Chapter 7 - International Sourcing and Production Flashcards
The idea of Ferdow
Senior MNE managers should try to upgrade their host country factories to give them the ability to develop new FSAs
Believes that a factory’s ability to create FSAs is as important as low costs
This requires long term investement
3 changes in the IB environment are driving the assignment of these new foreign factory roles
International trade tariffs declines substantially
Modern manufacturing is increasingly technology sophisticated
The time frame to move from manufacturing to marketing has become shorter
6 possible roles for foreign manufacturing facilities
Offshore
Server
Outpost
Source
Contributor
Leader
Offshore
Access to low cost production factors as an implementer on the input side and plants manufacturing output is determined by senior management
Server
Manufacture goods for the local market, probably because of trade barriers have little autonomy
Outpost
Gather valuable information, but manufacturing is mainly done by previous to no FSA
Source
Besides low cost production, they receive resources to engage in resource recombination and to develop FSAs that will turn it into a best practice plant.
This type of factory might be a strategic leader on the input side of the value chain but has a narrow character
Contributor
Not only manufacturing to local markets but is also responsible for resource recombination in the form of process improvements, new product development
Leader
This type is the most important one in terms of resource recombination and new FSA development
Upgrading foreign factories involves substantial resource recombination spread over three stages
Enhancing internal performance
Accessing and developing external resources
Developing new knowledge that can benefit the overall network
Enhancing internal performance
Employee training, education self management, JIT manufacturing
Accessing and developing external resources
Strengthening the plant’s supplier network and improving logistics
