Logistics and Supply Chain Management International Trade

Question: Discuss about the Essay for Logistics and Supply Chain Management of International Trade. Answer: 1: Global Trade: The global trade is also known as International trade. International trade is the import and export of goods and services across the boundaries all over the globe. The goods and services entering the country for the purpose of sale are known as imports while the goods and services that leave a country for sale are known as exports. One of the fundamental concepts that underlie the global trade is the comparative advantage that was developed by David Ricardo in the 19th century. Absolute advantage and comparative advantage are the two concepts that are used in the international trade or Global trade. But, there is a lot of difference between absolute advantage and comparative advantage. Absolute advantage: Absolute advantage is that which compares the productivity of the different economies or producers. A producer is said to have an absolute advantage if that producer requires smaller quantity inputs for producing a good. The figure below explains the amount of output produced by country A and country B in a given period of time. As seen in the below figure country A uses less time as compared to country B for making either the clothing or the food. It can be seen that 6 units of food are made by country A and only one unit is made by country B. In other words it can be said that Country A has an absolute advantage over country B in making both the clothing and the food. Output per day of work Food Clothing Country A 6 3 Country B 1 2 Comparative advantage: Comparative advantage means the ability of producing the goods and services at a lower opportunity cost than any other. It is said that even when one country is having an absolute advantage in producing all the goods and services other country can still have comparative advantage.(Roth 2000) If any country has a comparative advantage over the another then it is possible that both can be benefited from the trading this is because this is due to the reason that each of the party will receive a good at a price that would be lower than the opportunity cost at which the good will be produced. (Annoynomous 2012)For Example, consider two countries, country A and country B. In country A the opportunity cost is 2uints of food for producing 1 unit of clothing but in country B it is only 0.5 units of food. Since the opportunity cost is lower in country B for producing clothing then it can be said that country B has comparative advantage. (Cua 2012) 2: Factors for economic growth and development of international trade: The economic growth process is a very complex phenomenon that is highly influenced by various factors like the economic factors, social factors, cultural factors and political factors.(annoynomous 2010) Some economists believe that the capital is the most important requirement for economic growth and therefore they lay great emphasis on the formation of capital so that economic development can be brought.(Guru 2010) Following are the factors that determine the economic growth and development: Economic Factors: The various economic factors that affect the economic growth and development are: Capital Formation Conditions in foreign trade Natural Resources Economic system(Nitisha 2014) Marketable surplus of agriculture Growth of population Non Economic Factors: Human Resources Political freedom(Chand 2012) Corruption Technical know how Desire to develop Social organization Other factors: Supply of the resources Technological progress Capital form action Importance of the various factors affecting the economic growth and development: These factors are considered very important because these factors have a very much impact on the development and growth of the economy. (Blaguer 2002)Without these factors the economy cannot succeed. These factors are very important for every organization that is planning to trade internationally because before entering the international markets the organization needs to be very well aware of the various factors that might have a bearing on the business of the company. Proper study of these factors can prove out to be very advantageous for the economy as a whole. If the business does not go through these factors properly then there are chances that the business might have to face failure in the global economy. Answer 3: There have been lots of changes in the traditional organizational structures and the related models of the business as the companies are getting more and more involved in the outsourcing manufacturing and various logistical activities like warehousing, transportation and other fulfillment. All these activities impact largely to the supply chain and the activities that are related to the service. (Beomon 2000)The collaboration that is indicated requires coordination that is effective among the various parties so that the customer level is ensured, like the on-time delivery, reliability and the complete orders. There are many challenges that are faced by the supply chain managers . More volatility is introduced by the globalization. It is considered that the supply chain will experience various challenges with strikes, lockouts, weather, terrorism etc. it is very important for proper customer service that there is flexibity and responsiveness through the supply chain. (Stephe n 2007)There are long distances covered by the expanded networks that are complex. There are many organizations that are powered by smaller organization and individuals in contrast to the countries. The ingredients that are critical to the new era include communications and technology that are connected with the four corners all over the globe. While in the first era the countries were given boundaries that seeked materials and the second era often seek the companies with markets, goods and labor. There are new management systems and new technology. It can be concluded finally that the new technology has the power to create vast changes in an organization. The production processing can also be changed by the technology and this may also influence the skills of the employees that are being used by them on the job. There have been many changes in the organization over the period of time. The sizes of the organizations have started growing from small organizations to large organizations. Earlier there were only small organizations but now there are large organizations as well. (Kenneth H. Wathne 2004)It has been observed that there has been lots of changes in the traditional organizational culture as compared to the contemporary organizational structure. There is a familiar power dynamic employed by the traditional organizational culture. Under the traditional organizational culture there is a leader who gives orders and others are expected to follow the orders given by the leader. Impacts of changes in the organization: There are various positive as well as negative impacts of the organizational change. Some of the positive impacts of change on the organization are: Change is beneficial for the management: The organizational change is very beneficial for the management as they can make decisions for achieving the organizational goals rather than the individual interest.(Cooper 2004) Leads to efficiency of work: As there are various new ways and advancement in technology it helps in improving the efficiency of work as the time taken to complete a task is reduced by the advancement in the technology.(Keller Stank 2011) Saves time and effort: The effort and the time of the employees is saved due to various changes in the organization and the employees are in a position to spend more time on important and urgent tasks rather than spending time on an individual tasks. Improves the productivity: The productivity of the organization increases manifold due to various advancements in technology and changes in the organizational culture. Coordination in communication: The communication among the various groups in an organization improves by better technology and the work is performed with high speed. The goods can reach early: The time taken for the goods to reach the customers has reduced with the technology advancement, now the goods can reach the customers in less time as compared to traditional structures.(Witting 2009) 4: Basically, Supply chain is an essential element for the efficient operation of the business. The companies can apply supply chain management for the customer satisfaction and the success in the organization that includes cultural evolution and improvement in the quality of life. The supply change management is very important for the organization due to various reasons: Supply chain helps in boosting the business: The customer service is impacted by supply chain management and makes sure that the right product is delivered to the customers and the right quantity is delivered in a timely fashion. Along with this the products shall be made available where the customers expect them to be. Customer shall also receive quality after the sale of the product.(Srivastwa 2007) Improvement in the bottom line: Supply chain management has a tremendous impact on the bottom line. The supply chain is valued by the firms due to the reason that they decrease the usage of the fixed assets like the plants, transportation vehicles and warehouses. Improvement in the customer service: The supply chain management helps in the improvement of the customer service by providing g them better product quality on time.(University Alliance 2008) Elimination of the redundant elements and processes: Various unimportant elements and the processes are eliminated from the business with the help of the supply chain management that helps in saving the time and energy of the organization.(Bosak 2014) Creation of effective relationship: The supply chain management helps in creating effective relationships between the business and the employees hence leads to the success of the organization.(Ravallion 2012) Synchronization of planning and implementation: The supply chain management helps in the proper synchronization of the various plans and its proper implementation. 5: It is very true that the time and distance has compressed according to the latest definition of global economy. There were many challenges that were faced by the trade in the earlier times which has very well overcome by the supply change management. There were many safety issues over the past few years with the food, car parts, toys and medications that caused various illness and deaths due to which the business men had to face various losses in the business and trade. But now various traceability strategies have been adopted by various organizations in the global world that has helped the organizations a lot. There are broad traceability strategies that range from paper based system to higher level RFID and GPS that are put in place so that there is a change in the technology and changes in the government requirements as well. The various risk based decisions and value are made by the organizations about traceability. It is also agreed by the supply chain professional managers t hat due to traceability there will be an improvement and expansion of the technology that will make it further cost-effective. Due to globalization various large and the small companies expanded. The business operations of various organizations have expanded to a very great extent. There is a great globalization process created by the transportation and globalization. The old and the traditional methods of the globalization were very complex and customized and the countries exercised the control before the era of globalization. Earlier the goods were transported by ships and roads.(Chegg. 2001) The deliveries of these goods were not certain rather it was uncertain till the ocean vessel reached the destination. The communication was also not very good and coordinated so that the transportation activities could be tracked but now these challenges have been very well overcome. Now the communication, transportation and computer related technology have made it very convenient for the various communities of the business so that they can meet face to face or through special information technology. Now it is not required to wait for an extended period for some business to be done.(Coyle Langley 2004) The impacts of compression: The various impacts of the compression of the time and distance on the global trade are: Improvement in the communication: due to the advancement of technology there has been a great improvement in the communication among the organizations and the consumers. Timely delivery of goods: The goods can now reach the consumers on time which is a very positive thing and leads to less wastage of the goods due to the wear and tear in the transit. Coordination and tracking of the goods: Due to the advancement of technology now the where about of the goods can be easily known which was not possible earlier. 6: Importance of Customer service: There are both opportunities and threats that have been created by the current marketing environment. As there are very fast changes in the global environment for the development of the business enterprise.(Wierzbiski 2009) The need of shippers is becoming very complex as the 21st century global logistics world is quickly changing. If there is a development of custom are centric approach for the various organizations in which the customers are considered as focal point for all the different activities, processing and decisions. In an organization that is customer centric each person will be able to understand its responsibility so that it can meet the demands and wants of the customers and will automatically add value to the experience of the customer. Adaptation of the customer centric approach is the best strategy for the logistic companies so that they can compete successfully in the 21st century and service based global economy. The logistic ind ustry has been made more competitive due to globalization. The logistic industry has been made more competitive and existing at the top benchmarks by the help of globalization. (Annonymous 2012) Yes, it is true that the service provided to the customers is more important than lowering the price. For winning the customers it is very important that the businesses have differentiated product provided to them. According to various recent surveys it has been found that the businesses are responding by spending more on the services to the customer service. It is seen that 68% of the businesses are increasing their investment in this department.(Shai 2015) There are basically four reasons as to why the companies shall spend on improving the customer service: Better customer service improves the loyalty of the customers It improves the retention of the customer It also helps in increasing the acquisition of the customer. Bibliography Annonymous 2012, community kinaxis, viewed 14 July 2016, https://community.kinaxis.com/people/dustinmattison1974/blog/2012/06/21/customer-service-importance-in-supply-chain. annoynomous 2010, Economy Watch, viewed 14 July 2016, https://www.economywatch.com/international-trade/economic-growth.html. Annoynomous 2012, boundless.com, viewed 14 July 2016, https://www.boundless.com/economics/textbooks/boundless-economics-textbook/international-trade-31/introduction-to-international-trade-124/absolute-advantage-versus-comparative-advantage-493-12589/. 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