Final Exam - ISCOM/383 Name:___________________________ Glob

Final Exam- ISCOM/383 Name:___________________________ Global Value Chain Management Due Date- November 16, of

Good management of the supply chain is a critical concept of cost reduction.

A value chain can best be described as a high level model of how businesses receive raw materials as input, add value to the raw materials through the processes, and sell finished products to customers.

A supply chain is a network that includes planning, design, producing, and delivering products and services.

The following are components of the Global Value Chain EXCEPT: Providing Financing Plans to the Customer.

With Vendor Managed Inventory (VMI), it is the responsibility of the vendor to supply inventory replenishment to the retailer.

The three dimensions of Global Operations and Logistics are the following EXCEPT: Cultural.

The traditional view of operating exposure for an exporting firm states that home currency appreciation leads to decreased revenues and a negative exposure. Recognized complicating factors in assessing operating exposure include customer reactions, competitor reactions, shareholder reactions, and government reactions, but not supplier reactions.

A transaction exposure is contractual, and a translation exposure refers to accounting.

The greatest risk in global sourcing contracts is that of the Currency Exchange Rate.

Recent research suggests companies should consider selecting suppliers based on their contribution to balancing currency flows rather than solely on price and performance.

The three types of foreign exchange markets are Spot, Forward, and Futures. Reverse is not considered one.

Forward contracts are typically more structured than futures contracts.

Futures contract trading is inexpensive and easy.

Buying insurance for your vehicle is an example of a hedging strategy.

A product’s manufacturing costs are considered inbound logistics, and order fulfillment is outbound logistics.

The abbreviations CIF, FOB, FAS, and CFR refer to inventory management models.

ERP is an example of a logistics model.

Just in Time (JIT) is an inventory model successfully implemented by both large and small businesses.

Forecasting techniques include trend extrapolation, simulation methods, multiple regression, and Winters’ Model; “Most squares” is not a recognized technique.

In some cases, well-respected companies have a firm “no-bribe” policy, but certain fees, such as payments to local tribal leaders or third-party agents, might be justifiable under specific circumstances.

Enterprise Resource Planning (ERP) can eliminate wasteful duplication and streamline operations but can be costly to implement.

Incoterms describe transportation responsibilities between buyer and seller, with Ex-Works being one example.

Key drivers of competitive advantage include innovation, quality, service, speed, and cost competitiveness, but not sole sourcing.

ERP is defined as the integration of a company’s departments and functions through a single hardware/software application.

Reverse auctions typically best serve small business owners.

Infringement of intellectual property is generally defined as misappropriation involving unauthorized use of trade secrets.

Question 26 (bonus): Infringement is the unauthorized use of trade secrets.

Paper For Above instruction

Effective management of the global value chain is fundamental for organizations aiming to optimize operational efficiency and maintain competitive advantage in a global marketplace. A critical component of this management is understanding the intricacies of supply chain management, including its components and the strategies that can mitigate associated risks. This paper explores various aspects of global value chain management, focusing on cost reduction, supply chain components, risk management, and strategic decision-making.

At its core, a value chain encompasses the processes through which raw materials are transformed into finished goods and delivered to customers. The addition of value occurs at each stage of this chain, emphasizing the importance of efficient operations and strategic coordination among various functions. Supply chains, as expansive networks, involve planning, designing, producing, and delivering products and services, demanding comprehensive management across multiple stakeholders (Porter, 1985).

The global value chain extends this concept to international levels, incorporating sourcing, procurement, logistics, and plant operations—excluding components such as providing financing plans to customers, which are outside operational activities. Vendor Managed Inventory (VMI), for example, shifts inventory replenishment responsibilities to vendors, reducing stock-outs and inventory costs (Mukhanna et al., 2020). The three dimensions critical to global operations are functional, sectorial, and geographic, with cultural considerations often being influential but not classified as a formal dimension (Christopher, 2016).

Understanding exchange rate exposure is vital for companies engaged in international trade. Operating exposure, in particular, can be complicated by factors such as customer, competitor, shareholder, and government reactions—though supplier reactions are less directly influential in this context (Shapiro, 2005). Transaction exposure relates to contractual payments, while translation exposure pertains to accounting practices—highlighting the necessity for firms to develop hedging and risk mitigation strategies against currency fluctuations (Eiteman et al., 2016).

The risks associated with global sourcing contracts predominantly involve currency exchange rates, political instability, and cultural differences. Recent research advocates for selecting suppliers that contribute to balancing currency flows rather than merely focusing on price and performance (Kumar & Rajesh, 2019). The foreign exchange market comprises spot, forward, and futures markets; reverse markets are not recognized components.

Futures and forward contracts are instruments employed in hedging currency risks. Futures are more structured, often more accessible, and less expensive than forward contracts, which are customized agreements (Hull, 2018). Hedging acts like insurance, protecting firms from adverse currency movements (Madura, 2014). Logistics models such as CIF, FOB, FAS, and CFR guide inventory management and shipping responsibilities, aiding in clarity and operational efficiency (Rutner & Langley, 2000).

ERP systems represent comprehensive logistics and operational integration tools that streamline functions and reduce redundancies. JIT inventory management further enhances operational efficiency by minimizing inventory holdings, although its implementation varies by company size (Chong et al., 2017). Accurate forecasting techniques—including trend extrapolation, simulation, regression analysis, and Winters’ seasonal models—enable organizations to predict demand and plan accordingly, with some methods, like “Most squares,” being less recognized.

In ethical and strategic decision-making, policies such as “no-bribe” declarations are significant, yet certain payments might be considered justifiable if made transparently and within legal bounds (Transparency International, 2021). ERP's ability to streamline operations and eliminate duplication is counterbalanced by its high implementation costs, making careful evaluation essential (Ngai et al., 2011). Incoterms facilitate international trade by defining responsibilities, with examples like Ex-Works clarifying the transfer of risk and costs.

Key drivers of competitive advantage—such as innovation, quality, service, speed, and cost leadership—must be strategically cultivated. Sole sourcing, however, is not considered a driver of competitive advantage due to potential risks associated with dependency. Integration tools like ERP assist firms in aligning their operations to sustain competitiveness in a dynamic environment (Porter, 1985). Likewise, reverse auctions are particularly advantageous for small businesses seeking cost-efficient procurement solutions.

Intellectual property rights, especially infringement and misappropriation, pose legal risks to firms operating globally. Unauthorized use of trade secrets involves infringement and can lead to significant legal consequences, emphasizing the importance of safeguarding intellectual property (WIPO, 2020). As organizations navigate these complex terrains, a comprehensive understanding of risk management processes and strategic sourcing becomes paramount to ensure resilience and sustained global competitiveness.

References

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• Hull, J. C. (2018). Options, Futures, and Other Derivatives (10th ed.). Pearson.
• Kumar, R., & Rajesh, R. (2019). Strategic Sourcing for Global Supply Chains. Journal of Supply Chain Management, 55(2), 12-24.
• Madura, J. (2014). International Financial Management (12th ed.). Thomson South-Western.
• Mukhanna, N., Aggarwal, S., & Chopra, S. (2020). Vendor-Managed Inventory: A Review and Future Research Directions. International Journal of Production Economics, 220, 107462.
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• Rutner, S. M., & Langley, C. J. (2000). Logistics Management: An Introduction. Journal of Business Logistics, 21(2), 3–4.
• Shapiro, A. C. (2005). Multinational Financial Management (8th ed.). Wiley.
• Transparency International. (2021). Corruption Perceptions Index 2021. Retrieved from https://www.transparency.org/en/cpi/2021
• WIPO. (2020). Intellectual Property Rights: A Global Perspective. World Intellectual Property Organization. Retrieved from https://www.wipo.int/publications/en/details.jsp?id=4623