Published on October 22, 2007
Globalization III: Globalization III Field trip Driver agreements AB Health card Review Questions Production chains Bananas On to Chapter 3! Slide2: Inputs Transformations Distribution Consumption Production chain Slide3: Inputs Transformations Distribution Consumption Technology/R&D (product design and process technology) Logistic Services: movement of materials, products, people, info Production chain depends on technology inputs Slide4: Inputs Transformations Distribution Consumption Technology/R&D (product design and process technology) Logistic Services: movement of materials, products, people, info Financial system Regulation coordination control Production chain embedded in a financial system Production Chain: Production Chain Transactionally linked sequence of functions in which each stage adds value to the process of production of goods or services Services Provide the geographical and transactional connections Integrate and coordinate the globalized production process Typology of Firms: Typology of Firms Small single plant firms (domestic) Large multi-plant firms (domestic) TNCs (multinational) Global Corporations (multinational) The Firms and the Production Chain: The Firms and the Production Chain Transactions ‘internalized’ in a vertically integrated firm Hierarchically governed through organization structure OR Externalized…to some degree Arm’s length transactions (outsourced) Strategic alliances Subcontracting Licensing Joint Ventures Progressively more internalized http://www.hankstruckpictures.com/walter_mulder.htm Production Networks: Production Networks Producer driven TNCs Manufacture in-house and control the entire network Some components/subassemblies are contracted out Distribution may be in-house, franchised, or independent distributors and retailers Buyer driven Network controlled by large retailers and brand named merchandisers Production is all contracted out to overseas manufacturers Decentralized production networks all over the cheap labour world Plantation Agriculture: Plantation Agriculture Capital intensive tree crops: Coffee, cacao, tea, coconuts, oil palm Labour intensive annuals: cotton, tobacco, peanuts Field perennials, somewhere in the middle: bananas, sugar cane Siquirres, Costa Rica Primary protein source for 400 million people ~ 90% eaten locally: Primary protein source for 400 million people ~ 90% eaten locally United Fruit Company: United Fruit Company Minor C. Keith Costa Rica Railway – 1870 4 innovations Sail to steam 1880-1895 speed, capacity Refrigeration Communication by telegraph, telephone, radio Internalization Vertical integration from plantation to retail Horizontal integration – merger 1899 Monopoly and market power Narrow gauge plantation railway : Narrow gauge plantation railway Bananera, Guatemala, 1965: Bananera, Guatemala, 1965 Mainline railway to coastal port: Mainline railway to coastal port Loading bananas – women’s work!: Loading bananas – women’s work! 1931Adding corporate identity to crude resource products Brand name Image of Quality Healthfulness Reassurance: 1931 Adding corporate identity to crude resource products Brand name Image of Quality Healthfulness Reassurance Legendary Sta. Chiquita : Legendary Sta. Chiquita 1944 2001 Disease: Disease Panama disease, 1900, soil-based bacterium Sikota disease, 1935, airborne fungus Cultivation shifts from Caribbean to Pacific Early variety: Gros Michel Sturdy but vulnerable to Panama disease New cultivar: Cavendish Robust but bruises easily Packaging revolution 1965: 1965 2001: 2001 Trans-Atlantic Banana Trade: Trans-Atlantic Banana Trade Fleet of refrigerated container ships inaugurated in 1984 for European trade
Globalization III Field trip Driver agreements AB Health card Review Questions Production chains Bananas On to Chapter 3! Production Chain Transactionally ...