How Global Value Chains May Have an Impact on an Organization's Supply Essay

How Global Value Chains May Have an Impact on an Organization's Supply Chain Design and Corporate Alignment - Essay Example The global value chain encompasses functions which are strongly included and frequently managed on a regular basis. Thus, these functions can impact on the activities of organization in home as well as in other host countries where they perform the business operations. These impacts are pretty straightforward when an organization from one nation inaugurates a new industrial unit or engineering unit in other nation. A few of the impacts are more complex when an organization of one nation makes an agreement with an organization in other nation in order to coordinate production in plants. The impacts of global value chain are precisely seen on the supply chain design and corporate alignment of an organization (Schroeder, Goldstein, & Rungtusanatham, 2010). Value Chain and Supply Chain The idea of value was first created and promoted by Michael Porter in the year 1985. He had demarcated value as the number of purchasers who are prepared to pay for an organization’s products or ser vices (Chan, 2007). According to him, the value chain is the blend of nine common value added functions inside an organization which can deliver value to the consumers. On the other hand, the concept of supply chain first appeared in the year 1980. Supply chain describes the handling of material flow inside an organization from suppliers to the end users. ... Impact of Global Supply Chain on Organization’s Supply Chain Design Nowadays, globalization is no longer restricted to only products; it has expanded to other business aspects such as foreign direct investment, occupation and services among others. The global value chain is determined by the organization’s wish to raise competency, because increasing domestic competition and global market powers are facilitating organizations to become more effective with respect to cost of products and services. In this regard, a strong value chain can help organizations to enter new evolving markets and to improve access to strategic resources which can assist in tapping foreign business knowledge (Kleindorfer, Singhal, & Wassenhove, 2005). In order to cope up with the changes carried by rapid globalization, there is need for an accurate supply chain design. A properly structured supply chain design can enhance the internal network and flow of resources through it. With constant commo ditization of several goods, organizations require improved methods to differentiate themselves from other competitors. In order to compete in the global market, there is need for improvement through supply chain redesign. Therefore, global value chain can impact on supply chain design of organizations in order to fulfill the objective of cost minimization and to develop a more efficient value chain to stay cost competitive (Power, 2005). Impact of Global Value Chain on Corporate Alignment The global value chain is also related with the corporate alignment of an organization. The global value chain delivers the contents of organizational culture, management style,