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ASSIGNMENT 1 WK 4 : Analysis of the challenges of business managers towards the establishment of operations in different countries based on logistics and supply chain of product. “Identifying the key drivers and trends that are increasing the globalization of industries and markets as well as exploring the structure and management of a global and international logistics and supply networks.” Student number: R1910D Course name: Supply chains and logistics- UU-MBA- 716 - MW- 24736 Tutor’s name: Albert Kayange Date: 26th March 2021
TABLE OF CONTENTS
**1. Preamble
- Underlying basis
- Conceptualization of globalisation
- Supply chains and logistics
- Challenges of business managers towards the establishment of supply chain operations in different countries
- Summary & Conclusion
- Appendix
- References**
will have a case study of a company operatic in the SADC bloc and the challenges it is facing in foreign operations.
3. Conceptualisation of globalization 3.1 Globalisation Most vintage entities are either winding up or facing bankruptcy proceedings or are facing some financial challenges. Establishment of new and entities that are technologically advanced is of either financial failure or stability. The product of current or modern markets is not only sold in the home nation, but worldwide. Hirst et al, 2015. In the past years, the demands of consumers were able to be met by local industries, but in these times even the wants of customers are globalized. National barrier is not at all a trouble now. Globalization is a complex concept that can be explained in paragraph. Globalization is linked to various economic factors combined; the transferring of policies from one country to the other; the sharing of processed data; cultural security; replication and communication of power; global measure, inventing, and creation of the international business sector not dependent on influence from social and political factors. Therefore, to simplify “Globalization is a process that comprise the causes, course, and consequences of transnational and transcultural integration of human and non-human activities.” Like other sectors in the industry, supply chain management is influenced by globalization. (Mattsson, 2003)-Market is continuously getting global or acting as one Village. In market globalization the important thing is the coordinated supply of products from the manufacturer to the customers. 3 .2 key drivers and trends influencing globalization for supply chain and logistics Gereffi, Humphrey, & Sturgeon, 2005-Globalization is driven by communication, transport, travel, products and processes. Homogenized world demand is led by the listed key drivers in the prior sentence. The value chain commands or directs globally the business actions to take place in relation to activities that business leaders want to see happening. This is because the varying factors of supply chain and logistics are internationalized as a result of globalization. Nowadays entities are including the transaction cost in supply chain logistics thus distribution, production networking and technological investment costs due to the effects of globalization. Mentzer et al, 2001-Product development, sourcing, production and logistics, in addition to the information systems requires to coordinate these activities and that as overall is what Supply chain processes cover. Network of entities that contributes, through up and down stream linkages, with variant processes and activities that add value in the form of products and services delivered to the ultimate consumer defines what supply chain is. In other words, supply chain comprises multiple firms supplying(upstreaming) and distributing (down streaming) products or services to the ultimate buyer. Lambert & cooper, 2000-Supply chain management does coordinates and integrates these flows both within and among entities in the industry. Stocks are not allowed to pile and therefore not holding working capital, when the Supply chain is properly managed and that products are in supply when required or on demand. The integration of key business processes from end user through original supplier that provides, services, and information that add value for customers and other stakeholders formulates Supply chain processes.
Mentzer et al, 2001-Supply chain management and logistics has three forms of channel relationships (). The channels comprise direct supply chain, extended supply chain, and ultimate supply chain. Supply chain and logistics critically relies on the success of these channel relationships. Mattsson, 2003- Globalization has a component of distribution (coordinated supply of products to reach the ultimate customer) that is very crucial or key to the success of value chain processes. Globalization of the industry and business reengineering of distribution networks are mutually dependent processes and involve changes in industry structures.
4. Supply chain and logistics 4 .1 What is supply chain? Despite that the definition of supply chain varies, the meaning is the same as it has been widely agreed that many different scholars define supply chain differently but with same the understanding and it has been globally accepted. Lambert et al (1998) looks at supply chain as a line of entities that work together to deliver product and services to customers. La Londe and Masters (1994) explains that supply chain is a group of different and independent companies, that some of them are even geographically far, are acting in chain from manufacturing the goods to delivering it to the end user. Some members of the chain are, coarse(raw) substances and component manufacturers, product assemblers, retailers and transportation firms. (Mentzer et al, 2001) defines supply chain as a group of more than three firms or individuals who are directly working in the supply and distribution directions of materials, services, budgets, and/or instructions forward to a customer. Forrester (1958, p.52)” believes in a general recognition of the advantage enjoyed by the pioneering management who have been the first to improve their understanding of the interrelationships between separate company functions and between the company and its markets, its industry, and the national economy The key lesson that one can easily identify is that there is goal congruence and similarities in key words from each of the explanations above. In each there is a mention of services, goods, entities or organizations that need to deliver goods or services to the end user/customer or consumer. 4 .2 Defining supply chain management Supply chain has been expounded with various explanations; in all they use the same key words such as managing the concerted and coordinated effort of distributing the materials or products towards the end user. Mentzer et al, 2001 defines supply chain management as the active management of supply chain activities to maximize customer value and achieve a sustainable competitive advantage. It represents a conscious effort by the supply chain firms to develop and run supply chain in the most effective & efficient way possible. Jones and Riley, 1985 explains that supply chain management deals with the total flow of materials from supplier through end users. Cooper et al.,1997 sums up that supply chain management is the summarized upstream concern with management of a distribution channel of goods from the origin to end user.
- Challenges of business managers towards the establishment of supply chain operations in different countries. The two key challenges that are always being faced by leaders of business are macro environment and oversees culture. Porter’s PESTEL provides that model to expound the challenges that Managers working on a foreign operation in relation to Macro environment on the international market face in additional to issues of culture influenced by demographic factors such as religion, sex, education-working class or not that provides market and demand segmentation to the needs of the customer and the supply of such goods. We will look at Shoprite that is South African company operating in a SADC country Malawi. If we look at the Macro environmental factors affecting the manager when it comes to decisions to be made with regard to supply and logistics of various goods being served to the ultimate customer in the country under review. The first challenge is the issue to do with political situation in the SADC bloc thus in Zimbabwe had political instability due government transition post elections, also in South Africa had Xenophobic attacks that led to countries where tracks transporting goods to Malawi i.e. Zimbabwe and Mozambique blocking and boycotting such goods, also that in Malawi we had a challenge of election dispute in courts for almost a year after the election and that we had a lot of demonstrations that led to closure of business in the cities where Shoprite operates just as other shops did for security purposes. Essentially, Malawi has been stable and its easy for manager to technically predict security costs and plan properly supply and logistical costs hence Managers loving to work on the assignment. If we look at quota for imports and licensing, Malawi does not have restrictive policies as is a signatory to SADC and other regional agreements hence Shoprite being a South African company has same benefits of its origin hence easier to facilitate importation of products. Economically, Malawi face a world challenge posed by COVID 19 that is a global heathy risk hence having unpredictable business in terms of shops being closed or opened and also the fact that inflation is on the high and that Kwacha has been very unstable against foreign currencies such as Rand.The other key challenge is competition against local shops thus in terms of the food provided by Shoprite whose costing comes from initial costs as result of refrigerated tracks thus logistical issue, handling issues such as import duties and clearances, preserving ie meat and vegetable products and also flavor that can compete with readily available fresh foods such as meat, fish and vegetables/fruits that pose a very big challenge to preserve flavor and establish a competitive pricing. The legal requirements and social requirements looks at the need for the manager to feel some of positions like retail attendants as Malawians and also even supervisors so that they interact with local masses and also meet government requirement on issues of work permit to do with expatriates and non-expatriates position. Logistically, because of geographical setting on the continent, Malawi is landlocked, hence the challenge of using tracks facing breakdowns, some products reach Malawi not in good condition and also the closure of roadblocks due to COVID 19 created that gap in supply and stocking in and stock out that as well poses as a challenge. In Mozambique, we have Customs and immigration staff who don’t know customer care hence making logistic difficult to assess the timeframe of departure and arrival of goods. Furthermore, the war in Mozambique created that challenge of attacks of theft due to still in supply of war weapons and also the landmines pose physical threat to drivers’ life and goods as well hence manager has to think on insurance costs of the driver, van and the goods hence not easy to forecast properly on the pricing and costings and then the profits after sales. The other critical issue that poses as a challenge is the culture of the country. Culture usually is influenced by the demographics that bring a challenge of segmenting the products as well as where the shops can be placed to meet a certain section of the ultimate customers. In essence shop rite is for the work or business class in the cities as it is situated in the city. The villagers when visiting the cities they look down upon themselves hence not easy for them to have courage to access such services or products hence making a decision to access well
know local shops thereby reducing demand on goods and services henceforth affecting sales and thereafter profits. The other key challenge is the religion whereby certain section when they assess the products display and provision of certain products that are not allowed spiritually that makes them not acquire services from Shoprite and source in other market shops. Population also has affected the setting such shops has limiting their distribution to cities and municipalities.
6. Summary and conclusion Hirst el al, 2015- The culture and economics of the whole world are influenced by globalization thus the business phenomenon that continues to trend, and it affect the supply and logistics landscape. Globalisation influence supply chain and logistic just like any other business sector. The process that encompasses the causes, course, and consequences of transnational and transcultural integration of human and non-human activities is globalization. Globalization is caused and affected by communication, transport, travel, products and processes as a continuing trend in the industrialized markets. The need for exportation require entities to produce surplus production. The critical business aspect that is affecting politics, culture and economics globally is globalization. Globalization as a process that encompasses the causes, course, and consequences of transnational and transcultural integration of human and non-human activities henceforth affects aspects of supply chain and logistics. Various entities are striving to have competitive advantage and become a market leader derived from it. Supply chain logistics provides some factors that causes globalization. Among them we have Communications, Transport, Travel, Products and Processes. The formation of sector industrialization has been accelerated by globalization. Entities are beginning to produce surplus production that demands exportation rather than just local consumption by end users. La Lande and Masters (1994) defines supply chain as group of different entities aimed at transferring materials or products forward and in so doing encourage cooperation in the industries. Supply chain is a series of entities with a common purpose and that has specific task, through supply(upstream) and/or distribution(downstream) links, in the activities to process and deliver goods and provide services to the end customer. Christopher 1992 defines supply chain management (SCM) as the way of managing the movement of goods and services, where involves storage, inventory, from the manufacturing place to the target market. Logistics is basically outlining direction and framework that is working to perform a single plan for distributing products and services within the businesses Shaw, 1990. As discussed in prior paragraphs, supply chain is a process in which various entities are involved sometimes from different nations. Due to cultural difference, managers experience some difficulties in the international or foreign market environment. The main concerns of business leaders when dealing with supply chain product operation are market environment and oversea cultures. Different leaders in the same supply chain path can experience varying challenges because of them having varying perspectives. In that regard, business leaders must be culturally in the know of the effects and the impact. Skarmeas, Katsikeas, & Schlegelmilch, 2002-Market environments and transportation of goods requires formation of mutual working relationship among the importer, transporter, insurers, clearing agents and other supply chain partners and also leading to a concerted effort towards creating of business networks that are value adding and problem solving or counteracting the challenges being faced. Since there various players to
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