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This paper addresses a number of issues related to the propensity of an organization to use globalized supply chains in the context of the modern business environment. The first part of the paper explores the rational for firms locating operations or sourcing supplies from what may be considered high risk parts of the world. Then, the paper examines the potential impact of natural phenomena and political unrest upon the global supply chain of a company. Specific examples are given that include some of the potential negative results of making such an investment. This section is in the form of a case study approach that highlights supply chain issues from a theoretical perspective, and gives further examples of where firms have suffered as a result of investing in high risk countries as part of a supply chain strategy. The paper concludes by stating that in considering the value of various approaches to supply chain management, managers should investigate both local and global options, weighing up the pros and cons of each model in total before opting for a given solution.
From the Paper:"In the first instance, the literature would seem to indicate that there are a wide number of motivations from firms to engage in international supply chain management strategies in the first place. Here, Metzer et al (2006) highlights the key reasons including, access to cheap labour, access to raw materials, subsidized financing opportunities, larger product markets, arbitrage opportunities and government incentives designed to attract FDI such as tax breaks and other government led initiatives. As such, in assessing these reasons for the internationalisation of the supply chain, it would appear that the factors motivating firms to engage in such activities largely conform to economic theories of internationalisation which suggest that motivations are either market seeking or resource seeking in nature or a hybrid of the two (Krugman et al, 2012). Yet while the literature highlights the benefits of such internationalised versions of supply chain management, such strategies can be seen as risky with the possibility of a whole range of negative events from assets seizure such as was experienced by Yukos in Russia (Rodriguez, 2003) through to the environmental impact of natural evens such as was experienced by Toyota in relation to the Asian tsunami which cause lose of production as far afield as its UK manufacturing facilities..."
Sample of Sources Used:
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- Burgen, S, Phillips, T. 2011. Zara accused in Brazil sweatshop enquiry. Available online at: http://www.guardian.co.uk/world/2011/aug/18/zara-brazil-sweatshop-accusation [Accessed on 07/03/12].
- Cassidy, W, B. 2011. Thai flooding swamps Toyota supply chain. Available online at: http://www.joc.com/supply-chain-management/thai-flooding-swamps-toyota-supply-chain [Accessed on 07/03/12].
- CIA. 2012 a. World fact book UK. Available online at: https://www.cia.gov/library/publications/the-world-factbook/geos/uk.html [Accessed on 07/03/12].
- CIA. 2012 b. World fact book China. Available online at: https://www.cia.gov/library/publications/the-world-factbook/geos/ch.html [Accessed on 07/03/12].
Cite this Analytical Essay:
Managing Risk in Global Supply Chains (2012, September 16) Retrieved February 23, 2024, from https://www.academon.com/analytical-essay/managing-risk-in-global-supply-chains-151752/
"Managing Risk in Global Supply Chains" 16 September 2012. Web. 23 February. 2024. <https://www.academon.com/analytical-essay/managing-risk-in-global-supply-chains-151752/>