Case Analysis

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Globalization and International Business

Globalization at Boeing… continued • Remember… sourcing of parts has shifted • What did Boeing retain?

• Engineering design, marketing and sales, and final assembly • Activities Boeing is best at

• Problems of coordinating a globally dispersed production system • Late parts • Parts don’t “snap together” • Suppliers running into their own engineering problems

• Dramatic consequences for the company • Date of delivery for the first 787 was pushed back 4 years! • Millions of $ in penalties for late deliveries

Globalization at Boeing… continued • How has Boeing responded?

• Rethinking its global outsourcing policy • Bringing wing production of 777X back in house • Rekindle expertise in wing production – core skills that will strengthen the company’s competitive position

Outsourcing ! Outsourcing: Where one company contracts with another company to perform certain functions, including manufacturing and back office operations. May be done in or close to the company’s home country (nearshoring) or in another country (offshoring)

Learning Objectives •  Explain the main arguments in the debate over the impact of

globalization •  Look at the future of globalization •  Understand how the process of globalization is creating

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•  Look at the future of globalization •  Understand how the process of globalization is creating

opportunities and challenges for business managers

Costs of Globalization ! Offshoring, a type of outsourcing, involves the transferring of production abroad " it can be beneficial because it reduces costs " but, it also means that jobs move abroad

! Yet, offshoring may also create new, better jobs at home

Costs of Globalization • Threats to national sovereignty

• lose freedom to “act locally” • Economic growth and environmental stress

• growth consumes nonrenewable natural resources and increases environmental damage

• Growing income inequality and personal stress • promotes global superstars at the expense of others

Looking to the Future ! Three major perspectives on the future of international business and globalization " Further globalization is inevitable " International business will grow primarily along regional rather than global lines " Forces working against further globalization and international business will slow down both trends

Management Challenges and Opportunities • Countries are different

• Awareness and adaptability to different conditions • IB problems are complex

• More opportunities (e.g., where to produce?) • More challenges (e.g., strategy not the same)

• Work within the limits of the environment • Government restrictions and opportunities • Awareness of current events

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• Government restrictions and opportunities • Awareness of current events

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