Global Production Strategy

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Global Production Strategy Students Name Instuituauional Affiliation Course Title Professors Name Date

A global production strategy involves a company producing goods or services in multiple countries worldwide, often with the goal of taking advantage of lower labor and production costs, access to new markets, and economies of scale. There are several types of global production strategies, including centralized, regional, and fully vertically integrated production, each with its own set of potential issues. One potential issue with a centralized production strategy is the risk of relying on a single location for all production (Abele et al., 2008). Suppose a disruption at the central production facility, such as a natural disaster or labor strike. In that case, it can significantly impact the company's operations and bottom line. Additionally, cultural and language barriers need to be overcome to effectively manage and communicate with a globally dispersed workforce. On the other hand, regional production involves producing goods or services in specific regions of the world. It can be less risky than centralized production, as it allows for some redundancy in case of disruptions (Abele et al., 2008). However, setting up multiple production facilities in different regions can be more expensive, and managing a dispersed workforce can still present challenges. Fully vertically integrated production involves a company controlling every aspect of the production process, from raw materials to finished goods, and can provide greater control and efficiency. However, it requires a significant investment in infrastructure and can take time to manage on a global scale. Other potential issues with global production strategies include managing supply chain logistics, complying with local regulations and customs, and dealing with currency exchange rate fluctuations (Abele et al., 2008). Additionally, there may be cultural differences and communication barriers that need to be addressed to manage a global workforce effectively. Political instability in the countries where production occurs can also be a concern, as it can

impact the company's operations and create uncertainty. Similarly, trade disputes and tariffs can affect a company's ability to sell its products in specific markets, potentially impacting its bottom line. Another potential issue with global production strategies is the impact on the environment. Manufacturing processes can have a significant environmental impact, and producing goods in countries with less stringent environmental regulations can lead to negative consequences such as air and water pollution. This can lead to criticism and backlash from environmental groups and consumers and potential legal and reputational risks for the company. In addition to these potential issues, there are challenges related to managing and coordinating operations across different countries and regions. This can include managing logistics, communication, cultural differences, and dealing with different time zones and local business practices. Finally, companies utilizing global production strategies may face criticism for outsourcing jobs, potentially contributing to wage stagnation in their home countries. This can lead to negative perceptions of the company and may lead to backlash from consumers and advocacy groups. Overall, while global production strategies can provide companies with access to lower costs and new markets, they also come with various potential issues that must be carefully considered and managed.

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References Abele, E., Meyer, T., Näher, U., Strube, G., & Sykes, R. (2008). Global production. A Handbook for Strategy and Implementation, Berlin–Heidelberg.

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