Question

It is evident that globalization and having a supply chain connected across multiple countries can create real problems. 1. what kind of problems are created? 2. Why do these problems arise in some countries but not others? 3. How can companies help in resolving these problems?

Answer 1

1. The problems which can be created by supply chain globalisation are:

-- Currency fluctuations: While dealing with customers or suppliers overseas, companies need to plan for fluctuating charges and income from variations in foreign exchange rate.

-- Maintaining intellectual property protection: There is a possibility that company may have a product assembled overseas more cost effectively instead of assembling it domestically. But few countries have less stringent laws regulating protection of intellectual property.

-- Identifying and assuring the reliability of global business partners: With distributors, suppliers, customers and business partners located in several regional areas of the globe, it may be tough for companies to monitor the financial stability and business practices of all organizations in the supply chain

-- Accessing insurance and finance: Financial transactions conducted globally are more complicated compared to the domestic transactions

-- Compliance with international standards and regulations: Quality standards, export and import and restrictions, packing and safety regulations and labelling regulations vary around internationally. For new companies to global trade, ensuring that materials provided by an international supplier will meet all domestic entry regulations can be a daunting undertaking.

2. The countries which are politically stable, superior in technologies, the improvement of transportation infrastructures and significant developments in trade does not face these issues.

3. With an increase in the exchange of knowledge, capital and trade around the globe, driven by technological innovation, from the internet to shipping containers companies can resolve these problems.