Global Business Today: Asia-Pacific Perspective 5th edition by Charles W. L. Hill Solution manual
Answer guide: Despite the trends in the growth of the internet, we must be careful not to overemphasise its importance. While modern communication and transport technologies are ushering in the ‘global village’, significant national differences remain in culture, consumer preferences and business practices. For example, in competition with CNN and the BBC for global viewers is the influential Arab news and public affairs broadcaster Al Jazeera. Based in Qatar and owned by the Emirate of Qatar, this network reaches an estimated audience of 40 million and has uncensored independence, which is unusual for a broadcaster in the Arab world.
Suggesting that the creation of a global culture still has some way to go, to accommodate different cultural traditions Al Jazeera has two news operations: Al Jazeera Arabic and Al Jazeera English. The organisation itself has had to confront national cultural differences. The Al Jazeera English network is virtually locked out of the US. It can be accessed by the internet, but none of the major cable TV networks carry its programs: it is thought of as an ‘anti-American’ network. To gain a foothold in the US, Al Jazeera was forced to acquire its own, albeit small, cable network. A company that ignores differences between countries does so at its peril.
8. Read ‘Who makes the Apple iPhone?’ What are the potential ethical problems associated with outsourcing assembly jobs to Foxconn in China? Speculate how Apple might deal with these issues.
Answer guide: Potential ethical issues of outsourcing to China relate to the loss of jobs in the home market, income tax and lost company tax enjoyed by the home nation and other investment spin-offs through having a multinational corporation in the home market that develops skills at home and also has links to other supporting industries. Acceding to the lower wage rates and potentially poorer working conditions for the mainly less-skilled workers in manufacturing assembly in the Chinese subcontractor locations does little for the economic development or advancement of those workers.
Apple could take the approach of Boeing (see the Opening Case) and reconcile the sometimes conflicting relationship between its onshore and offshore activities, and in this way effectively introduce a more balanced approach to production manufacturing operations that have been heavily outsourced to date. This would help America’s faltering economy, while at the same time continue to help Apple in its FDI ventures overseas.
IBGA1: Discipline Knowledge and Skills
IBGA2: Critical Analysis
Refer to section ‘VII. Opening Case Analysis’.VI. Chapter vignettes
Management Focus: The globalisation of production at Boeing
Summary
The Opening Case identifies how Boeing’s foreign suppliers—of whom there were only a few 45 years ago—now account for around 65 per cent of the value of its latest aircraft, the 787 Dreamliner. There are three reasons for this dramatic change. First, in the current climate, 80 per cent of Boeing’s customers are foreign airlines, and to sell to those nations it often helps to give business to them. Second, dispersing component production to the most capable ‘best-practice’ parts suppliers around the world is seen as an effective strategy. Third, outsourcing parts supply on the 787 has reduced some of the risks and costs associated with in-house production. Moreover, this strategy allows for the ‘higher-level’ strategic aspects—such as engineering design, marketing, sales and final assembly in Seattle—to be kept in-house.
However, outsourcing went too far, with Boeing experiencing problems in the production process such as production schedules not being met, parts manufacturing not coming together as well as envisioned, and occasional loss of suppliers due to delivery unreliability and quality standards not being met. Boeing has now addressed these issues and moved to produce a lot of its components in-house once again.
The Opening Case identifies how Boeing’s foreign suppliers—of whom there were only a few 45 years ago—now account for around 65 per cent of the value of its latest aircraft, the 787 Dreamliner. There are three reasons for this dramatic change. First, in the current climate, 80 per cent of Boeing’s customers are foreign airlines, and to sell to those nations it often helps to give business to them. Second, dispersing component production to the most capable ‘best-practice’ parts suppliers around the world is seen as an effective strategy. Third, outsourcing parts supply on the 787 has reduced some of the risks and costs associated with in-house production. Moreover, this strategy allows for the ‘higher-level’ strategic aspects—such as engineering design, marketing, sales and final assembly in Seattle—to be kept in-house.
However, outsourcing went too far, with Boeing experiencing problems in the production process such as production schedules not being met, parts manufacturing not coming together as well as envisioned, and occasional loss of suppliers due to delivery unreliability and quality standards not being met. Boeing has now addressed these issues and moved to produce a lot of its components in-house once again.
Suggested discussion questions
1. Consider Boeing’s decision to outsource much of the production of the Dreamliner 787. What benefits does this strategy offer? What are the drawbacks? Discuss.
Answer guide: The main benefits are:
- opportunities to work on the higher-level (strategic) aspects of engineering design and marketing when the lower-level operational activities in production manufacturing go offshore