Running head: GLOBAL MARKET FORCES 1

Global Market Forces, Risks, Development Chain, Supply Chains, and Strategies of a Supplier

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GLOBAL MARKET FORCES 2

Global Market Forces, Risks, Development Chain, Supply Chains, and Strategies of a

Supplier

Globalization has revolutionized how businesses operate, providing new opportunities in

reaching a wider market, thus exposing distributing companies to high competition. Therefore,

suppliers have to deal with range of factors that may positively or negatively influence the free

movement of goods or services globally.

Global Market Forces

Suppliers have to operate on a global scale, and therefore they have to deal with global

market forces that are similar to those that affect any other aspect of the business. One of the

challenges that global merchandisers face is stiff competition from the local suppliers, who have

established themselves in that particular geographical region over a long time (Gibbon, 2001).

Due to the local suppliers' reputation, it is difficult for new dealers to convince the manufacturers

and other entities to work with, thus requiring much effort and resources in comparison with

competitors. However, the suppliers can utilize the opportunities resulting from the growing

demand for goods, which is supported by both domestic and foreign markets.

Furthermore, suppliers face the challenge of being distributed with low-quality products.

A research conducted by Steven, Dong, and Corsi (2014), concluded that most of the outsourced

goods were more likely to be recalled due to low-quality standards, thus negatively affecting the

relationship between partners. The level of quality of materials differs from each tier. Although it

is possible to meet most of the required standards, it is difficult for tier-one suppliers since they

have to distribute the best quality products in the market. Additionally, another global market
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force is the lack of stability in some foreign markets, which negatively impacts trade volumes

and patterns, resulting in losses.

Similarly, other challenges that global providers face are the government’s policies and

regulations in foreign countries. The laws play a major role in the success of any vendors in the

global market since they determine the mode of operation. However, some nations have

unfavorable regulations that discourage manufacturers and producers from conducting their

businesses with suppliers from some countries. For example the recent trade wars between

United States and China, the suppliers from America were prohibited from supplying goods to

Chinese manufacturers. In some cases, governments discourage vendors through levying higher

taxes, thus creating a hostile environment for the suppliers.

Social-cultural Environment

The global market is characterized by diverse cultures. Individuals in different regions

have different beliefs and values, which have an impact on organizational aspects of a business.

Diversity affects the logistics industry in various ways, including time, personal relationships, in

addition to agreements. For instance, whereas people from western nations are known for their

strictness with time, some countries are less keen on keeping time. Also, some countries such as

Japan and Korea consider greetings to be an important aspect of conducting business. All the

cultural aspects affect global suppliers in different ways. In such cases, the dealers have to find a

working relationship and adapt to each other cultures to ensure positive outcomes (Jean &

Sinkovics, 2010).

Development Chain

The development chain involves three major aspects, including the flow of material,

information, and finances that are significant in the delivery of products. However, the process is
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dependent on the manufacturers, since it includes the set of activities associated with selecting a

merchandiser. As a result, the supplier has to consider how the manufacturer chooses their

products to incorporate them into their strategy, and therefore both parties have to communicate

effectively and pass information between each other. Additionally, vendors appreciate

manufacturers who listen and give feedback about their inquiries in addition to completing

payments on time. Furthermore, the suppliers are keen on developing chains that are beneficial to

all involved stakeholders since such measures contribute to the strengthening of weaker areas.

Thus, suppliers value partners that aim at creating positive relationships.

Risks

Management of risks by the suppliers is one of the most important components in the

supply chain. This is because failure to do so can negatively impact the services, thus leading to

multiple losses. Some of the major risks that suppliers have to deal with include high levels of

unpredictability on the market and volatile manufacturing industry. Also, the success of the

provider is largely dependent on the manufacturer’s positive performance. Therefore, the

suppliers have to offer high-quality products to ensure that their partners remain competitive in

the market. Achieving such success requires both parties involved to have a positive working

relationship for mutual benefit. It involves consistent delivery of high-quality products from the

supplier and timely payment by the clients in addition to having manageable quality standards.

Similarly, another major risk is brought about by a lack of funds. The growth of business

requires large capital including facilities, materials in addition to development of new products

and features. The supplier might be able to fund the projects during the early stages; however,

this may not be enough, thus preventing effective competition with the already established

suppliers. Additionally, the customers are likely not to source the products from suppliers who
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are struggling financially. Although there are different ways of solving such a situation, such as

borrowing loans from banks, it may take a longer time to establish oneself in a highly

competitive environment.

Supply Chain

The supply chain involves all the channels that a supplier uses before delivering the

products to the final destination. Globalization has complicated the role of the supply chain.

Unlike before, the businesses are now sourcing materials from less expensive and most

convenient suppliers to maximize their profits. As result, the suppliers need to be more

innovative and maintain high-quality standards on the products and services they offer.

Strategies

Suppliers rely on effective strategies to succeed in businesses. Some factors that vendors

have to consider are better management, infrastructure and use of information systems to

increase efficiency and effectiveness. Therefore, it is important to have right personnel as well as

better modern technology since they determine the level of quality of the supplied products. For

instance, competent workers ensure that all the required regulations are followed, thus

minimizing the chances of supplying substandard products.

Similarly, suppliers are adopting and using information systems in delivering products.

This enhances the efficiency and effectiveness of the service and product delivery. Furthermore,

better strategies minimize potential conflicts while reducing the cost of production. Therefore, in

a highly competitive environment, suppliers have to implement the best strategies to survive the

harsh market conditions.

In conclusion, due to globalization, suppliers have to deal with range of factors that are

key to the success of their businesses. These include the competition from the local suppliers,
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government policies and regulations, and social-cultural factors. Also, suppliers have to manage

risks such as market unpredictability, in addition to volatile manufacturing industry. This

requires planning and execution of strategies, which includes adoption the latest technologies.
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References

Gibbon, P. (2001). Upgrading primary production: a global commodity chain approach. World

Development, 29(2), 345- 363. doi.org/10.1016/S0305-750X(00)00093-0

Jean, R. J. B., Sinkovics, R. R., & Kim, D. (2010). Drivers and performance outcomes of

relationship learning for suppliers in cross-border customer-supplier relationships: The

role of communication culture. Journal of International Marketing, 18(1), 63- 85.

doi.org/10.1509/jimk.18.1.63

Steven, A. B., Dong, Y., & Corsi, T. (2014). Global sourcing and quality recall: An empirical

study of outsourcing-supplier concentration-product recalls linkages. Journal of

Operations Management, 32(5), 241- 253. doi.org/10.1016/j.jom.2014.04.003