Discuss the Terms: Strategy, Relationship Development, and Global Sourcing Challenges

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Question 1:[pic 4]

Discuss the terms: strategy, relationship development, and global sourcing challenges.

1. Strategy

The word strategy is original a Greek word, which has the meaning of generalship and initially used in the military area. Gradually after the Second World War, strategy often shows up in the business area. But nowadays, strategy is not just a way to deal with an enemy or competitors in a market.

Mintzberg1 thinks strategy “has long been used implicitly in different ways even if it has been traditionally used in only one”. The strategy has five meanings that are plan, ploy, pattern, position and perspective. Combining his point of view, the following five points are my own understanding, all five different definitions focus on different aspects:

• Firstly, as a plan, strategy is a way to make sure the company can achieve its business goals even under an uncertain condition. It is an instructional guideline transmitted to lower levels from the executive level.
• Secondly, as a ploy, strategy puts emphasis on using methods with your opponent and competitor unconscious so that to be superior to them.
• Thirdly, as a pattern, strategy focuses on consistent actions of an organization throughout its life circle. It is in a way unchangeable unless the executive level decides to make something new.
• Fourthly, as a position, strategy is defined in the whole environment of an organization. When put the organization in the external environment, a good strategy can help it find its position in the whole market and gradually improved its status.
• The last one, as a perspective, strategy is a way for an organization to seeing its own development road even the whole world. Thus to make the best improve process.

Strategy is a way to use existing resources to achieve the goals of an organization. There are three steps to make a strategy: setting goals of the organization, identifying every action in order to achieve the goals and make best use of the resources to support every action.

Strategy is significant because in the competitive and changing environment, the resources available for an organization are often limited. However, the stakeholders have a requirement to see the stable growth of their own company. As a result, they always use a long term plan to give the guidance to all staff and to achieve any possible advantage. It is the scope of a company’s activities.

In our class, I learned that strategy is also connected with the vision, mission, objectives, and tactics of an organization and it focuses on its strategic planning and implementation. Over a period of time, an organization matches its resources to the future changing environment, and in particular its R&D, markets, customers, leadership as to meet stakeholders’ expectations. [pic 5]

1. Relationship Development

The word “relationship” is a state involving mutual dealings between people or parties or countries. In most cases it indicates the connectedness between people especially an emotional connection. And with the development of the society, there is more and more relationship between different countries. On account of what we learnt, here I will focus on the relationship development between companies. I think there are basic four steps for relationship development as follow:

• Step 1 Awareness

With the increasing competition in the global market, companies have a growing need to add their own value. It cannot deny that the best way to add value is through collaboration. Having a good relationship with your partner can reduce the cost, improve customer service, be more efficient, share information and have an edge over your competitors. So the first step of relationship development is having an awareness of collaboration.

• Step 2 Partner Selection

Before the selection of the partner, the organization should have knowledge of internal strengths and weaknesses. So it can know what it need and what it wants from its partner. After doing this, the organization can go ahead with partner selection. Identifying, evaluating and selecting appropriate partners. It assesses not only the performance aspects but also the way in which the two organizations can work together with a more integrated approach for mutual benefit.

• Step 3 Work Together

After the selection of the partner, the partners will work together. In order to make sure that the outcome is advantageous for both partners. There are some critical behaviors when working together: effective communication, listening effectively, sharing information, appreciating and respecting differences in cultures, getting honest feedback, understanding and supporting the partner, balancing risk and reward.

• Step 4 Relationship Measurement[pic 6]

The purpose of the whole relationship is adding value for the organization. So it is critical to measure if this aim has achieved. If yes, the organization should maintain the good relationship with its partner. If no, the ending of the relationship is necessary.

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Figure 1  The Development of relationship

1. Global Sourcing Challenges.

Global sourcing means positively integrating and coordinating common items and materials, processed, designs, technologies and suppliers across worldwide purchasing, engineering and operating locations by Trent and Monczka2. It is different from international purchasing which means the common commercial transaction between a buyer and a seller just located in different countries.

As a result, different from the goods transaction, when an organization tries to do global sourcing, it may face lots of challenges. The following are some common challenges occurring:

• Supplier Selection:

The first challenge in global sourcing is the selection of suppliers. Due to the long distance, it is difficult for an organization to choose their suppliers on the spot every time and it is even impossible to look at every optional supplier’s products. Otherwise it will cost a lot.

• Supply Chain Support: [pic 18]

Global sourcing means that the purchasing does not happen in the buyer’s own country. So there must have a process of long distance transportation of the products. It is vital for an organization to have a good supply chain supporting itself. First, transport the goods around the world which in must case by shipping, it take lots of time. Then an organization must have a large amount of safe stock to deal with the emergency circumstances and long shipping time. In a word, it requires a good supply chain support.