Outline the topics and elements of theory or frameworks then describe a company that has applied this theory successfully and show this has been done.
The value chain is a very old concept in logistics and this has been in existence since long. Global value chain is just an extension of the value chain concept. Value chain means managing the chains of business effectively. The chain includes designing, transportation, production and even the services provided to the end-user. Initially, these services were limited to only one geographical location but today, organizations have their presence in different part of the world and hence, global value chain came into the picture. Global value chain allows the chains in different organization to be co-ordinated globally (GlobalValuechainsInitiative, 2006).
Samsung electronics is a Korean company and today, it has its presence in almost all the countries in the world. Samsung Electronics produces all the electronic products that one can think of. Samsung’s global value chain starts with designing. The organization very well understands that people from different part of the world like different designs and hence, they have design centers in London, Milan, Shanghai, Japan, Seoul, San Francisco and Los Angeles. Samsung has its manufacturing center in various parts of the world because electronics which are manufactured in another part of the world may not match with the requirements of people in another part of the world. Accordingly, Samsung Electronics takes care of the procurement processes so that they can manufacture electronics at a cheap rate, thus making it beneficial to the organization as well as the end-users. The marketing activities of the organization are designed as per the end-users of different countries so that people can actually connect themselves with the brand (AlbertaCanada, 2012).
Discuss what best practice is for companies who want to apply the theory successfully
Global value chain was introduced in Samsung so that they can work efficiently by way of giving quality electronics to the customers. One of the best practices for implementing global value chain in Samsung would be to compare the quality and cost ratio. The quality of the electronic product that the end-user will be receiving should be more than that of the cost which they are paying. The boundaries of the business should be redefined. Samsung should evaluate the value of insourcing and outsourcing, that is, currently prevailing in the organization. If Samsung thinks that changing it can add value to the organization then it is advisable to go ahead rather than that of forcibly sticking to the current structure (Kauffman, C, 2004). If Samsung electronics assume that manufacturing of bins for refrigerator is expensive then they can outsource this task to an organization that has specialized in it. The organization which is specialized in preparing bins can achieve economies of scale because this is their only business.
Explain what you think are the limitations to the theory and what can be improved on
The global value chain isn’t free from flaws. There are certain things which need to be improved in this theory. Samsung believes that implementation of global value chain leads to increase in the cost factor. Changing the complete process at Samsung will add cost to the organization because few processes will have to be removed while few processes will have to be added. Implementation of this will be beneficial in the long-run only but this need to be understood by the organization and they should be willing to shell out money from their pockets. Secondly, employees in Samsung felt demotivated when newly global value chain was introduced in the organization. Employees will be irritated because they will have to learn new things and this can stop the employees from performing at a speed at which they are performing now. A proper training was given to the employees so that they can understand the benefits of the new introduction (Transtutors).
Services Logistics Provider (3PL and 4PL) what SPL can provide
3PL means third-Party logistics provider. 3PL means that the logistics process of the organization is taken care by an external organization. For example, online Samsung website doesn’t have its own courier service; they outsource it to the other existing courier company. This reduces the cost and increases the benefit as well (Murray). 4PL, that is, forth party logistics provider is one step ahead of 3PL as an organization modifies its processes, designs and technologies as per the client’s need and requirement (TheDesiletsGroupInc).
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