Global market forces from a supplier’s perspective

Global market forces from a supplier’s perspective

Introduction

Suppliers in the local market are experiencing high pressure created by opportunities for customers and foreign companies, which forces the companies to focus on proper management of their supply chain. These businesses need to protect their markets by considered the establishment of some of their branches in other countries. Through this, the companies will manage to enjoy numerous benefits associated with globalization. Most suppliers experience various market forces, risks, supply chain, including strategies that affect their operations. This paper will focus on these forces from a supplier’s perspective.

Market forces

Most forces that affect the local supply chain also affect supply companies in the international market. Managers need to understand the forces that affect business in the international market in order to develop strategies that will help them deal with the challenges that come with market forces. These forces often force companies to enter other markets to sell their products and services. With these forces, suppliers cannot ignore the potential growth of the foreign market. The suppliers need to protect their local markets and develop strategies that will enable them to attack international businesses that want to enter the market (Deligonul, Cavusgil, & Ghauri, 2013).

Suppliers should also be able to have a proper understanding of how international markets operate. This will enable them to respond to the diverse needs of customers effectively. They can take advantage of the acquired market knowledge to customize on foreign products. The penetration of suppliers into a market is dependent on distribution networks and the existing global supply. Therefore, a properly managed supply chain is significant for meeting diverse customer needs and expectations in the competitive dimension of cost, flexibility, and quality.

Many factors influence the nature of global forces, including the strategies applied in response to the factors. The factors include the availability of competitive threats, high foreign competition in the local markets, and an increase in international demand. Other factors include the existence of state-of-the-art markets, and changing priorities of customers. There has been increased entry of foreign products into the domestic market. This calls for all domestic companies to understand various dynamics associated with international markets. The introduction of free trade facilitated competition between domestic business and international businesses. This forced local businesses to upgrade their supply and production. Some domestic companies have been forced to outsource logistics, while others have shifted their focus to partnering with foreign companies (Deligonul, Cavusgil, & Ghauri, 2013).

There is also an increasing demand in the international market. Therefore, managers should take advantage of manifested opportunities in the international market. Managers of various local businesses can take advantage of the opportunities by establishing global networks. The competitive threats in the domestic market lead to increased distribution of goods and services in the international market. Therefore, when a company has a global network, it will act as a defensive tool and so international companies will be discouraged from entering the domestic market. In case there is an invasion, the company can retaliate.

Risks

The suppliers are also affected by both global and local risks, which affect their operations.  Business owners need to identify various risks, including strategies for dealing with the risks. The operations of international firms are mostly affected by both political and economic risks. These risks affect the supply chain depending on the facility location, including the links between them. Risks occurring in a specific area will affect the operations of a supplier within the region. Therefore, there should be a proper risk management strategy. For example, there can be a political ban of a product within a specific area, which will affect the supply chain (Lockamy III & McCormack, 2012).

Instability of links between facilities can also lead to various risks. This is as a result of factors such as distance, business relationships, and existing infrastructure. It is, therefore, important for business owners to protect their links through improved relationships and proper communication. A long-distance between the facilities increases the opportunities for the supply chain being disrupted (Lockamy III & McCormack, 2012). For example, if a pipeline is established from the U.S to China, it will cross many countries, making it impossible to survey the pipeline for twenty-four hours a day. The pipeline will, therefore, experience a risk of vandalism and poor weather conditions.

Strategies   

With the above risks facing businesses, managers need to come up with strategies that will help their businesses optimize their networks. Managers should develop measures for ensuring their flexibility in the global market. They should also be able to address risks in a manner that the structures of the business are not affected. In addition, the global supply chain should be resistant to natural disasters, political unrest, labor strikes, and regulatory shifts. Managers should always be prepared for various disruptive activities by focusing on improving the efficiency of their supply chains.

Conclusion   

Companies need to take advantage of opportunities that arise from entering the international market. However, they should be ready to deal with various risks by expanding their operations into the international market. Global markets are shaped by global forces that favor companies with an effective supply chain. The factors are such as competitive threats, overseas competition, and increased foreign demands. These factors can affect business operations and their competitiveness in the market. Therefore, companies should develop strategies for dealing with various risks and challenges in the both domestic and international markets.