978-1259317224 Module C Part 3

International Business

Geringer, McNett, Minor, Ball

Instructor Guide to Module C

4. Why would a company choose to source raw materials, components, or other

products or services from a foreign supplier? What problems or concerns can arise from

relying on foreign sources for a company’s supplies, and how might these differ from the

5. What concerns arise as a firm purchases an increasing portion of its materials from

outside firms, especially those located in foreign countries, rather than producing these

materials itself? How might this threaten the long-term competitiveness of a firm, and what

might a firm do in order to lessen such risks?

The reason for a large and increasing proportion of cost of raw materials in the overall cost of

goods sold is due to the greater complexity of products and the increasing pressure for firms to

with which the company is not familiar. Suppliers located in emerging nations may also

encounter difficulty in accessing and supporting sophisticated IT infrastructures, which can

affect international sourcing performance. Security can also be a significant concern, especially

International Business

Geringer, McNett, Minor, Ball

Instructor Guide to Module C

6. In what ways may the emergence of global electronic procurement be a potential

benefit for small and midsized companies, and in what ways might global electronic

procurement pose a threat to these companies?

The answers to this question may vary. Smaller companies are using the Internet to purchase

7. What are the advantages to a worldwide firm of global standardization of its

production facilities? Why might a firm not want to achieve such standardization across its

network of facilities?

The complexity of a global manufacturing company’s operation is immense. Standardization of

International Business

Geringer, McNett, Minor, Ball

Instructor Guide to Module C

Economic forces – market size and buying power may impact the level of production. Also labor

and capital cost differences, mix of labor and capital intensive machinery differs from market to

market creating difficulty from the perspective of standardization. Production machinery must

not stop unexpectedly in either a JIT or a synchronous production system, but unforeseen

stoppages create problems for any system. When a company can sell everything it produces and

has large backorders, management is reluctant to stop production while maintenance personnel

inspect and replace worn parts. A fatalistic attitude that is common in some cultures is a

deterrent to planning, the basis of preventive maintenance.

8. How might an international company’s decision to adopt approaches such as just–in–

time manufacturing systems or Six Sigma within its international network of subsidiaries

result in a decline in its short- and longer-term performance?

9. How might global logistics practices be impacted by developments such as 3D printing

technology or a sustained rise in the global price of oil?

10. What differences might you expect to see in the approach used for global

manufacturing and supply chain management for a product that has stable demand and

limited change in its basic design, versus a product that experiences substantial changes in

demand and continued design changes?

International Business

Geringer, McNett, Minor, Ball

Instructor Guide to Module C

MINICASE: Balagny Clothing Company Outsources Domestic Production

This mini-case provides an opportunity for students to examine a situation in which a company

has closed its domestic manufacturing operations and outsourced the production to companies

in China. A number of issues have arisen in conjunction with this decision to offshore production.

1. Identify specific concepts in the case found in this module, and discuss their relevance to the

problems facing the company.

i. Outsourcing and offshoring – Companies tend to jump on the “band wagon” and follow

ii. Global supply chain management – Balagny Clothing had a poor supply chain in China

and could be considered as a supply chain only in its broadest sense. A supply chain by

definition “involves the application of a total systems approach to managing the overall

iv. Organization and staffing – A new organization structure must developed that will allow

and techniques.

vi. Environmental forces – Both cultural and economic forces are involved in locating a

International Business

Geringer, McNett, Minor, Ball

Instructor Guide to Module C

holidays and overtime must be considered when scheduling production rates and

delivery times. One of the main economic forces that must be considered is the currency

fluctuation between the U.S. dollar and Mexican peso. These fluctuations will vary the

will be sent to Mexico at least once per week. This is needed to pay wages and any other

outstanding invoices from vendors in Mexico

vii. Design of the manufacturing systems – The China location resulted in a longer- than-

components.

2. Considering all of the problems incurred in China and the immense effort and capital

needed to start up the Mexico operation, would it have been a better idea for Balagny

Clothing to keep its domestic operations? Why or why not?

In order for the company to retain and grow its market share in a low-cost provider strategy,

Balagny must keep its prices in line with its competition. Given the vast differences in labor costs

lower than full domestic production. By keeping a portion of its production in a domestic factory

staffed by experienced workers, Balagny would have had the advantage of testing new

production methods then moving the newly developed techniques and practices into the

offshore plant.

International Business

Geringer, McNett, Minor, Ball

Instructor Guide to Module C

BONUS ACTIVITIES (additional resources not in the text)

This section provides you with support of your course above and beyond what’s found in the

text. We have developed these resources to support your course, to support your traditional,

hybrid, flipped, or online class.

VIDEO SUGGESTIONS

McGraw Hill’s collection of international business videos is available on pinterest at

https://pinterest.com/mheibvideos. The content is rich and varied, and it is updated monthly.

There are numerous videos dealing with issues related to global operations and supply chain

management.

When considering global standardization and the skills associated with achieving such an

outcome, you might find it valuable to use the video, “Audi trains Mexican auto workers in

Germany,” at http://www.wsj.com/video/audi-trains-mexican-auto-workers-in–

germany/CB886216-E765-447A-BBF0-2719F3F50E24.html.

Implications of examination of operating standards in the food services are highlighted in the

video “McDonald’s: Russia watchdog widens probe into food chain,” found at

http://www.bbc.com/news/world-europe-28877082. It highlights the importance of managing

not only a company’s direct operations but also the operations of suppliers.

An interesting aspect for discussion of global operations management is the presence of

adequate infrastructure for subsidiaries. The video “Demand for Power in India Outstrips

Current Energy Infrastructure,” found at

https://www.pinterest.com/pin/387591111650417260/, provides an interesting basis for class

discussion, particularly for students who may not think about the inadequacies of institutions

within emerging markets.

The video on the AIMS Lecture entitled, “What is Supply Chain Management? Definition,

Introduction and Fundamental Concepts,” found at

https://www.youtube.com/watch?v=xl3NJ0HC86k, provides an interesting overview.

For a company-based perspective on some of the issues confronted within international

operations, you might consider using the video, “Introduction to International Operations,”

which examines Novo Nordisk’s international activities. It can be found at:

https://www.youtube.com/watch?v=tnhc3piBRRM. A similar perspective on the international

supply chain in logistics supplier DHL can be found at

https://www.youtube.com/watch?v=DvEh04LNJ_I, in a video entitled, “DHL International Supply

Chain.”

GlobalEdge and the Academy of International Business provide links to a number of

organizations that offer videos about international business. You can find these links at

https://aib.msu.edu/resources/videodepositories.asp.

International Business

Geringer, McNett, Minor, Ball

Instructor Guide to Module C

TEAM EXERCISES

These may be done individually or in groups or teams, either in or out of class, for later class

presentation. Some are also appropriate for use in hybrid/flipped classroom and online courses.

1. We have had good response from students when we have asked them to analyze the

introductory vignette on 3D printing and the likely impact it will have on global manufacturing

and supply chains. We ask them what the opportunities truly will be, as well as the challenges

that are likely to be experienced, and then ask them to identify areas that they feel will be most

promising for this new technology. It can be useful to ask teams to identify items from their

own daily lives that might be attractive options for applying 3D printing technology in a

commercially viable manner, and explain whether and how 3D printing would have an

advantage over traditional means of supplying these goods.

2. Assign students to identify key elements of the global supply chain for a company such as

Apple (e.g., for the iPhone), Ford (e.g., for the Focus), or Old Navy (e.g., jeans or shirts). Have

them try to identify the components that go into the products and key sources for those

components internationally. Then you can ask the students to identify how these elements are

managed and to identify where bottlenecks or other concerns are likely to arise (e.g.,

forecasting errors, delivery times when shipping by boat), and what the company would need

to do in order to mitigate risks and problems. These analyses can be shared in class to help

initiate a discussion on the design of organizational structures in international business.

3. Have students report on the extent to which a company standardizes various parts of its

total product (e.g., you could use a well–known consumer product such as McDonald’s

sandwiches or Coca Cola, or you could use an industrial product such as an industrial popcorn

popping machine or a pallet used to ship goods internationally). You can have different teams

examine different industries or products, in an effort to identify whether and how the level of

standardization may vary, why, and the implications of these differences.

SUPPLEMENTAL ACTIVITIES

Case Studies

Case studies that focus on international operations and supply chain management are available

through Ivey Publishing and Harvard Business School. Ivey’s catalog is available for browsing

(www. iveycases.com); the cases are downloadable and pricing is in the U.S. $3.50 range.

Harvard Business Publishing (https://cb.hbsp.harvard.edu/cbmp/pages/home) requires an

account and offers free review copies for educators. The case prices begin in the $3.95 to $6

range.

“Market Expansion at CMS Electronics,” examines the challenges confronted by CMS

Electronics, a European provider of electronic manufacturing services, when trying to “follow

the customer” into the Asian marketplace. Setting up a local factory to better serve its

customers can involve high levels of risk and investment for this company, due to its relatively

small size. The case highlights the impacts of changes in the international manufacturing center