Question

Globalization represents the opportunity to deliver improved value to end customers by developing world-class supply relationships in terms of cost, quality, delivery and prrformance. mpre and more buyers have to learn to develop a supply base in more than one country in order to remain competitive in the complex and dynamic global business environment.

Identify a company of your choice ( in a vehicle manufacturing industry) on which you will base your study.

1. Critically analyse reasons that may cause your company to consider an international supplier over a local supplier.

Answer 1

The company is Tesla or any other maker of the electronic cars. The company makes its electric motors but sources many other components from a number of different suppliers apread across EU, Asia and the US.

The reason why the company might choose to consider an international supplier over a local supplier.

(i) Besides electric motor, which is a key component of the electricn vehicles and also a core competency of the company, the other items can be sourced from the outside suppliers, maily in Asia, which might help the company to contain the cost, as the cost of manufacturing is significatly lower in the countries like China, India, Thailand and Vietnam among others. The move can help it to lower the already high cost of vehilces, and help the company to be more competititve.

(ii) Using a number of different international suppliers might help to minimise the risk of disruption due to region  specific issues which might relate to economic policies, political stability and overall business environment.

(iii) The same international suppliers will be very handy from the strategic point of view when the company choses to produce in one of thse Asian or European countries which are some of the biggest potential markets of these new age vehicles.

(iv) By using international suppliers and develop strategic partnership with them , which often operate in a highly competitive business ecosystem where a number of Japanese, Korean and Chinese companies are at work, the company is more likely to gain global competitive intelligence inputs which might help it to form suitable strategy for future.