Quiz 3: Global Supply Chain Quality and International Quality Standards
Licensing: • Licensing is one of the mechanisms that a firm uses in globalizing. • Licensing allows foreign firms to use the design of the original designer to make and sell the products in restricted markets. • It involves the sales of like products with a new trademark in different countries. Merits of licensing: • Licensing is useful for firms to reach international markets without establishing marketing arms. • A firm expands its market and retains its earnings made in a foreign country through licensing. • The product's name and logo are the cultural aspects that are considered offensive in a foreign market. Drawbacks of licensing: • If a firm sells its product in a foreign market, it has to share its profit with the foreign country. • The firm has lost its profit, in case, if the profit from the foreign market is less. Hence, the merits and the drawbacks of licensing are discussed.
Globalization is the process of integrating all the economies across the world. It promotes the exchange of product, services, ideas, knowledge, and culture between the nations. Advantages of globalization are given below: • Increases the revenue and profitability of a firm by increasing international transactions. • Helps to expand the customer base and target market of a firm. Despite of the above benefits, globalization faces criticism due to the following reasons: • The main disadvantage of globalization is that a firm cannot be forced to set up its business in a foreign country. • Work environment of foreign country comprises different social, political, economic, and technical factors, in comparison to the native country. Therefore, the firm faces a number of challenges to operate in such environment. Consider the example of an automobile firm which is engaged in globalization. The advantages of globalization for this company include the following factors: • The company might increase potential clients for its products. • It might earn good profits from the foreign countries. • Globalization would enhance its brand image and reputation across different nations. Disadvantage of globalization for this company would include: • Higher operating cost. • Legal and political restriction on use of CNG gases or petroleum. • Scarcity of the supplier providing raw materials and equipment. • Uniform of its employees might be considered foreign in many parts of the globe. Therefore, a company should assess its capability before entering into the foreign market.
Award MB is one of the most prestigious award that is given to an organization for its good work. Due to its prestigious nature, most of the firms apply for this award to attract high-quality suppliers, stakeholders, and customers. Sometimes a firm does not win this award, but it receives field visit from the Baldridge examiners. In such cases, the firm includes the name, "Baldrige Qualified" in their promotional material and company brochures. This helps the firm to attract quality suppliers and customers. Award MB helps the firms to give attention to their work quality and helps to increase the quality improvement efforts by its employees. Thus, the firm gets benefits from participating in the Baldrige competition, even if they did not win the award.