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Current Research ABSTRACTS:THE ORGANIZATIONAL FACTORS OF GLOBALIZATION AND LOCALIZATION: A “TRAVEL OF IDEAS” APPROACH, by Yuwei Shi MULTI-PLANT COORDINATION IN GLOBAL SUPPLY CHAINS, by Eddine Dahel IMPACT OF THE INTERNET ON THE FINANCIAL SERVICES INDUSTRY, by Harvey Arbaláez CAN SMALL FIRMS IN DEVELOPING COUNTRIES BENEFIT FROM ACTIVITY-BASED COSTING? A COST ANALYSIS OF THE SOUTH CHINA UMBRELLA FACTORY LIMITED, by Steven Landry THE ORGANIZATIONAL FACTORS OF GLOBALIZATION AND LOCALIZATION: A “TRAVEL OF IDEAS” APPROACH By Yuwei Shi Abstract Business and management literature on globalization is biased toward external factors in explaining its process and predicting its outcome. Organizational factors are often brought up in the context of organizational alignment or misalignment with intended strategies, which are a function of mostly environmental drivers such as market, cost, competition, and government. Moreover, the organizational factors are seldom described explicitly and hypothesized in globalization theories. This paper makes an attempt to provide a direct, explicit link between organizational factors and its globalization strategy. It postulates the process of globalization as that of knowledge transfer at the level of business activities and as an institutionalization process modeled after the concept of “travel of ideas”. Further, this paper deliberates inside the organizational time and space where “travel of ideas” unfolds and hypothesizes the relationship of several organizational factors including organizational context, structure, resource and control to globalization and localization outcome. MULTI-PLANT COORDINATION IN GLOBAL SUPPLY CHAINS By Eddine Dahel Fisher Graduate School of International Business Monterey Institute of International Studies, 460 Pierce Street Monterey CA 93940 edahel@miis.edu ABSTRACT This paper addresses the horizontal coordination of production and distribution activities between plants located in different countries. Horizontal coordination gives the multinational firm the flexibility to shift production between plants within its global manufacturing network to take advantage of future changes in production, transportation costs, trade regulations, exchange rates, competitive moves, and government policies. In reaction to and in anticipation of such changes, the question is to determine how to adjust the production and distribution activities of the different plants in the network to maximize the global after-tax profit for the multinational firm. This paper proposes a mixed integer-programming model for this problem. Global supply chain coordination decisions are complex. They are influenced by strategic, technological, macroeconomic, political, infrastructure, competitive, and operational factors. An important question that arises in formulating global profit-maximizing production and distribution strategies is how decision-making at the different plants should be coordinated so that the operating policies are optimal for the multinational firm as a whole. This is important because without coordination value-adding decisions at one plant may not produce the expected results at the multinational firm level due to inefficiencies at another plant in the global production network. With over 50 manufacturing plants in 26 countries Toyota has, for example, the capability to serve many markets in the world. But with this capability comes the challenge of how to operate these plants in the face of changing market conditions, and cost structures. The global supply chain must not only routinely produce and deliver products on time to markets worldwide, but it must do so in a way that maximizes the profitability of the multinational firm. The objective of the paper is to formulate a comprehensive global after-tax profit maximizing multi-plant coordination model that provides unambiguous answers to such important and complex questions as: (1) is it profitable to serve customers in this country with this product? (2) In which plants, in which countries, and in what quantity should a product be manufactured? (3) Which plants should be open for production and which plants should be closed in every time period of the planning horizon? (4) Which plants should service which country’s product demand, and in what quantity? (5) How much inventory of which products should be stored at which plant? And finally, (6) what is the most economical way to comply with governmental regulations on taxes, export quotas, import duties, and local content requirements? IMPACT OF THE INTERNET ON THE FINANCIAL SERVICES INDUSTRY Harvey Arbeláez, Ph.D. Professor of Finance and International Business Fisher Graduate School of International Business Monterey Institute of International Studies This research consists of a survey used in conjunction with an encompassing on-going research project on international capital markets and financial institutions directed by Professor Harvey Arbeláez at the Monterey Institute of International Studies. The objective of this research is to evaluate the impact of the Internet on the financial industry during the recent years as well as to identify the current trends in this industry through online investing. The study seeks results that aim at identifying and characterizing recent trends in the financial industry worldwide, specifically in regards to the online investing market. An extensive literature review is carried out and supplemented with an analysis of opinions of professionals in the industry. Preliminary results indicate that, in response to the opinion that the introduction of the Internet is making the market more efficient due to the amount of information and its availability, a counterargument can be made that hypotheses of behavioral finance seem to be consistent with new developments in the market than the exclusive prevailing postulates of the efficient market theory. Irrationalities in investors’ behavior, both on the professional and independent level, can serve as a proof for this hypothesis, and should be accounted too. Key Words: Behavioral Finance. Capital Markets. Efficient Market Hypothesis. Financial Industry. Financial Institutions. Internet. CAN SMALL FIRMS IN DEVELOPING COUNTRIES BENEFIT FROM ACTIVITY-BASED COSTING? A COST ANALYSIS OF THE SOUTH CHINA UMBRELLA FACTORY LIMITED For more information, please contact the author below: Steven P. Landry, PhD, CPA, CMA, CFM, CFP® Professor of Accounting The Fisher Graduate School of International Business The Monterey Institute of International Studies 460 Pierce Street Monterey, CA 93940 Tel: (831) 647-6407 Fax: (831) 647-6506 Email: steve.landry@miis.edu Abstract This study investigated whether a small firm (South China Umbrella Factory Limited [SCUFL]), and in fact a firm in a developing country (mainland China), could benefit from a formal, activity-based costing system. Many small firms find themselves particularly vulnerable to competitive challenges, even more so than larger firms, because the smaller firms lack the know-how and resources to know their true costs and profit margins. Smaller firms tend to use heuristics, or rules-of-thumb, in estimating their costs as opposed to the bonafide use of a more sophisticated and validated costing systems, whether traditional or activity-based costing (ABC). Comparisons of this firm’s current estimation of costs were made with both a traditional, volume-based costing system, and an activity-based costing system. Results indicated differences across the three methods. Cost distortions were found that disfavored the estimation and traditional methods while favoring the ABC method. Notwithstanding the benefits found with using ABC, the firm decided not to adopt this method. A major constraining factor rested with the limitation of human resources particularly with training in ABC as well as, more generally, management accounting. Furthermore, since ABC, in a greater fundamental sense, benefits firms with significant overhead when measured as a proportion of total cost, ABC would only provide limited benefits relative to the cost of implementation given the low-tech, primarily labor-based nature of this firm and its products. |
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