Page 656 - Introduction to Business

630 PART 6 Managing Business Operations, Management Information Systems, and the Digital Enterprise

Global Business

Global Supply Chains

When companies enter growing global town,” it developed independently-owned supply
markets such as eastern Europe, China, plants in Moscow to keep its transportation costs and
South America, or even Mexico, expanding their handling times low and its quality and customer
supply chains becomes a strategic challenge. Quality service levels high. Every component in this food
production in those areas may be a challenge, just as chain—meat plant, chicken plant, bakery, fish plant,
distribution systems may be less reliable, suggesting and lettuce plant—is closely monitored to make sure
higher inventory levels than would be needed in one’s that all the supply chain’s links are strong.
home country. Tariffs and quotas may block non-local Firms like Ford Motor Company and the Boeing
companies from doing business. Moreover, both Company also face global procurement decisions.
political and currency risk remain high in much of the Ford’s Mercury has only 227 suppliers worldwide, a
world. small number compared to the 700 involved in
So the development of a successful strategic plan previous models. Ford has set a trend of developing a
for supply chain management requires innovative global network of fewer suppliers that provide the
planning and careful research. Supply chains in a lowest cost and highest quality regardless of home
global environment must be country. So global is the production of the Boeing 777
Flexible enough to react to sudden changes in parts that officials from the company proclaim, “The
availability, distribution or shipping channels, Chinese now make so many Boeing parts that when
import duties, and currency rates Boeing planes fly to China, they are going home.”
Able to use the latest computer and transmission Source: From Jay Heizer and Barry Render, Operations Management,
technologies to schedule and manage the 7th Edition, © 2004. Adapted by permission of Pearson Education,
Inc., Upper Saddle River, NJ.
shipment of parts in and finished products out
Staffed with local specialists to handle duties, trade, Questions
freight, customs, and political issues 1. Discuss the advantages and disadvantages of
McDonald’s planned for a global supply chain global supply chains.
challenge six years in advance of its opening in 2. List three global supply chains that you think are
Russia. Creating a $60 million U.S. dollars “food particularly successful.

Amazon.com, which sells books, software, and music to individual consumers, is
business-to-business (B2B) e-business an example of B2C e-business. Business-to-business (B2B) e-business involves
The e-business that involves selling selling goods and services among businesses. Milpro.com, Milacron’s website for
goods and services among businesses
selling cutting tools, grinding wheels, and metal working fluids to more than
consumer-to-consumer (C2C) 100,000 small machining businesses, is an example of B2B e-business. Consumer-
e-business The e-business that involves to-consumer (C2C) e-business involves consumers selling goods and services to
consumers selling goods and services other consumers. For example, eBay, the giant Web auction site, allows people to
to other consumers
sell their goods to other consumers by auctioning the merchandise off to the high-
est bidder.
Another way of classifying e-business is in terms of the participant’s physical
connection to the Internet. Until recently, almost all e-business transactions took
place over wired networks. Now, cell phones and other wireless, handheld digital
devices are Internet-enabled so that they can be used to send e-mail or access web-
sites. Companies are rushing to offer new sets of web-based products and services
that can be accessed by these wireless devices. For example, in Great Britain, cus-
tomers of Virgin Mobile can use their cell phones to browse Virgin’s website and
purchase compact disks, wine, TV sets, and washing machines. Subscribers to
Japan’s NTT DoCoMo Internet cell phone service can send and receive e-mail, tap
into online news, purchase airplane tickets, trade stocks, and browse through
restaurant guides, linking websites that have been redesigned to fit into tiny

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