Globalization III
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Field trip
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Driver agreements
AB Health card
Review
Questions
Production chains
Bananas
On to Chapter 3!
Inputs
Transformations
Distribution
Production chain
Consumption
Technology/R&D (product design and process technology)
Inputs
Transformations
Distribution
Consumption
Logistic Services: movement of materials, products, people, info
Production chain depends on technology inputs
Financial system
Technology/R&D (product design and process technology)
Inputs
Transformations
Distribution
Consumption
Logistic Services: movement of materials, products, people, info
Regulation coordination control
Production chain embedded in a financial system
Production Chain
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Transactionally linked sequence of
functions in which each stage adds value
to the process of production of goods or
services
Services
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Provide the geographical and transactional
connections
Integrate and coordinate the globalized
production process
Typology of Firms
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Small single plant firms (domestic)
Large multi-plant firms (domestic)
TNCs (multinational)
Global Corporations (multinational)
The Firms and the Production Chain
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Transactions ‘internalized’ in a vertically
integrated firm
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Hierarchically governed through organization
structure
OR
Externalized…to some degree
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Arm’s length transactions (outsourced)
Strategic alliances
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Subcontracting
Licensing
Joint Ventures
http://www.hankstruckpictures.com/walter_mulder.htm
Progressively
more
internalized
Production Networks
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Producer driven
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TNCs Manufacture in-house and control the entire network
Some components/subassemblies are contracted out
Distribution may be in-house, franchised, or independent
distributors and retailers
Buyer driven
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Network controlled by large retailers and brand named
merchandisers
Production is all contracted out to overseas manufacturers
Decentralized production networks all over the cheap labour
world
Plantation Agriculture
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Capital intensive tree crops:
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Labour intensive annuals:
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cotton, tobacco, peanuts
Field perennials, somewhere in the middle:
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Coffee, cacao, tea, coconuts, oil palm
bananas, sugar cane
Siquirres, Costa Rica
Primary protein source
for 400 million people
~ 90% eaten locally
United Fruit Company
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Minor C. Keith
Costa Rica Railway – 1870
4 innovations
Sail to steam 1880-1895
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Refrigeration
Communication by telegraph, telephone, radio
Internalization
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speed, capacity
Vertical integration from plantation to retail
Horizontal integration – merger 1899
Monopoly and market power
Narrow gauge plantation railway
Bananera, Guatemala, 1965
Mainline railway to coastal port
Loading bananas – women’s work!
1931
Adding corporate
identity to crude
resource products
Brand name
Image of Quality
Healthfulness
Reassurance
1944
2001
Legendary Sta. Chiquita
Disease
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Panama disease, 1900, soil-based bacterium
Sikota disease, 1935, airborne fungus
Cultivation shifts from Caribbean to Pacific
Early variety: Gros Michel
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New cultivar: Cavendish
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Sturdy but vulnerable to Panama disease
Robust but bruises easily
Packaging revolution
1965
2001
Trans-Atlantic Banana Trade
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Fleet of refrigerated container ships
inaugurated in 1984 for European trade