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Global Production. Effects of Globalization. Fragmenting activities in all stages of production . Performing activities in different countries and reintegrating them through production systems. Global production brings opportunities and challenges. Entering foreign markets

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Presentation Transcript
effects of globalization
Effects of Globalization
  • Fragmenting activities in all stages of production.
  • Performing activities in different countries and reintegrating them through production systems.
  • Global production brings opportunities

and challenges.

JiJun Xia & Yaching Chang

opportunities

Entering foreign markets

  • Earning more foreign currencies
  • Diversifying exports
  • Getting new skills, knowledge, and technology

Extending the scope of gains

Opportunities

JiJun Xia & Yaching Chang

opportunities cont
Opportunities…(cont.)
  • Benefiting latecomers not having the industrial base of the first movers and advanced capital markets and financial institutions
  • Stimulating the more business-friendly environments.

JiJun Xia & Yaching Chang

challenges
Challenges

Much competition

Prices down

Production and technological capabilities up

Smaller suppliers survive difficultly

JiJun Xia & Yaching Chang

challenges cont
Challenges…(cont.)
  • Even successful companies hardly sustain competitiveness.
  • Still, some countries have succeeded to use the opportunities from this new business condition.

Ex: Asian countries

high-technology-intensive products

JiJun Xia & Yaching Chang

global value chains and global production networks
Global value chains and global production networks

Global production

Network analysis:

  • Flagship firm’s production network
  • How it is dispersed
  • Transferring technology

Global value chain

analysis:

  • Strategic global dispersion
  • Possibilities for technological and industrial upgrading

JiJun Xia & Yaching Chang

what are global value chains
What are Global Value Chains ?
  • Value chains include a sequence of related activities.

JiJun Xia & Yaching Chang

global value chains
Global Value Chains
  • The market structure influence innovation possibilities

Low-income, price elastic markets

process innovation

High-income markets

product innovation

JiJun Xia & Yaching Chang

what are global production networks
What are global production networks ?
  • GPN participants at different hierarchical layers: growth, strategic direction, and network position
  • A global production network can participate in different value chains

JiJun Xia & Yaching Chang

global production networks
Global Production Networks

JiJun Xia & Yaching Chang

global production networks cont
Global Production Networks…(cont.)
  • Production networks may compete with each other in a product-specific value chain, but they may also cooperate.

Ex: Solectron & Flextronics

  • Dell is a flagship firm that works like a brand leader.

JiJun Xia & Yaching Chang

organization of a global production network
Organization of a Global Production Network
  • In 2001, Dell Computer became the world’s largest personal computer vendor.
  • Dell’s business model is simple in concept, but very complex in execution.
  • Building PCs to order

JiJun Xia & Yaching Chang

dell s partners
DELL ’s Partners…

JiJun Xia & Yaching Chang

dell s value web model
Dell’s Value Web Model

JiJun Xia & Yaching Chang

dell s value chain
Dell’s Value Chain

JiJun Xia & Yaching Chang

global organization
Global Organization
  • Dell is a global company operating in 34 countries in three world regions, with about 35,000 employees and $30 billion in sales.
  • Dell is organized along geographic lines into the Americas, Asia-Pacific , and Europe/Middle East/Africa (EMEA).

JiJun Xia & Yaching Chang

global organization19
Global Organization

JiJun Xia & Yaching Chang

global organization cont
We heard this explanation several times in interviews with Dell people in the EMEA region. They pointed out that Dell EMEA deals with 13 different languages, 18 different currencies, and 18 different tax rates whereas Dell North America deals has only 3 different languages, currencies, and tax rates… …Global Organization… (cont.)

Source: Dell Website

JiJun Xia & Yaching Chang

global organization cont21
Global Organization… (cont.)

JiJun Xia & Yaching Chang

location of manufacturing
Location of Manufacturing
  • 1990: Opens manufacturing plant in Ireland
  • 1996: Opens manufacturing plant in Malaysia
  • 1998: Opens manufacturing plant in China
  • 1999: Opens manufacturing plants in Tennessee and Brazil

JiJun Xia & Yaching Chang

location of manufacturing cont
Location of Manufacturing…(cont.)
  • What should take into consideration…???

General Location Factors

  • Market access
  • Labor costs and quality
  • Transportation and telecommunications infrastructure
  • Government incentives
  • Industry clusters

JiJun Xia & Yaching Chang

outsourcing
Outsourcing

JiJun Xia & Yaching Chang

outsourcing cont
Outsourcing…(cont.)
  • While sourcing of materials for PCs (major components and systems) is done centrally, sourcing of consumables is local (box and shipping material, printing of keyboards, printing of manuals, etc.).
  • The majority of sourcing is from low cost suppliers in Asia, but some sourcing is from local producers.

JiJun Xia & Yaching Chang

impacts of dell s location on supplier location
Impacts of Dell’s Location on Supplier Location
  • With so many different suppliers and partners involved, the location decisions of these companies naturally vary by company and location. Many parts and components are manufactured.
  • For instance, Solectron and SCI supply Dell’s U.S. plants from their plants in Guadalajara, Mexico, and from plants in the U.S.

JiJun Xia & Yaching Chang

supply chain
Supply Chain

JiJun Xia & Yaching Chang

dell s other operations
Dell’s Other Operations
  • Call Centers
  • Dell makes extensive use of call centers, both for sales and for technical support.
  • Dell generally organizes its call centers around its major customer segments with different call centers for relationship and transaction customers.

JiJun Xia & Yaching Chang

dell s other operations29
Dell’s Other Operations
  • Marketing, Sales and Support
  • The sales, service and support functions are located in the individual countries because these activities must be close to end customers.
  • As a result, Dell has sales and service offices in 34 countries around the world, usually in a large urban area and with multiple offices in some countries.

JiJun Xia & Yaching Chang

dell s other operations30
Dell’s Other Operations
  • IT and Data Centers
  • A network of data centers supports Dell’s sales, manufacturing, logistics and other operations.
  • Global applications, such as online sales tools, order management and supply chain management.

JiJun Xia & Yaching Chang

dell s facilities in us
Dell’s Facilities In US

JiJun Xia & Yaching Chang

reaction to market slowdown in 2001
Reaction to Market Slowdown in 2001
  • Dell was the only PC maker to show any growth in sales in 2001, but it still saw much slower growth than the 30-50% annual gains it was used to.
  • In order to cut costs, Dell laid off about 5,000 workers, mostly in the Austin, Texas area. About 600 workers were laid off in Europe.

JiJun Xia & Yaching Chang

conclusions
Conclusions
  • Dell has become a global company with global production networks in Americas, EMEA and Asia-Pacific.
  • Market potential is the driving force behind Dell’s general location decisions.
  • Dell has organized its operations by region and by country.

JiJun Xia & Yaching Chang

slide34

THANK YOU

JiJun Xia & Yaching Chang