Question

The Purchasing Manager at the Indiana facility has been over budget for several months, and the Vice President is not very pleased. The Purchasing Manager has made contact with an international supplier who can get one of the engine controls at a minimal cost, but the quality rating is much lower than what is required by Bridgeway. The Purchasing Manager does not want to be over budget again at the next quarterly meeting and has decided to consider purchasing this lower quality component for the engine controls. There is also a personal monetary reward for ordering parts from this specific international supplier.

Answer 1

The purchasing manager's consideration to purchase lower-quality components due to budget concerns and personal incentives raises issues related to globalization, supply chain management, and ethical business practices. Global just-in-time delivery systems and the construction of industrial plants in low-income countries reflect the complexity and impact of international business decisions on quality, environment, and labor standards.

Step-by-step explanation:

The scenario described involves a purchasing manager considering the acquisition of a lower-quality engine control component from an international supplier to prevent budget overruns. This decision is influenced by a personal monetary incentive and potentially compromises the required quality standards set by Bridgeway. It is evident that globalization has complex impacts on manufacturing, the supply chain, and environmental standards.

Businesses often source from multiple companies across different countries to achieve cost efficiency. This global supply chain was transformed by the just-in-time delivery system, which originated from Japanese business practices and was later adopted by American car manufacturers. This system reduces warehousing needs and improves quality control by requiring suppliers to be within a day's drive of the main assembly plant, putting pressure on wages and benefits due to competition for low-cost labor.

Additionally, when an international company builds plants in low-income countries with lax environmental laws, they commonly use the same design as their plants in high-income countries with stricter standards. This approach minimizes risks and ensures compliance with environmental laws, countering the notion that globalization invariably leads to lower standards. At times, international pressure through trade restrictions can lead to stronger environmental policies in low-income countries, as seen with efforts to combat elephant poaching in Africa.