Global Operations Management

The following paper will address many issues such as issues that are associated to expanding globally i.

e. cultural barriers, diversity and what happens when these issues are ignored. In addition, there will be two examples of political conflicts and two examples of economic conflicts. PPQ Parts is planning to expand globally over the next several years. To ensure that this is a smooth transition I have prepared this extensive report to aid in any issues that may arise and how to handle them.Throughout the following document you will find a plethora of useful information ranging from how cultural barriers and diversity can affect our company to a few political and economic issues that commonly arise.

In addition, you will find a comprehensive analysis of what happens when these issues are ignored. Global expansion will increase PPQ Parts profits as well as give the company a competitive advantage over the competition. What are some of the issues the host foreign country could face as a result of the expansion?When it comes to global expansions the host country is responsible for providing a wide array of things ranging from skilled individuals to the availability of raw material as well as transportation and a valid market to sell the products being produced. By introducing an expansion into a new foreign country there are other issues that can arise such as the host countries ability to integrate the new company into the marketplace and grow as it does as well as the country’s rate of utilization and absorption.

Secondly, the country’s infrastructure may also be affected when it integrates the new firm.In addition, when things such as machinery is hard to obtain, electricity is either non-existent or unreliable and technologies such as telephones and other communicational tools are unavailable the host country would have to integrate these tools before the firm would even be able to expand or the firm would have to find a new host country. To sum this up, the host country is responsible for providing an educated workforce, any technologies (i. e.

access to electricity, water, and telephone and intranet services) that may be needed as well as the ability to absorb and integrate the new firm into the local economy.Explain what cultural barriers and diversity issues are commonly encountered by international/multinational (MNC) and global organizations. Each country is very different when it comes to culture and diversity. In short, culture is defined as “the behaviors and beliefs characteristic of a particular social, ethnic, or age group” (Dictionary. com, n. d) and diversity is defined as being different than one may be used to.

Given these definitions the issues that can arise because of them is very wide.For example, there is the issue of religion, some countries try to be more “green” than others, there may be an issue involving language as it is very hard to communicate when two people cannot understand one another. In addition, other issues that may arise are customs and traditions. With all of these problems it would be very hard to avoid all of them but what can be done is to train managers to speak the native language, study the culture and beliefs and hire local individuals to work in the new plant to assist in a smooth transition by offering their general knowledge of local culture.Some people do not adjust well to change and don’t often like when someone tries to change what has worked for them for decades.

The perfect example of this is the war on terrorism. The reason those countries are fighting so hard is because the great ol’ USA thinks that just because our type of government and the way we do things is going to work for everyone. They are simply fighting to keep things the way they have been forever.I don’t necessarily agree with the way they run their own countries or the war but who are we (USA) to force them to change… The result of this war should be to show the world that if they mess with us we will fight back but, the USA shouldn’t be a bully. The same goes for business, it is great to contribute and share technologies so the host country can grow with the firm but it would not be ethical to ignore the tools and tactics that have worked in that country in the past.

The key is to build on it. Why has diversity become such an important topic in the international arena?There are so many forms of diversity which range from ethnic groups to religions and different managerial skills. It is very important to have diversity within a firm that is planning to expand globally because it will allow for an easier transition. In the world today there are so many cultures and all of them practice different belief systems, speak different languages, practice their own religions and reside in their own parts of the world.

As diversity becomes more widely accepted we are seeing a substantial increase in interracial marriages which often times produce children who are at least two different ethnicities.These children often want to learn about both of the cultures in which they are derived. This often poses a problem because there are so many ethnicities and cultures that it may be hard for one to find an educational facility that provides the knowledge they seek. In business, diversity can be very advantageous because not only does the firm appear to be friendly and trustworthy it also sparks growth. By growth I mean often times a company will not adjust policies or offer new services for issues they are not aware of.For example, by having employees that come from very different backgrounds they will each possess insight into their different cultures which would allow the firm to customize their organization to incorporate such customs in an attempt to be friendlier and have a competitive advantage [ (Heizer & Render, 2012) ].

What can occur when issues related to multiculturalism and diversity are ignored in an international company? There are many things that can happen if multiculturalism and diversity are ignored in an international company.Perhaps the worst case scenario is that the company would fail. While this is extreme other implications may include a slower adaptation to the host country and rejection from the local economy. Both of these scenarios would mean that the company would not grow as quickly and could possibly run into future problems concerning traditions and cultural factors that are important to local consumers. Describe at least 2 political and 2 economic issues that may arise during global expansion and proposed methods of addressing them.

Political Issue #1 Rules and regulations can vary widely from country to country and can affect supplies and information that a firm can have/use. For example the United States is very adamant about personal privacy. Other countries may be either more or less concerned with this issue which may make it difficult to deal in business if there is a lot of sensitive data involved. As for supplies, some countries may not allow some of the raw materials that are used in producing the firm’s products.For example, lead is no longer allowed to be used in children’s toys in many countries.

Proposed solution: Of course, if the firm has to deal with such information it would be hard but the firm would have to adjust their inner workings to accommodate the laws of the host country. Such laws and regulations have made it very hard for companies to trade internationally but nonetheless it still happens legally each and every day. It is possible to commence business but adjustments may have to be made.Trade agreements between nations can be complicating and in the case the host country does not have such an agreement in place with the country/nation that supplies the raw materials for the firm’s products it would make it extremely difficult to acquire such materials resulting in production issues. Proposed solution: Ultimately it would be wise to foresee such an issue before choosing the host nation. However, if this is not foreseen the solution would be to find local suppliers or suppliers in nations that held a trade agreement with the country the firm is expanding to.

* Economic Issue #1The first issue is the cost of real estate and operating. If basic necessities such as real estate and utilities are hard to find or are very expensive it may increase operating costs which ultimately affects the final price of the products that are produced. Proposed solution: Being as one of the main reasons firms choose to expand globally is because it will save them money. This stems from the fact that wages are generally cheaper and it is sometimes easier to acquire the necessary raw materials.

* Economic Issue #2 The second economic issue is perhaps the economy itself.Given the recent recession here at home various other countries suffered the same blows. It is not a good idea to expand during poor economic times because consumers are often tighter with their money and tend to spend less resulting in a longer period to make up what the expansion cost the firm in the first place. Proposed solution: Ideally the best solution to this problem would be to either choose a host country that is not experiencing difficult times or to wait until the economy has recovered. Explain the importance of and the implications of each of these items in PPQ Parts’ expansion plans to Germany and Japan.

Germany and Japan are both very good choices for an expansion. Japan is known for its use of innovative technology and industrialization. However, given the recent tsunami, earthquake and the meltdown of the power plant part of the country is still in ruins. This would be an ideal time to purchase real estate in the case that the firm purchased property near the power plant or purchased it from another firm that had been run out and chooses not to rebuild. However, because of the recent meltdown electric power may be unstable or unreliable.

Given that information I would advise PPQ Parts to expand to Germany first. Germany hit a recession about the same time as the United States and therefore can be thought to be safe for quite awhile. Germany has different states much like the United States and believe it or not Germany has more than one type of currency. The economy is booming and it would still be cheaper than operating in the United States. In addition, trade agreements are in place between the United States and both of these countries which would make it easier to get the raw materials that are needed to produce PPQ Parts products.

 Lastly, the rules and regulations only vary slightly and therefore would not cause a lot of hassle [ (Klawitter, 2006) ].In conclusion, the host country is expected to provide an educated workforce and the availability of basic necessities such as utilities. Cultural barriers and diversity vary widely but they are easy to overcome if the firm chooses to adapt to the local customs and absorb local traditions in addition to laws and regulations.These factors are extremely important in the international arena because consumers need to be able to relate and rely on the firm.

If these issues are ignored there can be serious implications where failure is the worst case scenario. Lastly, there are many political and economic issues that can arise which may make it difficult to operate in such an environment but if the firm adheres to the local laws, customs and traditions the company should have no problem becoming a valued part of the host country.