Global Logistics and Supply Chain
- Table of content
1. Introduction
With the advent of information technology, different companies are fast emerging in the global market. One of the companies admired in the global market is Nortel. Accordingly, the company is known to be the leader in providing communication capabilities which make the promise of Business made simple a reality for the target market. The next generation technologies, provided for both service provide and enterprise networks have been able to support multimedia as well as business-critical applications. The technologies of Nortel, are designed to help prevent or totally dispersed the barriers for having efficient company and those that hinders speed and effective performance. This is done by simplifying networks as well as connecting different stakeholders to the information they need. The company is operating in more than 150 nations all over the globe. Primarily, the main goal of this paper is to analyse the supply chain management approach of and to determine their market entry strategies. Furthermore, this report aims on identifying how Nortel Networks Corporation controls its global supply chain and aligns the global operations of the company. Lastly, this paper aims on comparing the global strategies of
2. Manufacturing Strategies
Telecommunications industry like Nortel is fast becoming one of the major contributors to the business sector. In this industry there are various trends which affect the performance of the company (, 2003). In this generation, the major trends in the environment of Nortel and other telecommunications and manufacturing companies gravitate towards a global scale. With this, Nortel find them faced with the challenge of producing new and better products at reduced cost and market price. Aside from this, the globalization trend is also influencing the way Nortel operates in the global market. Additionally, globalization calls for the industry to design strategies which will ensure that the largest scope of innovations is taken hold of. With these shifts comes the important role that innovative activities play in the organization's management of its various aspects.
With these trends, Nortel should spark new passions. Innovation comes from the heart as well as the head. Companies that aren't afraid to innovate engage employee energies in a new and profoundly different way. When people are part of a cause and are not considered as just a cog in the wheel, their innovation quotient skyrockets. And above all, recognize that in today's economy, capital is plentiful; good ideas are scarce. Companies that look to incremental change to generate additional revenue will tend toward subsistence at best--eclipsed by companies that create an environment of innovation, spawning the new ideas that generate new wealth (2000). The environment where Nortel belongs monitor these trends through the use of the information technology system and the use of the internet to determine how these trends could impact their organizational performance and how they will be able to compete efficiently with these trends. However, the emergence of different telecommunication products and service providers has affected the organizational competitiveness of industries like Nortel. In this regard, the company has been able to use different manufacturing approaches to survive in the global market.
Based on the case given, it has been mentioned that Nortel has been able to use distinctive manufacturing strategy to sustain their competitive advantage. In doing so, the company has been able to change the structure of their 23 manufacturing sites to adapt to the situation in the global market and to ensure that they will be the number one choice of their clients in terms of system house (See Appendix 1). Part of the manufacturing strategy of the company is being ah production or process focused rather than product focused. With this, the company ensures that all their manufacturing process are able to meet the ISO 9000 standards. ISO 9000 has been described as the fundamentals of quality management system. The principal philosophy of ISO 9000 is to give a standardized approach that global company should follow and use. ISO 9000 is composed of different programs which vary according to the functions in order to give a structure on which a quality management program system can be efficiently used for the development of the operations of business organizations (, 2008). Accordingly, Nortel has been able to follow these standards to ensure quality manufacturing process. The company’s total quality culture involves team working and investing in their human capital. The company believes that employees are the main asset of the company and empowering them enhances productivity and adherence to quality products or services in the telecommunication industry. Aside from this, the company’s process focused approach which is known as systems house relies on strategic supply chain approach.
In this regard, the supply chain management approach in Nortel has become a key strategic initiative to improving service and reducing costs in order to remain competitive in today’s global economy ( 2001). SCM is business strategy focusing on the quick response to ever-changing market needs and shortened purchasing lead time, also adding value to increasingly demanding customers at the least cost and time (Water, 2007). The company’s global supply chain approach aims on having a good relationship to their global suppliers to provide quality products and services to their clients.
Like any other telecommunication industries, there are also some factors which affect the operation of the company. This includes the context of market changes. Based on the given case, the changes in the global telecommunication market have an enormous effect to industries like Nortel. One of these changes include the deregulation of the industries which drove the competition to the traditional PTTs. Such companies are considered for having new ideas, demands as well as legacy systems.
Aside from these, the increasing competitions have also affected the global operation of Nortel. Accordingly, competitors are major threats to the business. It can be said that there are competitors who are in the business longer than Nortel. While these competitors has gradually developed its core competencies and technologies over a very long time period, some of the major technological assets that underpin Nortel’s contemporary competitiveness have initially been developed by other firms, and subsequently been acquired by Nortel. The firm’s inability to keep up with the global market or recognize its demand, creates a threat for them, a risk that they could be displaced by other industry leaders like Motorola, Sony Ericsson, Samsung, Nokia and others. The legal and political environment in the countries where they operate in could potentially affect the business negatively. Their apparent complacence could be used by their competitors to their advantage, and take Nortel by surprise, with the latter realizing too late that they are not the industry leader anymore. Customer discontent is also a very potent threat being faced by the company, connected to the hasty decrease in the separate product's life circle. The inevitability of using all the possible phone variants became one of the side effects of having wide product line, as Nortel products would show.
According to (2004), the trends and regulations at the network operator level heavily influence the telecommunications industry. Despite their immense size, telecommunication products providers are often at the mercy of international regulations and the demands of national operators, particularly in terms of industry standards. As s result, companies such as Nokia engage in significant and often skilful lobbying efforts at the European Union and other regulatory levels to create favorable standards that allow them a degree of certainty in their production cycles. Today, the telecommunications industry is affected by the global trends of increasingly mobile technology, with progressively greater importance placed on speed, data and multimedia advancements. Moreover, the industry is affected by a tendency to be overly optimistic about the implementation of this new technology, leading many firms to create an excess supply of equipment that the marker has not been quite ready to absorb. While Europe and the United States have been the primary targets for telecommunication growth during the 1990s telecommunications boom, and even during the slowdowns, suppliers and operators are beginning to focus on emerging markets with higher growth potential like what Nortel has been doing.
3. Market Entry strategies
In the business arena, it is important that an business industries must be knowledgeable about the different marketing strategies that must be utilized in order to make the business prolong its competitiveness and stay in the marketing world, locally and internationally. The management of an enterprise that are considering entry into a foreign market must be able to make decisions focusing on uncertain and changeable circumstances that might be faced. Hence, their decision must include the consideration of the mode of market entry to be used.
Internationally, entry modes have long been distinguished as closely related to varying degrees of resource commitment, exposure to risks, control and profit return. Past studies have shown that the choice of entry modes depends on different types of factors, including firm-specific factors ( 1997), industry-specific and country-specific factors ( 1997). Entering a new market is a complex decision which must be given focus and attention. With the goal of establishing a business that would be recognized and patronized by consumers, more and more entrepreneurs are trying to enter the market swiftly. There are different motivations for market entry. One of the motivational factors to enter an international market is the chance given by this investment to make the company become more competitive among its rivals. It can be said that one’s an industry becomes a multinational company, there is an implication that such company has been able to establish a competitive position in the marketplace not only in the local but most especially to the global arena. Marketing entry is also capable in making a certain business enhance and expand its business portfolio. Based on the case study, Nortel has been able to use an effective market entry approach to become a competitive industry in the market. Based on the given case, it can be said that Nortel has been able to use Joint Venture approach as their marketing entry strategy.
It is said that the joint venture mode happen by having a venture with other bigger and competitive companies in the telecommunication industries like LG. An international joint venture is a distinct enterprise or multi-organizational agreement, created as an alliance between two or more parents organizations working across country borders in designing and managing the venture ( 1996).
In order to do so, the company must ensure that the company is willing to have a joint venture with Nortel. In addition, Nortel has also been able to use a third party stakeholder to help them in designing and implementing joint venture with an existing telecommunication industry in the global market, For instance, banks, government agencies, union officials, suppliers, distributors and legal officials often make critical contributions in designing-implementing parts of an international joint venture. Enterprises with little prior experience in setting-up joint venture almost always underestimate the impact of third party involvement.
Nortel has been able to use global supply chain approach with their global partners through joint venture and merger and acquisition. Based on the given case, the company has been able to merge with stable industries in the global market and also acquire small industries with good marketability and reputation. The company made it sure that they are able to have competitive position in the market place.
The company makes sure that their global supply chain partners will help them achieve competitive advantage in the market. Accordingly, interdependence and participation of suppliers and manufacturers in product design, innovation, as well as research and development characterize the current international business environment resulting to competitive position ( 2001;2002; 2003) like what Nortel is experiencing. Their global supply chain process has accommodated their global strategies to meet and satisfy the needs of their target market. The high cost of acquiring leading-edge, technology-based equipment and an accompanying highly skilled research and labor force makes contract manufacturing a highly attractive alternative for many companies (1998; 2004).
It can be said that Nortel has been able to use the most appropriate mode of market entry which include joint venture, merging and acquisition to make it products be known in the international market. Further, this method has also been able to make Nortel diversify its products to other products. In the case of Nortel, the company used joint venture and merger and acquisitions to stay in the competitive market and perform better within the marketplace, by providing innovative and new products in terms of telecommunication through the ideas that the management gain because of merging with and acquiring other companies. It shows that without such strategy, the company may not be able to expand its business portfolio and reach more and more customers from local to international market.
It can be concluded that the right choice of market entry mode along with the concept of strategic management and other efficient marketing approach, can make a company succeed in achieving its goal of providing quality products with their target market. However, decisions should be made strategic also. This means, that the company should have the ability to decide which among the market entry mode can be helpful to the company itself and suitable for the international market that the company will consider.
4. Compare and contrast with Nokia
Different telecommunication industries have been emerging in the global market and each of these industries are trying to provide their unique strategies and approaches.
5. Conclusion
6. References
7. Appendix
Appendix 1
Nortel Networks Systems House
Supply Chain Position
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