Sector Matrix vs. Value Chain and Commodity Chain

The 21st century has seen several companies cross international borders to look for new markets to conduct their business and increase shareholders’ return. The process was fuelled by opening of borders and advancement in transport mode and technology in the 21st century. The situation has complicated the attempts to fully understand the process of global production. However, the research and different literatures in the recent past have given customers and scholar a good read on forms of labour which go into producing the product or service, and how this work is globally distributed (Coe, Dicken and Hess 2008, p.274). The development has made customers to strongly know what they want and what they consume. Therefore, this essay will analyze the Global Production Network (GPN) of coffee and discuss who benefits most from the structure of this GPN. In the analysis, the essay will focus on three different aspects. First, the paper will analyze various forms of labour that go into creating the product and how is this work globally distributed. The essay will also analyze how the value is captured at each stage of production distributed along the network. Lastly, the essay will focus on the institutional arrangements that explain the structure of this GPN.

Over the past decade Ford Motor Company has had its financial ups and downs and had not been able to maintain a stable net income (See graph below). To combat this problem in the middle of the last decade Ford made some management changes to try and improve their industry position. They addressed supply chain efficiency problems that the company was facing. Some of the needed changes included closing plants, retooling, building flexible manufacturing facilities, and contracting with new logistics firms. The plan to make the transformation was coined “One Ford” .

The fact of the matter is, “The existence of global poverty helps to ensure the wealth of affordable goods for western consumers.” (Eglitis 224) The supply of these affordable goods and products that are so readily enjoyed by western consumers is a direct result of the benefits gained from participating in a global manufacturing

No matter the company, the production of goods in any shape or form is bound to have both costs and benefits to its consumers, its workers and the environment. The widely used phrase ‘commodity chain’ describes process by which firms gathers resources, transforms them into goods (commodities) and, in the final step of the process, and distributes them to consumers (Sparke, 2013). In our age of technology and the ever reigning presence of the internet, commodity chains are becoming increasingly more transparent, just as transgressions of large multinational corporations are brought to the public’s attention much more frequently (Sinclair, 2012). To thoroughly explore the logistical side of commodity chains, this paper will be examining the example of Apple, the American multinational corporation headquartered in California, which designs, develops and distributes our Apple electronics - our iPhones, iPads, iPods, MacBooks, iMacs – as well as various online services and computer software (Apple Inc., 2014). When it comes to customer service, Apple is a bold innovator – very much leading the industry and forces others to catch up. To Apple’s credit, they have also set an incredibly high standard in their innovative energy-efficient electronic products (in fact, the most

This is a cause of the social problems seen in the America today because by mass producing production in other nations there are lost opportunities to provide jobs and stimulate the local economy. These cheaper products led to larger profit margins and an “‘unprecedented number of mergers in the manufacturing sector,” resulted in wealth becoming increasingly concentrated in the hands of the few” (addressing

When an individual goes to a store to purchase an item, most will simply walk out and not really think about how it got there in their hands. Behind the scenes, there are potentially hundreds if not, thousands of workers who will get that item into your hands. These processes are called global commodity chains. In fact, they are one of the biggest shapers of our global economy, specifically buyer-driven chains. For my specific item, I picked the Bauer NEXUS 1N composite hockey stick.

Global Sourcing has been defined has companies practicing offshoring and outsourcing. Labor Market under Globalization and the other readings we have covered in class so far has emphasized that the primary factor different companies engaged in global sourcing was due to low labor cost. Although low labor cost is very important factor the Global sourcing reading also informs that there are factors such as facilities and infrastructure, availability of resources, easy access to market and consumers and the political conditions which a company has to consider. At the end of the reading the concept of “Race to the Bottom” was very interesting. This concept informs us how large companies try their best to reduce their expenditure and increase profit by trying to reach countries with low labor cost. In the other hand government of different countries are forced to adopt new polices, reduce taxes and weaken economic polices in order for companies to invest in their country. The opening of different companies will provide people with jobs which are very labor intensive with deteriorating working

This case presents a company, known as Westminster and currently considered as one of the biggest manufacturer of health products. It consist of three separate companies, in which each of them manufactures their own and unique products, with a decentralized management that allows for an overall outside view of what is for best the future of this enterprise. Top managerial personnel is currently re-evaluating and assessing the company’s supply chain and how they could develop a strategies that would facilitate revamping such system.

Global manufacturing turns out to be more prevalent as opposed within global marketplaces is extremely elevated and persists to expand; manufacturing is a significant component in value-chain stratagem. Global manufacturing is utilized to possess a vanguard over your contenders, since other states may hold a profusion of exclusive resources, for instance, inexpensive labor, or assistance in supplementary approaches for example eliminating trade obstructions (Porter, 1985).

Highly Effective Supply Chain: Woolworths and Coles efficient distribution network is both a resource and a capability in its in-bound and out-bound logistics. A culmination of tangible and intangible assets such as technological capabilities and supplier relationships, it is highly valuable as it was the significant cost- savings achieved throughout its entire logistics network that enabled Woolworths to achieve a higher EBIT over Coles (McKinna, 2009). The level of cost saving benefits provided is non-substitutable by any other resource. It is also difficult to imitate as the level and scope of the technological capabilities involved is highly specialized and staggering. However, should Woolworth’s possess an unfavorable public image or sell products undesirable to consumers, possessing an efficient distribution network would be

The definition of the Global Commodity Chain is that it is the network created among the global south and the corporations of the global north in order to produce and deliver products to consumers. It has four key elements, Intellectual property rights, communication, transportation, and the structure of factories in the third world. A great example of the global commodity chain is the rise of China. In 1994, China passed a law that allowed the privatization of state owned enterprises, the end of welfare programs, and the relaxation of FDI barriers. This completely changed the landscape of the working class in China. The number of rural enterprises sharply declined in favor for these new, inner city manufacturing jobs. Social goods like medical care and education went from being free to being obtained at a price. Peasants from the countryside where suddenly dropping everything they had and trying to become a part of this new commodity chain. The workers appreciated the fact that the urban wages where three times as much as the rural. Through the 1990s, the Chinese industry was making products in all sectors. But, these products weren’t being consumed by the millions that produced these products. It was being consumed by the north. The products went directly into the shipping containers that head for Los Angeles and San Francisco. This cycle worked because the North’s average consumer ate up the idea of the same products that where produced locally, but at a remarkably lower

* In those industries when the output required to attain EOS represents a significant proportion of total world demand, the global market may be able to profitably support only a small no. of enterprises. Thus, world trade in certain products may be dominated by countries whose firms were first movers in their production.

The OECD report entitled "Moving Up the Value Chain: Staying Competitive in the Global Economy" reports that the "pace and scale of today's globalization" is unprecedented and linked to the "rapid emergence of global value chains as production processes become increasingly fragmented geographically." (nd, p.5) Globalization has resulted in production becoming fragmented physically in which the stages of production are located in various sites due to the advantages that firms have discovered in sourcing more of their operations globally. Globalization has also resulted in an increase in foreign direct investment as well as trade in services with many of these activities being conducted on an international basis and most specifically as ICT has enabled "the production of many services independent of a specific location." (OECD, nd, p.5) There are two factors motivating the globalization of value chains: (1) the first of the "desire to increase efficiency, as growing competition in domestic and

Table 1. Coordination mechanisms for collective strategies Coordination mechanism Regulative legislation Contracting Mergers Joint ventures Interlocking directorates Trade associations Collusion and industry leadership Degree of formalization High High High High Moderate Moderate Low

Global companies source their raw materials and outsource manufacturing of their products to many countries to take advantage of lower costs or high quality production, and/or lower costs of