Global Production

Global Production
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Abstract
Derived from an endless desire to acquire competitive advantage in the industry, firms have developed a need to expand their operations by locating production facilities in various parts of the country. In simple terms, global production involves the general desire of firms to locate similar business activities in different parts of the country with the aim of maximizing income. This piece starts by elaborating the general term of sourcing which precedes any form of global expansion. On the other hand, the text highlights the advantages that a firm is likely to enjoy by embracing global production. These include improvement in the quality of goods and services provided due to global competition as well as financial economies. Moreover, the piece elaborated on drawbacks associated with locating production facilities in various parts of the country. Finally, the text explains by giving an example why a business organization would dislike engaging in global production.
Global operation as applied by many firms has been used successfully to achieve sustainable as well as competitive advantage. This has been facilitated by sourcing aspect which entails the aspect of what to produce and what to acquire from suppliers; a strategic decision that goes ahead global production and procurement. The sourcing decision as it relates to production is dynamic and keeps on changing hence leading to the common practice of in-sourcing or outsourcing.

Once an organization settles on a particular sourcing strategy and embraces global production, the firm must manage various facilities around the globe that mostly engages in the production of raw materials, finished products, and components. Since global production involves the location of several production facilities in various parts across the globe, a firm that engages in this practice is likely to enjoy financial economies of scale (Bowersox, et al., 2002). This is because it sells its products to several consumers located in the same industry but in dissimilar countries. This enables it to lower its production cost hence reducing prices of various items that they produce.
The global production also grows the firm from local competition to universal strives hence helping the firm to upgrade its systems so as to fit in the competitive industry. In this regard, a firm is likely to embrace the use of modern technology as well as employment of qualified staff hence improving the quality of goods and service they provide.
On the other hand, when an organization engages in the global production, it is likely to face diseconomies of scale such as management complexity where the main branch is likely to lose management control of various branches located in different parts of the country. Moreover, global production increases management costs due to a general upsurge of activities as well as employees hence reducing firm’s level of income.
In many instances, firms dislike the pursuit of global production because they fail to enjoy economies of scale enjoyed by other suppliers with the ability to draw close the activity of several businesses. For instance, any tire business must have the ability greater than Nissan and Mercedes for it to enjoy global economies in production.
Reference
Bowersox, D. J., Closs, D. J., & Cooper, M. B. (2002). Supply chain logistics management (Vol. 2). New York, NY: McGraw-Hill.