1.1 Having read the above case study, discuss how global firms may use competitive
and political factors to adapt to shifting supply chains. (12)
1.2 There are dimensions to consider when evaluating total cost from offshoring.
Discuss in detail at least three performance dimensions evident fro...
, 1.1Having read the above case study, discuss how global firms may use competitive and
political factors to adapt to shifting supply chains.
Global firms can adapt to shifting supply chains in the following ways:
Political Stability as a Location Factor:
Global firms can utilize the Global Political Risk Index (GPRI) to assess the political stability of
potential regions or countries for their supply chain operations. This index helps them
evaluate the capacity of a country to withstand political shocks or crises.
Companies may prefer to establish facilities in countries with well-defined rules of commerce
and ownership, reducing the risk associated with sudden political changes or instability.
Political stability is a critical factor in supply chain location decisions.
Related to Case Study: The case study highlights the importance of considering political
factors in supply chain decisions. For instance, it mentions China's political stance on Taiwan
as an internal matter. Global firms operating in or sourcing from China must consider these
political dynamics when making supply chain decisions.
Example: An example of political considerations can be found in the case of Huawei, a
Chinese telecommunications company. Due to political tensions between the U.S. and China,
Huawei faced challenges in sourcing critical components for its products, leading to the need
to diversify suppliers and invest in regional supply chain solutions
Competitive Factors and Positive Externalities:
When designing supply chain networks, companies must consider the strategies, size, and
locations of their competitors. Proximity to competitors can lead to positive externalities that
benefit all firms involved.
Positive externalities can encourage competitors to locate close to each other. For instance,
retail stores often cluster together to create a convenient shopping experience for
customers, increasing overall demand. This, in turn, benefits all the stores in the vicinity.
Related to Case Study: The case study discusses how firms are exploring low-cost
manufacturing zones in North America and Europe. This decision is influenced by competitive
factors, such as the need to remain competitive in the face of changing geopolitical
conditions.
Example: An example from the case study is the shift of manufacturing operations to Mexico.
The presence of a competitive and well-educated labour force, combined with the positive
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