The Global Value Chain Management

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The emergence of global value chains has been one of the most important paths to economic growth in the age of globalization. A global value chain typically focuses on building efficiencies for business on the inbound and outbound logistics component of the value chain, where the process of producing a good has been divided into multiple components. Any given good is the product of resource extractors, component subcontractors, assembly and logistics, in addition to the design and marketing functions (OECD, 2007). There are a number of benefits to global value chain management. The most important is specialization. Each component of the operation is subcontracted to specialists who can perform their service or produce their goods with a very high level of efficiency. This specialization and efficiency also leverages comparative advantage to ensure that the goods or services are produced where that production is at its peak value. Manual labor ends up conducted in countries where labor is cheap; skilled work ends up conducted in countries with high skilled labor capacity. Carter (2011) notes that global value chain management is challenging, because of the complexities of international business. Effective management of the global value chain requires exceptional forecasting and good timing, and it also requires a high level of risk management, such that risk management is another element of the global value chain in and of itself. In addition to specialization,

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