40 Questions
Which factor is NOT driving globalisation?
Political risks
What is one advantage of globalisation mentioned in the text?
Access to new markets
What is one disadvantage of globalisation mentioned in the text?
Political risks
Which of the following is NOT an issue with globalisation mentioned in the text?
Technological advancements
What is one reason why a company would replicate manufacturing around the world, according to the text?
To address 'external' costs
What is the term used in the text to describe the split of common components from market-specific offerings?
Decoupling point
What is the cost base comparison mentioned in the text?
China vs. EU
What is one factor mentioned in the text that complicates management due to cultural differences?
Ex-pats' 'sense of humour'
What is one factor mentioned in the text that may be compromised in local infrastructure due to globalisation?
Skills and productivity
What is one example of a logistics specialist mentioned in the text?
Bulk shipping
Which of the following is a characteristic of the automotive industry?
Market specific products manufactured ‘near market'
What is the difference between outsourcing and offshoring?
Outsourcing works with an overseas partner, while offshoring involves developing operations in an overseas territory
What factors can affect location decisions?
Supply side and demand side
What is a greenfield development?
A development with maximum design flexibility
What is the main advantage of the factor rating method for evaluation?
Relatively transparent
What is the main disadvantage of the factor rating method for evaluation?
Each rating becomes a negotiation
What is the main advantage of the load-distance model for evaluation?
Generates a true optimum
What is the main disadvantage of the load-distance model for evaluation?
Reliant on good data
What is a challenge in locating facilities?
Facility location challenges are 'generational'
What is a characteristic of the aerospace industry?
Components made globally, final products assembled in EU & US
Which of the following is NOT a driver of globalisation mentioned in the text?
Cost base
What is one advantage of globalisation mentioned in the text?
Access to new markets
What is one disadvantage of globalisation mentioned in the text?
Share (exposure) of intellectual property
What is one issue mentioned in the text that complicates management due to cultural differences?
Language barriers
What is one factor mentioned in the text that may be compromised in local infrastructure due to globalisation?
Local infrastructure
What is the term used in the text to describe the split of common components from market-specific offerings?
Decoupling point
What is one disadvantage of the load-distance model for evaluation mentioned in the text?
Share (exposure) of intellectual property
What is one advantage of the factor rating method for evaluation mentioned in the text?
Side-step trade barriers
What is one factor mentioned in the text that complicates management due to cultural differences?
Language barriers
What is the main advantage of the load-distance model for evaluation mentioned in the text?
Maximize utilisation
Which of the following industries primarily focuses on manufacturing in the United States?
Automotive
Which of the following industries primarily focuses on manufacturing in Europe and the United States?
Automotive
Which of the following statements about outsourcing is true?
Outsourcing involves working with an overseas partner to produce goods or services.
Which of the following statements about offshoring is true?
Offshoring involves developing one's own operations in an overseas territory.
Which of the following factors can affect location decisions?
All of the above
What is the main advantage of the factor rating method for evaluation?
It results in a single choice.
What is the main disadvantage of the load-distance model for evaluation?
It relies on good data.
Which of the following is NOT a characteristic of the aerospace industry?
Components made in the US
What is a greenfield development?
A maximum design flexibility with local hostility
What is one reason why a company would replicate manufacturing around the world?
To benefit from globalized operations
Study Notes
Globalisation and Factory Location in Manufacturing Management
- Factors driving globalisation include technology (communications, manufacturing, design) and logistics (bulk shipping, logistics specialists).
- Other drivers of globalisation are markets and competition (World Trade Organisation, NAFTA, EU, TPT) and cost base (e.g. China vs. EU with UK at $19).
- Advantages of globalisation include access to new markets, reduced stigma of imported goods, side-stepping trade barriers, utilizing reduced labor rates, and supporting just-in-time manufacturing.
- Disadvantages of globalisation include political risks, restrictions on operations by governments, exposure of intellectual property, complications due to cultural differences, lower skills and productivity, and compromised local infrastructure.
- Language barriers and cultural differences pose challenges in globalisation, such as misunderstandings and differences in communication styles.
- The economics of globalisation involve addressing external costs (tariffs, certification), accepting lower returns to address market risk, and using decoupling points to split common components from market-specific offerings.
- Different industries have different approaches to global manufacturing, such as VAG, Mercedes, and BMW selling the same products everywhere but manufacturing them in Europe and the USA, while Toyota, Nissan, and Honda manufacture market-specific products near the market.
- Boeing and Airbus in the aerospace industry have globally made components but final product assembly in the US and EU/US respectively.
- Facility location is important for long-term investment, the inability to easily move due to embedded equipment, and the reputational impact of closure.
- Outsourcing involves working with overseas partners, while offshoring involves developing own operations in an overseas territory.
- The optimum location for a new facility balances spatially variable costs, revenue potential, and service level responsiveness to customers.
- Factors affecting location decisions include labor costs, labor skills, suitability of the site, land costs, image of the location, energy costs, convenience of the site, transportation costs, and community factors.
Test your knowledge on the factors driving globalisation and the economics of globalisation in manufacturing management. This quiz will also cover the importance of factory location in the global market.
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