Analyzing the Global Factory Concept & its Impact on Int'l Business

This essay delves into the concept of the global factory, initially defined by Buckley Peter, as a globally operating entity that distributes its functions across international locations. It examines the implications of this concept, both positive and negative, on international businesses. Positive implications include better understanding of market preferences and cost regulation through strategic resource allocation. Negative implications involve navigating diverse legislations and fluctuating international relations. The essay also discusses leveraging the global factory concept to develop successful international businesses, suggesting manufacturing in developing countries like China and India due to their large populations, lower labor costs, and favorable business infrastructure. The analysis emphasizes lean production and management to enhance organizational effectiveness and innovation.

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GLOBAL FACTORY
Name of the student
Subject Name:
Date:

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What concept of Global factory mean
Concept of Global factory was initially penned by Buckley Peter. According to the
founder, this concept of global factory originated because of initiation of globalization in the
present time. The concept is term to be same as any other corporation or organization but their
functions are not just concentrated on the national limits of their original country1. However,
global factory concept operates as international entity with considering different requirement
alongside demands of international marketplaces. In accordance with this fact, operational
facilities of the international factory separate into different sections and are scattered in diverse
locations around global society.
According to ideas presented by Buckley Peter, majority of activities of global factory are
being attained by third-party vendors without having personal facilities. For example, survey
together with development as well as distribution and sales are being outsourced to the
contractors and they are situated in different nations around international community based on
the resources readily available in those nations2. Therefore, global factories are able to source
their raw materials from diverse regions within the international community at cheaper prices
available. They are also able to market their products base on international requirements. The
idea of global factory, hence, concentrate on the idea of passing different activities of
1 Buckley, Peter J., and Roger Strange. 2015. "The Governance Of The Global Factory: Location
And Control Of World Economic Activity". Academy Of Management Perspectives 29 (2): 237-
249. doi:10.5465/amp.2013.0113.
2 Buckley, Peter J., and Xiaowen Tian. 2016. "Transnationality And Financial Performance In
The Era Of The Global Factory". Management International Review 57 (4): 501-528.
doi:10.1007/s11575-016-0306-7.

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international corporation or international network of corporations that organize distribution,
production, design, marketing, innovation, together with branding of set services and products.
Implications of the concept of Global factory on international business
Global factor comprise of both adverse as well as positive implications for different
international businesses. One of the fundamental implications of global factory in international
trade is to determine taste as well as preference pattern of diverse markets around the
international community. The idea is due to the fact that global factory is having its operational
facilities distributed all over the global community3. Such facilities are capable of identifying
various needs together with requirements of the diverse marketplace around global society.
therefore, idea of conducting global business turn out to be more effective with the efficient
identification as well as determination of different desires and needs from various sections
around international society while offering products in line with such needs.
The other positive implication of global factory in international business operation is that
it helps in process of regulating costs of the business operations. For instance, idea of
international businesses having around the globe is improved. Facilities are also being developed
based on availability of resources in specific state4. For instance, states that posses more
advanced technology, as well as access to current infrastructure of technology, are being selected
for process of conducting research alongside advancement. However, countries that have lower
3 Buckley, Peter J., and Roger Strange. 2015. "The Governance Of The Global Factory: Location
And Control Of World Economic Activity". Academy Of Management Perspectives 29 (2): 237-
249. doi:10.5465/amp.2013.0113.
4 Dahlgaard, Jens J., Chi-Kuang Chen, Jiun-Yi Jang, Leonardo A. Banegas, and Su Mi
Dahlgaard-Park. 2013. "Business Excellence Models: Limitations, Reflections And Further
Development". Total Quality Management & Business Excellence 24 (5-6): 519-538.
doi:10.1080/14783363.2012.756745.

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costs of human resources are always being selected for activities that comprise of manufacturing.
Therefore, concept of global factory aids in regulation of costs of operating international
business5. Nevertheless, due to the outsourcing of material at cheaper price, it is more essential
for the international company to focus on offering different services of products at more
affordable prices. Hence, activities of global factory in different corporations are being attained
by different vendors without having personal facilities during their operations.
With the above-stated benefits of using concept of global factory on international
business, there are some negative implications that the concept has on international business as
well. One of the significant negative implications is difficulty in adhering to the diversity in
legislation along with regulations in varied states6. In present international scenario, nations are
having varying political models as well as different and diverse collection of rules that every
business has to follow promptly7. Additionally, relations of international diplomatic between
different states are fluctuating in nature and this has negative impact on outcome of business
operations. Therefore, it is quite challenging and tough for global factory to follow and operate
with all the present differences among countries. They are having their facilities in varied states
and they need to face the diversity in business regulations together with fluctuations in aspects of
5 Eriksson, Taina, Niina Nummela, and Sami Saarenketo. 2014. "Dynamic Capability In A Small
Global Factory". International Business Review 23 (1): 169-180.
doi:10.1016/j.ibusrev.2013.03.007.
6 Stahl, Günter K, and Rosalie L Tung. 2014. "Towards A More Balanced Treatment Of Culture
In International Business Studies: The Need For Positive Cross-Cultural Scholarship". Journal
Of International Business Studies 46 (4): 391-414. doi:10.1057/jibs.2014.68.
7 Hannibal, Martin, and Gary Knight. 2018. "Additive Manufacturing And The Global Factory:
Disruptive Technologies And The Location Of International Business". International Business
Review 27 (6): 1116-1127. doi:10.1016/j.ibusrev.2018.04.003.

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politics. It is important to understand that concept of global factory deals with need of marketing
different global products in different regions around international community. Moreover, need as
well as requirement in varied states is diverse and different in nature. Therefore, in some
instances, it turns to be tough to attain the requirements of all the marks with the normal product
that is fit for entire global community8. In such situation, international business operation faces
challenge of not having the much-needed and expected marketplace potentiality for specified
product.
Leveraging concept of Global factory in developing firm into a successful international
business
The idea of having a global factory concept in developing a successful business within
international states is vital. One of the fundamental steps will comprise of idea of having the
manufacturing sector in the developing states that comprise of China together with India. These
two nations in consideration are believed to have huge population and good market from
manufactured products. The selection of such countries is due to the fact that these two nations
are still having more development rate when compared to other developed states around
international community9. Furthermore, China together with India is having cheaper or lower
cost of human resources together with favorable infrastructure of business. Hence, cost of
production in such states will be much lower leading to huge profits in the operations. Besides,
such facilities will be minimal scattered in order to come into face with various difficulties in
8 Eriksson, Taina, Niina Nummela, and Sami Saarenketo. 2014. "Dynamic Capability In A Small
Global Factory". International Business Review 23 (1): 169-180.
doi:10.1016/j.ibusrev.2013.03.007.
9 Haufler, Virginia. 2018. "Producing Global Governance In The Global Factory: Markets,
Politics, And Regulation". Global Policy 9 (1): 114-120. doi:10.1111/1758-5899.12525.

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adhering to diverse business regulations. The idea will help in improving charges involved in
maintenance and management of facilities in several nations as well as having more efficient
form of management10. Hence, lean production together with management shall be initiated in
established corporation that will further help in improving effectiveness and production of
organization. Such increase in development of nations gives rise to enormous chances or
opportunities for development of appropriate business models for innovation in the target states.
Bibliographies
10 Khonsary Atighi, Hadis. 2013. "Masuma Farooki And Raphael Kaplinsky, The Impact Of
China On Global Commodity Prices: The Global Reshaping Of The Resource Sector". The
Copenhagen Journal Of Asian Studies 30 (1): 122. doi:10.22439/cjas.v30i1.4171.

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Buckley, Peter J., and Roger Strange. 2015. "The Governance Of The Global Factory: Location
And Control Of World Economic Activity". Academy Of Management Perspectives 29
(2): 237-249. doi:10.5465/amp.2013.0113.
Buckley, Peter J., and Xiaowen Tian. 2016. "Transnationality And Financial Performance In The
Era Of The Global Factory". Management International Review 57 (4): 501-528.
doi:10.1007/s11575-016-0306-7.
Dahlgaard, Jens J., Chi-Kuang Chen, Jiun-Yi Jang, Leonardo A. Banegas, and Su Mi Dahlgaard-
Park. 2013. "Business Excellence Models: Limitations, Reflections And Further
Development". Total Quality Management & Business Excellence 24 (5-6): 519-538.
doi:10.1080/14783363.2012.756745.
Eriksson, Taina, Niina Nummela, and Sami Saarenketo. 2014. "Dynamic Capability In A Small
Global Factory". International Business Review 23 (1): 169-180.
doi:10.1016/j.ibusrev.2013.03.007.
Hannibal, Martin, and Gary Knight. 2018. "Additive Manufacturing And The Global Factory:
Disruptive Technologies And The Location Of International Business". International
Business Review 27 (6): 1116-1127. doi:10.1016/j.ibusrev.2018.04.003.
Haufler, Virginia. 2018. "Producing Global Governance In The Global Factory: Markets,
Politics, And Regulation". Global Policy 9 (1): 114-120. doi:10.1111/1758-5899.12525.

8
Khonsary Atighi, Hadis. 2013. "Masuma Farooki And Raphael Kaplinsky, The Impact Of China
On Global Commodity Prices: The Global Reshaping Of The Resource Sector". The
Copenhagen Journal Of Asian Studies 30 (1): 122. doi:10.22439/cjas.v30i1.4171.
Stahl, Günter K, and Rosalie L Tung. 2014. "Towards A More Balanced Treatment Of Culture In
International Business Studies: The Need For Positive Cross-Cultural Scholarship".
Journal Of International Business Studies 46 (4): 391-414. doi:10.1057/jibs.2014.68.