Lana 4.2.5 Outsourcing and MNCs
Supply Chain Concepts
Supply Chain: Network between a company and suppliers; outlines steps to produce and distribute products to customers.
Outsourcing: Subcontracting parts of production to another company; reduces labor costs and allows focus on core competencies (e.g., R&D).
Offshoring: Moving parts of production to another country; may involve outsourcing. Example: Ford built a factory in Manchester when entering the UK market.
International Division of Labour: Allocation of tasks globally among countries.
Foreign Direct Investment (FDI): Investments by one country's entities into another's economic sectors.
MNCs (Multinational Corporations): Companies operating in at least one country other than their home country.
TNCs (Transnational Corporations): Organizations with operations in multiple countries; handle both purchasing and branch expansions through FDIs.
Roles and Strategies of TNCs
Core Areas: Decision-making, strategy, R&D, and marketing concentrated in developed countries.
Assembly and Production: Typically situated in developing countries and peripheral regions.
Globalization Definitions
Globalization: Interconnection of different places through global interactions, including FDI and outsourcing.
Benefits and Disadvantages of Outsourcing:
Benefits: Increased efficiency, cost reduction, job opportunities, and leveraging existing infrastructure.
Disadvantages: Quality concerns, potential for unsafe working conditions, unfair practices towards low-income countries (LICs), and job loss in origin countries.
Tasks Overview
Task 1: Outsourcing
Define key terms related to globalization, FDI, and TNCs.
Compare outsourcing to labor migration and manufactured goods flow; analyze costs and benefits.
Task 2: FDI Trends
Examining FDI inflow trends from 2007 to 2018.
Discussing the role of TNCs in FDI processes.
Task 3: Research on Global Supply Chains
Research a significant multinational's global supply (e.g., Boeing, Apple, Mercedes-Benz).
Identify organization of the supply chain.
Create a supply chain overview using Google Earth.
Compare findings with another group's multinational.
Impact of the 2020/21 Global Supply Crisis
Case study: Daimler
Unit sales decreased by 34% in Q2 2020.
Revenue dropped by 29% to €30.2 billion.
Challenges: Demand remained strong but constrained by COVID-19 lockdowns and semiconductor shortages.
Summary on Supply Chains
Supply Chain Definition: Network linking a company with its suppliers for product distribution.
Importance of effective supply chain systems in maintaining competitiveness, ensuring timely delivery of raw materials, and avoiding production halts due to disruptions.