Optimization Strategies in Business Management

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Questions and Answers

What percentage increase in profit is targeted in the given optimization scenario?

140%

What is the initial revenue amount before optimization measures?

350 million euros

What is one procurement cost reduction strategy mentioned in the optimization objectives?

Supply chain optimization

What is the profit margin stated in the initial situation?

<p>2%</p> Signup and view all the answers

Which commercial approach can be employed to achieve cost reductions according to the optimization goals?

<p>Price reduction</p> Signup and view all the answers

What is the primary distinction between outsourcing and outtasking?

<p>Outsourcing involves transferring a complete process to an external company, while outtasking refers to delegating single tasks.</p> Signup and view all the answers

How does break-even analysis aid in make-or-buy decisions?

<p>Break-even analysis helps determine the volume of units at which the total costs of making and buying are equal, assisting in cost-effective sourcing decisions.</p> Signup and view all the answers

List two arguments for choosing to 'make' rather than 'buy' in a sourcing decision.

<p>Two arguments for 'make' include protection of know-how and cost savings from specialized technology.</p> Signup and view all the answers

What are the two different types of outsourcing based on geographical location?

<p>The two types are offshore outsourcing, which involves distant countries, and nearshore outsourcing, which involves nearby countries.</p> Signup and view all the answers

What benefit does direct managerial authority provide in a 'make' decision?

<p>Direct managerial authority enables faster improvement cycles and a stronger focus on quality management.</p> Signup and view all the answers

What role does Corporate Social Responsibility play in global sourcing according to globalization trends?

<p>Corporate Social Responsibility is becoming increasingly important as organizations adapt to changes in consumption patterns, particularly regarding environmental and social accountability.</p> Signup and view all the answers

How does demographic change impact the labor market in the context of global sourcing?

<p>Demographic change affects the availability of both skilled and low-cost labor, influencing companies' sourcing strategies.</p> Signup and view all the answers

What impact have falling trade barriers had on global sourcing opportunities?

<p>Falling trade barriers, such as decreasing tariffs and increasing WTO memberships, have expanded global sourcing opportunities for firms.</p> Signup and view all the answers

What is the projected growth trend of developing markets compared to traditional industries?

<p>Developing markets are expected to experience strong growth, while demand in traditional industries and mature markets is slowing down.</p> Signup and view all the answers

Why is IT and innovations considered a key success factor in global sourcing?

<p>IT and innovations enable companies to optimize their global sourcing operations, increasing efficiency and responsiveness.</p> Signup and view all the answers

What trend in globalization has been observed since 2007?

<p>Globalization has been declining slightly since 2007.</p> Signup and view all the answers

How do companies like Nike and Apple approach global sourcing?

<p>They contract out most of their production to foreign suppliers and focus on branding and core competences.</p> Signup and view all the answers

What role do companies like Dell play in the global manufacturing network?

<p>Dell relies extensively on independent suppliers for its manufacturing.</p> Signup and view all the answers

What are the two key focuses for companies engaging in global sourcing?

<p>Maximizing operational efficiency and concentrating on their core competencies.</p> Signup and view all the answers

What is the implication of being described as brand owners and marketers in the context of companies like Nike?

<p>It implies that these companies prioritize branding and marketing over direct manufacturing.</p> Signup and view all the answers

Flashcards

EBIT increase

Earning Before Interest and Taxes increased by 140%.

Cost reduction levers

Methods to decrease costs in procurement.

Sales increase strategies

Techniques to boost revenue to increase profit.

Material cost reduction

Methods for decreasing material costs in procurement.

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Supply chain optimization

Improving the efficiency and effectiveness of the supply chain.

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Outtasking (BPO)

A type of outsourcing where a company outsources single tasks or complete business processes to another company or service provider.

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Make-or-Buy Decision

A strategic decision in production where a company chooses whether to manufacture a product internally (make) or purchase it from an external supplier (buy).

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Offshore Outsourcing

Outsourcing to a company located in a distant country.

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Nearshore Outsourcing

Outsourcing to a company located in a nearby country.

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Break-Even Analysis

A method used to determine the production volume at which the total costs of making a product equal the total costs of buying it from an external source.

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Globalization Mega-Trends

Major global trends shaping business, including increased corporate social responsibility, accelerated technological progress, demographic shifts, economic growth shifts, and changing market dynamics.

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CSR Importance

Corporate social responsibility is becoming increasingly critical as businesses respond to changing consumer demands for sustainability, ethical practices, and positive social impact.

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Tech Acceleration

Rapid advancements in technology are driving significant transformations in various industries, creating new opportunities and challenges for businesses.

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Demographic Impacts

Changes in population demographics, such as aging populations and shifts in labor availability, significantly influence business strategies and operations.

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Market Shifts

Traditional markets may experience slower growth, while emerging markets offer significant potential for expansion, requiring businesses to adjust their strategies accordingly.

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Global Sourcing

A strategy where companies procure goods or services from suppliers located in other countries. It involves outsourcing some or all production to external partners, often in locations with lower labor costs or specialized expertise.

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Brand Owners vs. Manufacturers

Companies like Nike and Apple are primarily brand owners and marketers, not manufacturers. They design products but rely heavily on external suppliers to produce them.

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Core Competencies

The unique strengths and capabilities that give a company a competitive advantage. Companies like Apple focus their internal resources on these core competencies, such as software development, while outsourcing other aspects.

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Global Manufacturing Network

A network of suppliers located in different countries that collaborate to manufacture a product. Dell is an example of a company that utilizes a global manufacturing network, often composed of independent suppliers.

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Factor Cost Calculation

The process of analyzing and comparing the costs associated with different locations for production. It considers factors like labor costs, taxes, transportation, and raw materials to determine the most cost-effective location.

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Study Notes

BA International Management - Global Sourcing

  • Course title: B.A. Business Administration International Management, Global Sourcing (BA/BAET 2/3)
  • Version: Student's Version – Edition Winter 2024
  • Module Code: IMET4
  • Credits: 5
  • Teaching Language: English
  • Intake: Winter semester
  • Hours per week (SWS): 4
  • Duration: 1 semester

Module Overview

  • Global Value Creation

  • Lectures of the module:

    • Global Sourcing (18 hours presence, 57 self-study hours, 75 total workload, 2 SWS)
    • Global Value Chain Management (18 hours presence, 57 self-study hours, 75 total workload, 2 SWS)

  • Teaching and learning methods:

    • Lectures: 50%
    • Free class discussion: 15%
    • Small group work: 15%
    • Case studies: 20%

  • Type and duration of exam: Written exam (120 minutes)

Course Description

  • The course focuses on optimizing value creation through supplier selection and cooperation.
  • Essential terms, procurement management objectives, and increasing importance for international competitiveness are presented.
  • Global procurement management opportunities and risks are explained with case studies from globally active companies.
  • The course covers awarding processes, from specifications and market analysis to supplier decision and contract conclusion, including classic tenders and innovative approaches (e.g., concept competitions, online auctions).
  • Negotiation tactics and strategies are emphasized to obtain suitable suppliers and secure long-term cooperation.
  • Case studies and management approaches are used to practice global procurement management tasks and decisions.

Learning Methods

  • Lecture presentations
  • Videos
  • Case studies
  • Online Survey (optional)
  • Live Demo (optional)
  • Kahoot (optional)
  • Group exercises

Literature

  • Van Weele, A.J. (2018), Purchasing and Supply Chain Management, Cengage Learning
  • Weigel, U.; Rücker, M. (2017), The Strategic Procurement Practice Guide, Springer International Publishing
  • Schupp, F.; Wöhner, H. (2020), The Nature of Purchasing, Springer International Purchasing
  • Zsidisin, G,; Gaudenzi, B.; Pellegrino R. (2024), Strategic Sourcing, Springer Nature Switzerland
  • Oshri, I.; Kotlarsky, J.; Willcocks, L. (2024) Global Outsourcing and Offshoring, Springer Internatioinal Purchasing

Work Load and Exam

  • Punctuality and presence until end of lecture, mobile phones, smart-phones, and PDAs must be switched off.
  • Class attendance accounts for a small portion of the overall workload.
  • Additional preparation, wrap-up, and exam preparation time is included (2.5-3 hours per hour of class)
  • Written module exam, calculators permitted.
  • Active participation in class and exercise preparation are vital to exam success.

Principles of Sourcing - Agenda

  • Terms and Meanings
  • Objectives
  • Outsourcing (topics include increasing importance of purchasing and supply in the manufacturing sector from 1940-present, vertical manufacturing, and examples with the automotive industry: SMART in Hambach)
  • Make-or-Buy

Additional Notes

  • The course contains exercises and case studies, emphasizing practical application of concepts learned.
  • The documents cover various aspects of global sourcing, from initial principles to operational aspects like contracts, costs, and selection processes.
  • Detailed information regarding ethical considerations, global sourcing trends, company approaches, and global issues.

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Global Sourcing BA_BAET_2_3 Students Winter 2024 PDF

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