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International Business
Geringer, McNett, Minor, Ball
Instructor Guide to Module C
Module C: Global Operations and Supply Chain
Management
Use this Instructor Guide to incorporate the unique content of this product and facilitate your
Face-to-Face, Online, and Hybrid classes. This guide has been designed to be interactive and links
have been created within each title in the Table of Contents to guide you to each section. You
can also link back to the main page by clicking at the button at the bottom of each page.
Here is the Table of Contents highlighting what you’ll be able to find to support you in teaching
this module:
YOUR CONTENT
Summary
Learning Objectives
Key Terms & Key Terms with Definitions
Content Outline
CONNECT TOOLS FOR CLASS PREPARATION
SmartBook
What is SmartBook?
How Does SmartBook Help You/Students?
How to assign SmartBook to ensure students come to class prepared?
ENGAGEMENT & APPLICATION (FACE TO FACE & ONLINE & HYBRID)
BOXED TEXT DISCUSSION QUESTIONS WITH SUGGESTED ANSWERS
IB IN PRACTICE
GLOBAL DEBATE
Video Suggestions
Team Exercises
Supplemental Lecture
Tools & Tricks
Controversial Issues
International Business
Geringer, McNett, Minor, Ball
Instructor Guide to Module C
2 Instructor’s Manual – Module C| Geringer, McNett, Minor, Ball © 2016 by McGraw-Hill Education.
CONNECT TOOLS FOR ASSESSEMENT OF LEARNING
Interactive Applications
Assigning Interactives
Time-Saving Hints:
Connect Content Matrix
International Business
Geringer, McNett, Minor, Ball
Instructor Guide to Module C
3 Instructor’s Manual – Module C| Geringer, McNett, Minor, Ball © 2016 by McGraw-Hill Education.
YOUR CONTENT
SUMMARY
Global markets and global competition have pushed ICs to search for methods to lower costs
and improve product quality. These same pressures have resulted in a new focus on supply
chain management, the process of coordinating and integrating the flow of materials,
information, finances, and services within and among companies in the value chain from
suppliers to the ultimate consumer.
LEARNING OBJECTIVES
LO C-1 Explain the concept of supply chain management.
LO C-2 Discuss the relationship between design and supply chain management.
LO C-3 Describe the reasons for sourcing globally, the five global sourcing arrangements,
and the benefits and challenges of global sourcing.
Backward vertical integration
(p. 490)
An arrangement in which facilities are established to
manufacture inputs used in the production of a firm’s final
products.
Bottleneck (p. 482)
Operation in a manufacturing system whose output sets the
limit for the entire system’s output.
Indirect procurement(p. 477)
The purchasing of goods and services that are not part of
finished goods.
Intermediate technology
(p. 494)
Production methods between capital- and labor-intensive
methods.
Intrafirm trade (p. 476)
Trade that occurs between a parent company and its foreign
affiliates.
Just-in-time (JIT) (p. 480)
A balanced system in which there is little or no delay time and
idle in-process and finished goods inventory.
Logistics (p. 484)
Managerial functions associated with the movement of
materials such as raw materials, work in progress, or finished
goods.
International Business
Geringer, McNett, Minor, Ball
Instructor Guide to Module C
4 Instructor’s Manual – Module C| Geringer, McNett, Minor, Ball © 2016 by McGraw-Hill Education.
Manufacturing rationalization
(p. 488)
Division of production among a number of production units,
thus enabling each to produce only a limited number of
components for all of a firm’s assembly plants.
Mass customization (p. 483)
The use of flexible, usually computer-aided, manufacturing
systems to produce and deliver customized products and
services for different customers worldwide.
Offshoring (p. 475)
Relocation of some or all of a business’s activities or processes
to a foreign location.
Outsourcing (p. 472)
Hiring others to perform some of the noncore activities and
decision making in a company’s value chain, rather than
having the company and its employees continue to perform
those activities.
Quality circle (p. 481)
Small work group that meets periodically to discuss ways to
improve its functional areas and the quality of the product.
Six Sigma (p. 483)
Business management process for reducing defects and
eliminating variation.
Standards (p. 486)
Documented agreements containing technical specifications
or other precise criteria that will be used consistently as
guidelines, rules, or definitions of the characteristics of a
product, process, or service.
Supply chain management
(p. 472)
The process of coordinating and integrating the flow of
materials, information, finances, and services within and
among companies in the value chain from suppliers to the
ultimate consumer.
Synchronous manufacturing
(p. 482)
An entire manufacturing system with unbalanced operations
that emphasizes total system performance.
Total quality management
(TQM) (p. 481)
A companywide management approach in which the entire
organization is managed so that it excels on all dimensions of
product and services that are important to the customer.
International Business
Geringer, McNett, Minor, Ball
Instructor Guide to Module C
5 Instructor’s Manual – Module C| Geringer, McNett, Minor, Ball © 2016 by McGraw-Hill Education.
This is proprietary material solely for authorized instructor use. Not authorized for sale or distribution in any manner. This
document may not be copied, scanned, duplicated, forwarded, distributed, or posted on a website, in whole or part.
LO C-1
Explain the concept of supply chain management
• Introduction
Managing global supply chains
Key Terms:
• Outsourcing
• Supply chain
management
Lecture Outline and Notes:
I. Introduction
To improve competitiveness, international and domestic companies seek ways to lower costs
while improving their products. A common solution is outsourcing. Any activity in the value
chain can be outsourced
II. Managing Global Supply Chains (Fig. C.1)
Supply chain refers to activities involved in producing products and services and how they are
linked together
Supply chains are integral to global quality and cost management
Shorter, less predictable product life cycles, plus impact of unplanned economic, political, and
social events, place further emphasis on achievement of effective supply chain performance
Operations in each step of the supply chain must be synchronized
Measurement of supply chain performance varies by industry and company, because the way
success is defined also tends to vary and performance assessment should be aligned with a
company’s strategic objectives and the key factors for success
LO C-2
Discuss the relationship between design and supply chain
management
I. Design of products and services
Key Terms:
•
Lecture Outline and Notes:
I. Design of Products and Services
Design of a company’s products and services has a fundamental relationship with the types of
inputs a company will require
Operations can be standardized or adapted to meet different needs of various markets
Traditional “over-the-wall” approach – sequential steps to design
Alternative approaches – cross-functional participation in each stage of design, identifying and
avoiding many potential sourcing, manufacturing
1. Many companies also pull customers into design activities
2. Can improve products, generate new product ideas, and engage customer
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International Business
Geringer, McNett, Minor, Ball
Instructor Guide to Module C
LO C-3
Describe the reasons for sourcing globally, the five global
sourcing arrangements, and the benefits and challenges of
global sourcing
• Sourcing globally
• Reasons for sourcing globally
• Global sourcing arrangements
• Importance of global sourcing
• The increasing use of electronic purchasing for
global sourcing
o Options for global electronic
procurement
o Benefits of global electronic
procurement systems
o Problems with global sourcing
Key Terms:
• offshoring
• intrafirm trade
• indirect procurement
•
Lecture Outline and Notes:
I. Sourcing Globally
Reasons for Sourcing Globally:
1. The primary reason is to obtain lower prices. In addition, certain products may not be
available locally. Firms’ competitors may be using components of better quality or
better design.
2. When deciding to source internationally, companies either set up their own facilities
or outsource the production to other companies.
a. A company’s decision to relocate some or all of its activities or processes to a
foreign location is called offshoring
focus scarce resources on their core competencies and leverage the skills of other
companies to reduce costs and capital investments, improve flexibility and speed
of response, enhance quality, or provide other strategic benefits.
c. Any part of the value chain can be outsourced.
3. The value of global sourcing is the existence of suppliers with improved
competitiveness in terms of cost, quality, timeliness, and other relevant dimensions.
4. The rate at which developing nations shift to more sophisticated processes is often
more rapid than the initial emergence of these processes in a developed country. In
part, this may be due to an emerging nation’s ability to transfer technology and
International Business
Geringer, McNett, Minor, Ball
Instructor Guide to Module C
7 Instructor’s Manual – Module C| Geringer, McNett, Minor, Ball © 2016 by McGraw-Hill Education.
This is proprietary material solely for authorized instructor use. Not authorized for sale or distribution in any manner. This
document may not be copied, scanned, duplicated, forwarded, distributed, or posted on a website, in whole or part.
processes previously invented and commercialized in the more developed nations,
thus avoiding the cost and time of inventing these technologies on its own.
5. The ability to effectively and efficiently use global sources has been enhanced by the
drop in cost of communications, widespread use of standardized interfaces such as
World Wide Web browsers, and the increasing pace at which companies are
automating and digitizing data.
Global Sourcing Arrangements
1. Wholly owned subsidiary – established in a country with low cost labor or producing a
product not made in the home country.
assembled or just assembled by an independent contractor in an in-bond plant.
4. Overseas independent contractor – common in the clothing industry in which firms
with no production facilities such as DKNY, Liz Claiborne, and Nike, contract with
foreign manufacturers to make clothing to their specifications with their label.
5. Independent overseas manufacturer.
Importance of Global Sourcing
1. Intrafirm trade (trade between U.S. parent companies and their foreign affiliates)
b. Accounts for 35% to 50% of U.S. imports.
2. Cost of Goods Sold is rising, because of:
a. Greater product complexity
b. Increasing focus on firm’s core business
d. Pressure to reduce concept-to-market cycle times
The Increasing Use of Electronic Purchasing for Global Sourcing
Entering exporter and the product name in a search engine will bring up Web sites of exporters
around the world that have on-line catalogs and information on how to order their products –
purchasing needs online for all prospective suppliers to view, and suppliers can then
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International Business
Geringer, McNett, Minor, Ball
Instructor Guide to Module C
8 Instructor’s Manual – Module C| Geringer, McNett, Minor, Ball © 2016 by McGraw-Hill Education.
submit private quotes to the buyer.
3. Benefits of Global Electronic Procurement Systems
substantial benefits, in savings and breadth of offerings because suppliers can be
global:
a. Streamline operations, cut costs, improve productivity in supply chain
management and customer response
b. Smaller companies benefit from lower barriers, using Internet to purchase raw
materials and to sell products to customers, often on worldwide basis
c. Industry-based business-to-business (B2B) exchanges can help optimize the
a. Following are the costs of importing with an estimated percentage of the quoted
price that each adds:
i. International freight, insurance, and packing (10-12%)
ii. Import duties (0-50%)
iii. Customhouse broker fees (3-5%)
viii. Rework of products out of specifications (0-15%)
b. Other Disadvantages
c. Importers can face an increase in price because the home currency has lost value
as a result of exchange rate fluctuation. To address this risk (discussed in Chapter
17), hedging may be used.
d. Some efforts at developing e-procurement systems have been done in isolation
f. Security can also be a significant concern for e-procurement, including allowing
competitors or customers to see proprietary details of their business. Different
country standards are also a concern when attempting to implement international
e-procurement systems.
International Business
Geringer, McNett, Minor, Ball
Instructor Guide to Module C
LO C-4
Explain why manufacturing systems and logistical elements
may vary, even within the same company.
• Manufacturing systems and logistics
• Advanced production techniques can enhance
quality and lower costs
o Reducing costs through just-in-time
manufacturing systems
o Improving quality through total quality
management
o Enhancing total system performance
through synchronous manufacturing
o Managing costs and customer needs
through mass customization
o Improving quality and costs through Six
Sigma
• Logistics and supply chains
Key Terms:
• Just-in-time (JIT)
• Total quality
management (TQM)
• Quality circle
• Synchronous
manufacturing
• Bottleneck
• Mass customization
• Six Sigma
• Logistics
•
Lecture Outline and Notes:
I. Manufacturing Systems and Logistics
Because international firms maintain manufacturing facilities in countries at various levels of
development, manufacturing systems often vary considerably in cost and quality from country
to country and even in the same country.
1. Advanced production techniques can enhance quality and lower costs
and enhance quality; they are balanced systems in which there is little or no delay time and idle
in-process and finished goods inventory
What is important is “big JIT” – a total system covering management of people, materials, and
relationships with suppliers
b. Teams are necessary in the implementation of TQM, and one useful kind of team
is the quality circle.
2. Enhancing Total System Performance through Synchronous Manufacturing
International Business
Geringer, McNett, Minor, Ball
Instructor Guide to Module C
a. Synchronous manufacturing, also called the theory of constraints (TOC), is an
entire manufacturing system with unbalanced operations that emphasizes total
system performance.
b. The system’s output is determined by and limited to the output of the slowest
operation, or bottleneck, that is working at full capacity.
c. Instead of attempting to achieve a balanced system like JIT, synchronous
manufacturing aims to balance the product flow through the system, which leaves
output levels of the various operations unbalanced.
d. A defective part or component at any point in the production process can shut
down a JIT system. But because a synchronous manufacturing system has excess
capacity in all operations except at the bottleneck, any defective part produced
before the bottleneck can be remade, and thus the entire system is not stopped.
3. Managing costs and customer needs through mass customization
a. Mass customization refers to a company’s use of flexible, usually computer-aided,
manufacturing systems to produce and deliver customized products and services
for different customers worldwide.
b. Four basic approaches to mass customization
ix. collaborative—company helps customers choose the required product features
x. adaptive—company offers a standard product that users can modify
themselves
xi. cosmetic—only product’s presentation is customized, such as packaging or
color
xii. transparent—customers are provided with individualized product or service
offerings withouttheir knowing it, such as on website interfaces
c. Mass customization is usually appropriate where it is feasible to delay
differentiating the product for a particular customer until the last possible point in
the supply network. In practice, this means reconceptualizing and often
reconfiguring the company’s entire supply chain
d. benefits of such a comprehensive approach to operations are that the company
will be able to function at maximum efficiency and to rapidly respond to
• Standardization and the management of global
operations
o Benefits of standardization of global operations
o Organization and staffing
o Purchasing
• Manufacturing
rationalization
• Backward vertical
integration
• Intermediate
