Challenges of Global Supply Chain Management

1973 Words Jul 14th, 2010 8 Pages
CHALLENGES OF GLOBAL SUPPLY CHAIN MANAGEMENT

Introduction

Rapid growth of globalisation has enabled the developed countries to gather the motivation for making investment in developing countries. The developed countries nowadays are investing in different sectors of developing countries. Acknowledging the increasing rate of investment of the developed, the entrepreneurs of the developing countries are setting up the necessary infrastructure and facilities to produce low-cost goods for retail and consumption in the developed countries which are usually European countries and North America. Along with the rise of such trend a new concern has emerged within the core of globalisation and that is regarding the ethically responsive
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This very attitude has given the rise to the challenges faced by globalisation. Second challenge is the impact on indigenous business. MNCs are large in terms of size, power and political influence for which theyr are much more prone to enjoy the considerable cost and other advantages compared to local competitors in the developing country. For example, when an Indian MNC invests in Bangladesh, they will bring the influence of Indian of government in Bangladesh. The local competitors are affected. In this way, MNCs can create indirect trade barriers.

Third challenge is the differing labour and environmental standards. In this challenge we find that the global supply chain is highly affected. Due to the high demand of MNCs in lowering the price of the goods the suppliers in developing countries go through a ‘race to the bottom’ where all the suppliers struggle amongst each other to provide with the lowest price quotations to their buyers from the big corporations at the cost of providing the basic necessities to the labourers. Often the race of providing the lowest price is accompanied by ‘sweatshop’ a condition which is comprised of poorer labour conditions, less environmental protection and lower attention to health and safety.

Fourth
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