Value chain and globalization

Introduction
The process of corporate life is always a sea change and sometimes there are high tides
and sometimes are quiet times. Day to day companies are faced with new challenges, whether it
be a consolidated organization or a small business just starting, always emerging issues that affect
their behavior and their performance. Owing to the consequences of an impressive development
of technology and globalization that we are living in this age.
Nowadays are faster changes, new challenges threaten seriously survival of organizations, new
foreign competitors, mobilization of capitals, difficulties in retaining human capital and changing
technologies are elements that require managers to be prepared for change and have ability to
motivate employees in order to have continuous renewal. Micro and small enterprise dominated
industries have been both threatened and provided with advantages as a result of dynamic trends
related to globalization (Kula et al., 2006). Value chain is not only to implement new management
models that ultimately prove to be only uncertain. However, management of change consists of
take advantage of changes in business environment for the interest of the organization. That is
why companies should not only be flexible, but also managers should develop a keen sense to
anticipate change; therefore companies will be able to achieve to be at the forefront. According to
Porter (1998) Activities provide the bridge between strategy and implementation. When strategy
was defined in terms of broad positioning concepts, a clear separation between strategy and
structure was meaningful and useful.
Innovation is everywhere and organizations that are not renewed will hardly be able to survive.
Firstly, it should be noted that the purpose of this essay is that I want to explain what is the value
chain, its impact to the companies and the impact of globalization to the value chain. Afterwards, I
will explain the following seven major issues have had significant impact of globalization on the
value chain.


History of the value chain and consisting
First of all, the value chain is a theoretical model to describe the development of the
activities of a business generating value to the final customer. The value chain was described by
Michael Porter. He defines the value as the sum of the perceived benefits customer receives of
low costs to acquire and use product or service Value is the amount buyers are willing to pay for
what a firm provides them. Value is measured by total revenue, a reflection of the price a firms
product commands exceed the cost involved in creating the product. (Porter 1998).
At the same time value chain is essentially a form of analysis of business through which a
company is split up into their constituent parts, and we can seeking to identify sources of
advantage. Simultaneously, it is creating the competitive advantage that is achieved when
company develops and integrates activities of its value chain less expensive and better
differentiated than their competitors. Therefore value chain of a company is formed by all its
added value generating activities and the margins they contribute Competitive advantage in
regard to products and services takes two possible forms. The first is an offering or differentiation
advantage. I f customers perceive a product or service as superior, they become more willing to pay
a premium price relative to the price they will pay for competing offerings. The second is a relative
low-cost advantage, which customers gain when companys total costs undercut those of its
average competitor (San Miguel, 1996).
Sometimes change times in business can generate fear, but beyond fear, managers must
generate within their companies the ability to bring about change. When it comes to making
changes to the companies and this usually means the introduction of new procedures, staff or
ways of working that directly affect those around the organization: employees, shareholders,
suppliers, customers. Therefore managers have two options to deal with the changes. The first
option is intimidated by the changes and remaining still or the second option is to understand
what is going on, develop strategies and implementation to deal with change. Competitive
Advantage provides the architecture for describing and assessing strategy, linking it to company
behavior, and understanding the sources of competitive advantage. It provides the foundation
needed to go deeper. (Porter 1998)

According to Kula (2006), Globalization is a process by which people, companies, goods and
services, capital and information and ideas are exchanged across international boundaries, is
shaping opportunities for growth and poverty reduction in developing countries. In the current
context of globalization, the trend toward merging business grows increasingly harder. Therefore,
it is very important to cooperation of all employees of organization in a chain and they sharing
common vision for business quickly translate into success factors. Where employees are involved
to this vision therefore they will be more productive and more collaborative mechanisms bind
them to other actors in the chain, the greater the chance of survival and progress towards
economic development processes.
Moreover, companies tend to compete with other companies in the same country and in
the same way, companies of the same country tend to compete with companies in other countries
a cause of globalization. Therefore, competition among global companies are strongly and should
possess highest level of professional competence and for this reason heads of companies should
know as renew companies every day to produce high return. A good example about this
information is the competence between Procter and Gamble and Unilever; both are global
companies and both offer similar products. In the case of my country; In Mexico are both
companies each one have both have large factories and corporate offices; the number of
employees is large and both have many processes to manufacture both products, as well as quality
and administrative.
CEOs of each company must be updated on how to improve processes in each part of the
business, the should evaluate the process and trying to reduce as many errors and waste in order
to offer the best products and the best price cheaper for the end customer. So also promote more
featuring your product compared with the rest of their competition, as to promote values, social
responsibility, brand linkage and sometimes prizes and raffles.
Another key point, managers of big companies know that linking brand starts when people
are young children and this is why, one of their main sector of society are children. Because
marketers know that if a child comes to impregnate a brand in in their childhood, they will take
for all their life and therefore they will transmit to their offspring in the future. I see this reflected
in my case, since I always prefer to drink Coke when I am eating and I never liked Pepsi since my
childhood, this is because since my childhood always drank Coca-Cola by the influence of my
mother. To date I still drink coke, this is an example of how a global company that has
implemented the value chain in their structural processes relevant their product has made in my
life. For a firm to achieve superior differentiation, it must utilize the best mix of resources in
creating value for its customers. In order to prioritize its processes as sources of differentiation, a
company must determine what attributes of each process enhance customer value (San Miguel
1996).
1) Competitive advantage considerations
The competitive advantages are the fundamental capabilities that put an organization over
competitors. Is that company does much better than competitors, so it is a force to compete and
specialized experience that the competition cannot match. There appears then to be acceleration
in the growth of a business strategy is powerful if it causes or results in a significant and lasting
competitive advantage; is weak if the results not to be successfully and consequently is a
competitive disadvantage.
Confirming this claim, Porter (1998) Competitive advantage grows fundamentally out of value a
firm is able to create for its buyers that exceeds the firms cost of creating it. Value is what buyers
are willing to pay, and superior value stems from offering lower prices than competitors for
equivalent benefits or providing unique benefits that more than offset a higher price. In this
manner the competitive advantages are the power, imagination, agility, experience, knowledge
about strengths and weaknesses of opponent, information and finally the winner the battle it will
be the one have made better use of resources and adequate manner.
A good example about competitive advantage considerations are the case of the American
company Wall-Mart that their goal is always offer the cheapest prices into markets. A good
example about competitive advantage considerations is the case of the American company Wal-
Mart that their goal is always offer the cheapest prices into markets and in the case in Mexico,
Wal-Mart Mexico is the biggest group of supermarkets because the goal of this company is to offer
more variety of products and open more shops.
2) Corporate social responsibility considerations
An important aspect in business strategy is to interact more with society, this means that those
companies that reflect the impact of needs and goals of the population, through projects involving
the community and contribute to a better quality of life; should also seek strategies warranting
protection of the environment; policies that are concerned with employees, among others. As
such strategies make integrated part of the so-called corporate social responsibility.
Moreover, the idea of better business, competitive, efficient and profitable, framing a concept
that it is unclear and may be too forward throwing a definition about him, he is enthroned as an
essential component in businesses or organizations looking to be much more that success in
today's markets. This component is corporate social responsibility.
This term because of the complexity in its implementation, given sample of firms that are fair,
balanced, inclusive, legalistic, socially active and environmentally responsible. Furthermore,
companies seek through rules or laws, their own abilities and innate voluntarism meet those
requirements, is intended to establish the constant interaction between economic, social, cultural
and environmental issues, making this a reliable source for the continued development of clearly
responsible companies.
This is reflected through en the example with Coles, as the company focuses on three approaches,
sustainability, national charity partners and local charity support. Coles is helping charities not for
profit organization like Guide Dogs Australia, Cancer Council, Food Bank and more charities. On
the other hand, the supermarket company is working closely with environmentally responsible
growers and suppliers, developing efficiencies with their supply chain. They are working about
waste reduction, recycling and reducing greenhouse gas. When the company opens a new
supermarket supports offering employments in the community and also offering vibrant and
supportive environment to work in plus and great career opportunities.
3) Cultural considerations
Nowadays, the value chain has been developed through globalization in all around the world on
profitability and the advantages to be gained by that chain. But in each country is very different
the ways of processes are performed in the companies. In recent years, China and India have had
excellent development and economic growth, as they are cultures that make people work more
than eight hours and CEOs know how to do great business trying to make cheaper products and
low wages in labor. Moreover, this is not good for the health and quality of life for employees.
Taking up the topic about cultural considerations, "While Most R & D internationalization still
takes place within the OECD area, developing countries are increasingly attracting R & D centres,
although these remain relatively small in a perspective overall. Large Increases in foreign R & D
investment in Asia, in particular in China and India, have attracted much attention in recent years.
(Staying Competitive in the Global Economy 2008)
4) Financial considerations
The area of finance has the responsibility of independent, objective assurance and consulting
designed to add value and improve an organization's operations. It helps an organization
accomplish its objectives by bringing a systematic, disciplined approach to evaluate and improve
the efficiency of the processes of risk management, control and governance processes. For many
professionals in the finance department are focused on addressing the development and improve
on what companies more than just a job for verifying compliance of policies and procedures.
Financial department of a company must adopt and use the value added. this is reflected when
finance specialists know how to implement processes to improve on issues like obtaining efficient
financial resources, profitability, value added and translation of financial resources into economic
resources, or conversion of savings into investment.
5) Human resources considerations
The Human Resources function in business has changed considerably in recent years, some
organizations began to provide the area staff training and career development opportunities,
replacing the word "personal" by "human resources" with a new concept. It was no longer
considered a cost but an asset. In the past HR was considered an area of the company purely
administrative role has gone on to become in many cases in a strategic area of the organization.
Achieving good results was a constant concern for management who began to realize the human
side of the persons in the organization, moving towards a proactive and participatory position in
strategic decision making.
A clear example of value chain in human resources is when employees are looking for satisfaction
with their work and eliminate those functions or unnecessary or costly tasks that do not
contribute to the value. In my case, I worked for two years in the area of Assessment and
Management of Talent in Mexico City and the value chain in the company where I worked is
reflected in the value analysis is an organized approach to analyze jobs and the variables that
affect them, to examine how work creates or adds value to the ongoing processes of the
organization.
6) Political and economic considerations
Economics is the science of scarcity because of resources are limited and needs are unlimited, so
there must be a hierarchy in the satisfaction of needs, therein lies the importance of economics in
business and government. One reason why businesses fail is because they do not manage
resources efficiently. A company must manage the scarce and limited resources efficiently not get
bankruptcy, do not spend more than income permits. A company must be solvent and profitable,
first be solvent means having enough cash to make payments, suppliers and banks, for that
requires carrying a good cash flow, cash inflows that are greater than cash outflows, and if it were
the other way round, it could be insolvent. Being profitable means that business income
outweighs the costs, for get good management is required to make good decisions in the
administration of statements of profit and loss. Is essential doing excellent management for to
make good decisions, constantly innovating and finding new products to meet unlimited needs.
However, in the case of politics in the governments of each country, income taxes are collected
and expenses are those intended for the public sector can operate efficiently as spending on
education, health, defense, pensions, and interest on debt transfers.
7) Technological considerations
Recently, technology has drastically developed and therefore plays a role increasingly more
important in life in general, but particularly in enterprises, which are subjected due to the opening
of markets, an increased competition. Use of technologies in supply chains could bring
operational benefits like cost reduction and service improvements and strategic benefits such as
improvements in product planning and innovation (Prajogo & Sohal 2013)
The information technologies supporting business to enable it to be more competitive in the
market. Additionally, the information technologies are the best strategies that a business can use
to improve the business; because it can be easier to align IT services with the needs of your
company and the enterprise architecture ensures fulfillment of the strategic objectives of a
company aligning technology with business processes. In according with Lancioni This ability
includes quickly adjusting inventory levels, adding or reducing carriers when needed increasing the
speed in reacting to customer service problems, more effectively managing distant facilities,
reducing the level of paperwork in a supply chain system, adjusting material throughput when
necessary, tracking shipments more accurately developing cost effective purchasing strategies,
improving production scheduling and reducing operational redundancy in supply chain systems.
Conclusion
In addition, to doing this research, I could find relevant information about the significant role that
is playing the value chain into companies. The purpose of the essay is to provide assessment the
role that could be obtained in business when is used the value chain process in the different
departments of a company. The administration of change is of great importance, since it allows
control of the transformation process. but in most organizations even greater challenge is
managing change so that through leadership can attack low productivity, motivate the actions
needed to alter behavior in a meaningful way and make the change take root in infusing culture
and values of the business. It is of primary importance that business leaders must be updated and
catch up on new models and theories about management, change and value chain. To be able to
compete with the variety of existing competitors in business territory.
In Conclusion, there is no possibility that organizations can achieve competitive goals, if the people
who are not found suitable from the point of view of training and attitudes, to carry on. In
essence, organizations today emphasize the ability of leaders to manage their staff. Therefore,
people will go to those who can prove they have the will and capacity to meet their needs,
enhancing their strengths and improving their skills. Thus man becomes the protagonist of the
success of any business strategy.
References:
San Miguel, J, 1996, Value chain analysis for assessing competitive Advantage. Institute of
Management Accountants. Canada.
Staying competitive in the global economy (2008) Secretary-General of the OECD