Course Plan Logistics Management, Transportation and Communication 3 Project Reports 14 “ Quest for Global Dominance,” Globalization Backlash 13 Strategic and Political Implications Globalization of R&D 12 Semiconductors and Global Knowledge Networks 11 EU, Albany International 10 Industry Examples China, Color Kinetics 9 India 8 Mexico 7 US and Japan 6 Country Examples World Class Operations, Global vs National Mindsets 5 Productivity and Location Decisions 4 Global Supply Chains, Outsourcing and Offshoring 2 Introduction, History, Globalizaion and Jobs 1 General Principles Week
Globalization: Japan, the Asian Tigers, the EU and China
Growth of Trade WTO and IMF and World Bank data Intra-EU trade in 2000 was 1.4T in 2000 Services was 20%, Merchandise was 80% in 2000 2004 data from a different series 27.0 10.06 37.3 2004 2000 1990 1980 1970 1960 1950 Year 21.7 7.88 36.3 15.1 4.30 28.5 12.2 2.54 20.8 2.7 0.39 14.3 2.0 0.17 8.6 1.6 0.09 5.4 Trade as a % of GDP World Trade (2000$ trillions) World GDP (2000$ trillions)
Growth of Foreign Direct Investment UNCTAD data
Established in 1995 after the Uruguay Round of trade negations
Successor to GATT
Administers WTO trade agreements, forum for trade negotiations and for resolving trade disputes
without discrimination — a country should not discriminate between its trading partners (giving them equally “most-favored-nation” or MFN status); and it should not discriminate between its own and foreign products, services or nationals (giving them “national treatment”);
freer — barriers coming down through negotiation;
predictable — foreign companies, investors and governments should be confident that trade barriers (including tariffs and non-tariff barriers) should not be raised arbitrarily; tariff rates and market-opening commitments are “bound” in the WTO;
more competitive — discouraging “unfair” practices such as export subsidies and dumping products at below cost to gain market share;
more beneficial for less developed countries — giving them more time to adjust, greater flexibility, and special privileges.
No payments by US companies to foreign officials for the purpose of obtaining business (1977)
Can’t avoid it by using subsidiaries or intermediaries
Can get hit with treble damages from companies that lose business because of our bribe
Where provably legal in the foreign country
Changed the game for US companies
Extended to most firms from other developed countries (1998)
OECD Convention (ratified by 33 countries)
US FPCA extended to apply to almost any firm doing business in the US
A Global Supply Chain Fiber supplier in Australia Textile Maker in Italy Zipper Maker in China Apparel Maker in Mauritius Apparel Designer and Marketer in US Carriers and Intermediaries Carriers and Intermediaries Retailer in US
Question: How best to command a supply chain?
Arms length transaction at every stage?
Global coordination – vertical integration?
Use of Intermediaries
Laura Ashley – Federal Express Case: Logistics Outsourcing
Next time - Li and Fung Case: Supply Chain Outsourcing
Material flow Information flow Implies transport system details omitted