profitability and efficiency of investments in location decisions.

Supply Chain Strategies

Various systematic approaches employed by companies in determining where to produce goods.

Negotiating Terms

The discussions that take place to finalize agreements for the selected location.

Cost Factors

Elements that influence the overall expenses associated with a particular location, such as labor and taxes.

Legal Compliance

Ensuring that the location adheres to laws and regulations relevant to business operations.

Infrastructure Quality

The standard and readiness of the physical and organizational structures in a location that support business logistics.

Local Culture

The social norms and values present in a location that may influence business operations.

Quality of Life

Factors related to the well-being of employees in a location, impacting talent attraction and retention.

Sustainability Considerations

Evaluating environmental impacts and practices related to the selected production site.

Investment Costs

The upfront expenditures required to establish production at a new location.

Transportation Efficiency

The effectiveness of moving goods from production to market, critical in location decision-making.

Location Selection Methodology

A structured approach used to evaluate and choose suitable sites for production facilities.

Market Responsiveness

The ability of a company to adapt its production and delivery in response to market needs.