Critical Thinking

What are the roles of Third-party logistics firms in a smooth running

of Supply chain process of a multinational organization?

Walmart is a classic example of an organization that has adopted third party logistics firm

into its establishment[ CITATION Ada15 \l 1033 ] . The organization by assistance and collaboration of

third-party logistics firm has been able to increase its business spectrum by opting for third party

logistics firms wherein, third party vendors would be able to pay Walmart for storing, packing and

shipping items henceforth, reducing delivery cycle for the customer henceforth bringing efficiency to

the delivery[ CITATION Mel201 \l 1033 ]. Moreover, the approach shall further assist Walmart in

increasing its product assortment. As a basic structure, third party logistics firms serves following

roles or purpose for smooth running of supply chain processes in a multinational

organizations[ CITATION GEP19 \l 1033 ][ CITATION Blu21 \l 1033 ][ CITATION Pie18 \l 1033 ]

By virtue of their expertise and experience, third party logistics firms have competitive

advantage henceforth, negotiates effectively to arrange discounts which adds value back to the

company. Moreover, these firms owing to their expertise are able to manage inventory for the

business on behalf of their client henceforth reducing hassle and efforts arising thereto from setting-

up additional warehouse, transportation fleet, loading and un-loading staff etc.

By opting for third party logistics firm, business shall be able to focus over its core

competencies instead of involving into logistics related matter. Moreover, business may be able to

get expert hired services without incurring additional cost for deploying internal resources.

Additionally, third party logistics firm may be directed to arrange distribution of good and product

directly to the customer henceforth, enabling business to keep direct focus on its product line.

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 Freight costs carries considerable weightage in overall overhead costs of a business.

Businesses are required to carry out focused approach for reducing their freight cost with a

perspective to reduce cost of doing business. By virtue of their business expertise, third party

logistics firms are able to effectively manage freight related transportation henceforth, reducing cost

of doing business.

What are the motivational factors companies going internationally?

Business operates against a purpose. Majority of commercial oriented business operates and

exists with a purpose to gain profits and remain sustainable. Considering same in perspective, it may

be safe to infer that the primary reason for business to operate is to increase their

profitability[ CITATION CFI21 \l 1033 ]. Building up upon the same, businesses are highly motivational

to gain incremental profits and accordingly explore new markets wherein, they are able to penetrate

effectively for meeting their objectives. Decision of moving to international arena is taken while,

considering several motivational factors that includes[ CITATION BAB20 \l 1033 ][ CITATION Jus16 \l 1033

]:

Market size is amongst a motivational factor that is being considered by a business while,

going international. Huge or large market size provides an opportunity regarding existence of

demand henceforth, business make decision of entering into that particular market.

Proximity of market with the company location also attract or motivates a business to tap the

market. The primary reason for taking this step is attributable to deemed reduced overhead costs

arising thereto from entering into the market.

Business at times considering the profit potential of the target market decided upon entering

into that market. The primary reason for same is owing to customer purchasing power and existence

of need. Moreover, business further substantiates availability of untapped need that may be sufficed

through the product offered by the business.

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 Business may also enter into a market by developing an alliance with foreign distributor

henceforth reducing cost attributable to setting up a plant or manufacturing unit. By virtue of this

offer, business is able to capitalize on profit prospects at minimal investment or upfront costs.

Regressed local demand or changing economic condition motivates a business to move

international. Moreover, depressed economic condition also results in reducing demand for product

henceforth, resulting in idle or excess capacity for the business. Accordingly, with a perspective to

maintain their operation continuity, business opt for moving international with a purpose to explore

new market while, maintaining their plant running.

On what ground companies choose developing country’s location for

offshoring. Use examples.

Companies are rigorously looking up for locations wherein, they could offshore their business

and provide service at lowest possible cost. The approach has brought about significant growth

prospects for developing world wherein, countries are offering innovative solution and relaxed

regimes with a perspective to gain company’s business [ CITATION Abu16 \l 1033 ] . By virtue of

offshoring business are able to reduce their operational and business risk henceforth, serves as an

opportunity in effective serving the clients. Moreover, businesses are able to effectively control their

business operations which results in gaining additional and incremental profits [ CITATION Meg16 \l

1033 ]. Considering the benefits arising thereto from offshoring, following could be the likely

grounds on basis of which companies chose a developing country’s location when planning for

offshoring. They include[ CITATION Jul17 \l 1033 ][ CITATION Arl13 \l 1033 ]:

 Availability of adequate infrastructure

 Legal framework and investor related policies

 Political stability in host country

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  Culture of the host country

 Availability of skilled workers in host country

 Business standard and ease of doing business

 Alignment of host country with company’s standards and values

India has turn out to be a classic example of offshoring country. The country has developed

several investor friendly policies and infrastructure that attracts potential investors to opt for

offshoring. Classic examples of business operating in India through offshoring could be that of IBM

which through its subsidiary IBM India private limited is operating an offshore company. The

company employs around 131,000 employees. Moreover, example of General electric may also be

inferred here. The company has developed its research and development center in India which is

amongst second largest research and development center globally. Considering same in perspective,

it may be safe to infer that India by virtue of its investor friendly policies and extended support has

been able to attract world’s renowned businesses for setting-up their offshore facilities. Moreover,

these companies by virtue of their business operations are able to contribute significantly to

economic development of the country.

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 References

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CFI. (2021, March 24). What are Business Operations? Corporate finance institute.

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Repko, M. (2020, February 25). Walmart steps up competition with Amazon by fulfilling orders for

third-party vendors. CNBC.

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Richford, M. (2016, December 19). What Are Outsourcing and Offshoring? Naps International.

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