...Graduate School of Business and the director of the Stanford Global Supply Chain Management Forum. He is on the board at Esquel, one of the companies discussed in this article. Don’t Tweak Your Supply Chain— Rethink It End to End October 2010 Harvard Business Review 63 by Hau L. Lee H SPOTLIGHT RADICALLY REINVENT YOUR SUPPLY CHAIN Hong Kong–based Esquel, one of the world’s leading producers of premium cotton shirts, faced a quandary in the early 2000s. Apparel and retail customers such as Nike and Marks & Spencer had begun asking the company about its environmental and social performance. Its leaders anticipated scrutiny from other customers as well, since more of them were demanding that a greater portion of the cotton in their shirts be grown organically. But the crop required a lot of water and pesticides, especially in poor and rapidly developing countries, where Esquel’s cotton was grown and processed. Though Esquel’s executives wanted to strengthen the company’s already serious commitment to social and environmental sustainability, they realized they couldn’t simply demand that the farmers who supplied extra-long-staple cotton just reduce their use of water, fertilizer, and pesticides. A mandate like that could be catastrophic for the farmers and their villages. Most of Esquel’s cotton came from Xinjiang, an arid province in northwestern China that depends mainly on underground sources of water. The traditional method of irrigation there was to periodically...
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...Below is a brief description of the various arguments presented on the topic. Political: With the value of the Dollar decreasing over the recent years, the western governments are less pleased with China maintaining its currency at a fixed rate. The US and EU are of the opinion that the quasi-fixed exchange rate gives China a competitive advantage, creating a strain on their import surplus and thereby increasing their trade deficit with China. As of 2005, China’s exports and imports to and from the U.S was $86.9 and $27.6 Billion USD. Members of the US congress have threatened to impose tariffs against China if they do not agree to a revaluation. Allowing the Yuan to float would result in an increase in price of Chinese exports to the US and a decline in the price of US imports into China, hence narrowing their trade deficit. On the other hand, analysts argued that the increase in Yuan’s value between 94-01 was not an absolute result of inflation differentials between China and its trade partners. The large increase in exports over those years could be matched by increased imports. Moreover, it was noted that even post revaluation in 2005, the value of RMB non-deliverable forward (NDF) contracts showed only an expected growth of 5% per annum. Economic: One of the key ways in which China ‘fixes’ or maintains its currency to the US Dollar is by converting its FDI (cumulative total balance of $564 billion in...
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...Market research clothing in China While Asia, particularly China, has enjoyed a dominant position in shoes, apparel and household textiles manufacturing for several years, makers of these items located in developed nations such as the U.S. and Canada have suffered a long period of decline. For example, over 98% of the shoes sold in America each year are imports, and the majority of these imports come from Asia. To consumers in Europe and North America, this growing reliance on Asia as a low-cost producer has meant very low retail prices for goods of reasonable quality. However, recent increases in the value of the Chinese currency, combined with rapidly rising labor costs, have put Chinese manufacturers in a much less competitive position. Competition from very low-cost nations in Africa as well as Vietnam, Sri Lanka, Mauritius, Malaysia, Cambodia, Bangladesh, Pakistan, the Philippines and elsewhere is intense, and a large portion of apparel manufacturing formerly done in China is moving to these areas at a rapid pace. For example, Vietnam’s apparel exports to the U.S. jumped to $7.1 billion in 2012 from $6.6 billion a year earlier. China’s apparel exports to the U.S. were $29.0 billion in 2012, down slightly from 2011’s $29.3 billion. While China continues to have a robust apparel manufacturing industry, it is moving up the industrial chain by fostering manufacturing that requires greater skills, better technology and more investment in advanced...
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...Rural Finance Opportunities in China By Alison Kennedy and Albert Chan From the steppes of Inner Mongolia to the tropical islands of Hainan Province, half of rural Chinese households lack access to banks or other formal financial services. With central government blessing, that will change over the next decade. But Chinese and multinational players considering this vast and variegated market will need innovative marketing and business models, a taste for on-theground campaigning, and patience. 1 2 Hidden in plain sight: the other economic miracle The popular narrative of China’s economic rise has been overwhelmingly urban and state-sponsored, from glittering architectural wonders rising up in Shanghai to new high speed railway lines and the growing appetite for cars and branded luxury goods. 3 Edited by Foxit Reader Copyright(C) by Foxit Software Company,2005-2007 For Evaluation Only. Government investment and private finance have indeed focused mainly on the country’s large cities, particularly along the eastern coastal provinces. That’s just half the story. Rural China, with between 50 and 56 percent of the population, or close to 700 million people, has emerged from the shadows and come of age economically. This vast collection of farms, villages, and towns in secondary coastal and inland provinces is now attracting attention from the Chinese central government, multinational corporations, investors, and local companies. Many larger Chinese enterprises...
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...TEACHING MODULE THE FUTURE OF FASHION DECEMBER 2010 This teaching module was independently written by the Aspen Institute Business and Society Program with the generous support of THE FUTURE OF FASHION: SUSTAINABILITY THROUGH THE LENS OF THE FASHION INDUSTRY* By: Jennifer Johnson & Gina Wu Companies across all industries are facing the challenges of business sustainability, debating how best to address these risky issues while also embracing their opportunities for competitive advantage. This Teaching Module uses the context of the fashion industry to discuss topics that are shaping the future of all industries. These topics include sustainable resource management, the challenges and opportunities of global growth, workforce management, and the role of ethical consumption in business. The fashion industry offers a compelling case study for exploring business sustainability issues. In the fashion industry, as in many industries, success requires highly developed sourcing, design, manufacturing, and marketing chains. Increasingly, success also means incorporating sustainability in resource and labor management, as firms realize that long-term corporate survival will depend on new ways of doing business. Climate change, resource challenges, new technologies and dramatic shifts in the global economy are already impacting the industry. The nexus of these concerns allows students to explore sustainability challenges while providing a framework for discussing new business...
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...FOREIGN DIRECT INVESTMENT IN EMERGING MARKET COUNTRIES Report of the Working Group of the Capital Markets Consultative Group September 2003 This report reflects the views of private sector participants in a working group examining the determinants, trends and prospects of foreign direct investment (FDI) in emerging market countries. The views expressed should not be attributed to the staff and management of HSBC, members of the CMCG, the International Monetary Fund, and the World Bank. -2- Contents Page Main Findings ..........................................................................................................................3 I. II. III. Introduction....................................................................................................................10 Overview of FDI in EMCs.............................................................................................14 Motivation, Location, and Decision-Making.................................................................15 A. Motivation ...............................................................................................................15 B. Locational Determinants of FDI..............................................................................16 C. Decision-Making .....................................................................................................19 Financing, Global Conditions, and Managing FDI Risks................................................
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...S T R A T E G Y – II S T R A T E G Y – II S T R A T E G Y – II S T R A T E G Y – II S T R A T E G Y – II www.ibscdc.org 1 Transformation Corporate Transformation Korean Air: Chairman/CEO Yang-Ho Cho’s Radical Transformation A series of fatal accidents, coupled with operational inefficiencies snowballed Korean Air into troubled times. Then, at the beginning of the 21st century, its CEO/ Chairman, Yang-Ho Cho undertook various transformation initiatives - for instance, improving service quality and safety standards, technology integration, upgrading pilot training, better business focus; putting in place a professional management team, improving corporate image through sponsorship marketing, etc. He gave a new corporate direction in the form of '10,10,10' goal. However, Korean Air is held up by a slew of challenges. Among which are inefficiencies of - Chaebol system of management, possible clash of its cargo business with its own shipping company, limited focus on the domestic market and growing competition from LCCs. How would Korean Air manage growth as a family-owned conglomerate? The case offers enriching scope for analysing a family business’s turnaround strategies, with all the legacy costs involved. Pedagogical Objectives • To discuss the (operational) dynamics of Korean Chaebols - their influence/ effects on the country’s industrial sector and the economy as a whole • To analyse how family-owned businesses manage the transition phase - from a supplier-driven...
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