Globalization of Logistics and Supply Chain Management in Wales

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Table of Contents

Introduction
Discussion
Conclusion
Reference List

Introduction

This paper is based on the topic of globalization of logistics and supply chain management. It explores the topic using Wales as a case study. The paper is divided into two parts namely part one and part two. Part one is an overview of the current rail system in Wales.

Part two is a comparison of the proposed high-speed rail and an integrated transport system. At the end is a conclusion which provides a definite solution to the client.

The main issue in the paper is that the Welsh government wants to improve its transport infrastructure for transporting people and freight. It is, however, not decided on whether to build the proposed high-speed rail or set up an integrated transport infrastructure.

On the one hand, the high-speed rail is expected to reduce the time used to transport people and freight between various cities in the United Kingdom, which would attract new investors. It is also expected to enhance efficiency of the supply chains.

On the other hand, focusing on the high-speed rail at the expense of the other modes of transport would be counterproductive because trains are not the only means of transportation in Wales.

As the consultant, I have addressed these issues in my analysis of the situation and the implications of the various options which are available to the client (the Welsh government). In the review, I have used different theoretical frameworks such as gap analysis and the theory of absolute advantage to illustrate the arguments.

I have argued that the proposed high-speed rail is not adequate to deal with the challenge of poor transport infrastructure in Wales and as a result, there is need for an integrated transport system which would link the entire transport infrastructure in Wales.

The reason is that an integrated transport system would have more benefits than the proposed high-speed rail.

Discussion

Part one

Gap analysis is a situation in which organizations ask themselves the questions of ‘where are we’ and ‘where do we want to be.’ It is very useful for managers because it helps them to focus on the real issues which affect their organizations.

It also enables the managers to come up with the proper means of realizing their desired outcomes (Franklin 2006).

In an effort to fill the gaps in organizations, managers use differentiation and positioning (McLoughlin & Aaker 2010). According to Thompson and Martins, differentiation has to do with enhancing the popularity of products or services among the customers.

For an organization to claim that it has differentiated its products and services, it has to ensure that it provides extensive details about the uniqueness of its products or services. Many organizations engage in differentiation of their products and services for various reasons.

However, economic analysts have argued that the whole idea of differentiation is to increase the competitiveness of organizations. Differentiation has the potential of influencing consumer behavior by ensuring that consumers understand what is unique about different products or services (Thompson & Martin 2010).

According to Armstrong and Kotler positioning is a strategy which complements differentiation. It has to do with using various strategies like product distribution and production of unique products with low prices to build an identity of a particular Company in the minds of consumers (Armstrong & Kotler 2009).

In many cases, positioning is done after differentiation so as to stabilize and retain the positions of the differentiated products or services. It also ensures that organizations retain their competitive advantage in any given market.

The current rail system in Wales is outdated since it was established many years back when the population of Wales was relatively small. At the time when the rail system was established, globalization had not taken effect and as a result, the demand for transport services was very low (Kendall & Cole 2006).

However, with the advent of globalization, there has emerged the need for people to move frequently from one point to another in different parts of the globe. Due to globalization, the business environment has become more competitive than ever.

According to Scholte, the drivers of globalization include advancement in information and communication technology, improvement of transport infrastructure, and liberalization of trade and immigration policies (Scholte 2005).

Due to globalization, people from different countries are able to work anywhere in the world, irrespective of their cultural orientation. Through globalization also, people are able to study, marry, and stay in any part of the world (Cole 2005). Globalization has also enabled different cultures to coexist peacefully without cultural prejudice.

The interaction of people in different spheres of life has made them to appreciate their cultural differences, a situation which has greatly reduced instances of racism and ethnicity (Chrysanthopoulos 2010).

Due to its outdated status, the current rail system lacks the capacity to handle huge volumes of freight. It is also not suitable for transporting people because it is too slow compared to other modes of transport such as road and air.

In some cases, the current rail system makes firms to miss business opportunities due to the inability of the rail system to deliver goods on time. It also makes the supply chains of many firms to be inefficient, which increases the cost of production (Lan & Unhelkar 2006).

This situation is threatening the stability of the economy of Wales because many firms have threatened to relocate their businesses in other countries or cities which have efficient and reliable rail transport.

As a result, there is need to upgrade the current rail system so as to restore the confidence of investors and attract others. That is why the high-speed rail has been proposed.

Once in place, the high-speed rail would not only attract new investors to Wales, but it would also enable the existing firms to expand their businesses due to increased efficiency. It is essential to mention that the objective of multinational firms is to get access to cheap factors of production, such as raw materials, capital, land, and labor.

The reason is that the cost of these factors of production varies from one country to another (Johnson, Scholes & Whittington 2010). Consequently, the high-speed rail would enable the firms in Wales to get access to these factors of production.

The interest of the Welsh government is to ensure that there are no barriers which restrict investors from getting opportunities to invest in Wales. However, the outdated rail system is a hindering factor to the growth of the economy of Wales. As a result, the high-speed rail would expand the economy of Wales and enhance growth.

It would also have a multiplier effect in form of enhanced social and economic well-being of the citizens of Wales. For instance, many firms would be able to make huge profits due to reduced cost of transport. As a result, they would increase funding to Corporate Social Responsibility (CSR) programs.

Different scholars have written about the concept of CSR. According to Carroll, CSR is generally used to explain the relationship between businesses and their environments. The reason is that almost all organizations operate in dynamic social, political, economic, and natural environments.

CSR, therefore, looks into how businesses interact with these environments, either positively or negatively. Different scholars have come up with various components of CSR. However, the elements which are mentioned by many scholars include the ethical, regulatory, philanthropic, and legal components.

When an organization establishes a business in any given society, the people in that society usually have different expectations from the business. While some expect to purchase goods and services at low prices, others expect to be employed by the organization.

There also those who expect the organization to operate in manner which does not raise questions as far as quality of products and services are concerned. These concerns comprise the ethical component of CSR (Carroll, 1979). Due to the reduced cost of transport, the firms in Wales would make huge profits.

As a result, the tendency of the firms to engage in unethical behavior would be minimized.

According to Aras and Crowther, the regulatory component has to do with abiding by all regulations which are established to protect shareholders, investors, and customers from unethical business practices.

It also has to do with ensuring that organizations maximize their profits and minimize their operation costs with the aim of making more profits. Once organizations generate more profits, they are expected to increase the salary of employees because employees are essential stakeholders in the success of organizations (Aras & Crowther 2010).

The reduced cost of transport would enable the firms in Wales to generate more profits than before, which would enable them to take care of the interests of shareholders and customers.

The legal component has to do with compliance to various laws and regulations which have been established in different jurisdictions to govern all businesses and ensure that they operate legally.

For example, there are laws and regulations which touch on protection of the environment, respect of employees’ rights, and production of quality products. The philanthropic component has to do with charity work. It is based on the argument that businesses must give back to the communities where they operate.

There are many ways of giving back to the community. Some of them include initiating programs which directly benefit the community through provision of health and education services to the less fortunate in the community (Carroll 2008).

The high-speed rail would enable the firms in Wales to generate more profits than before and as a result, they would be able to pay the various taxes to government authorities.

Rail transport has been successful in many countries. In China, for example, there are modernized rails which are used by electric trains. These trains have made transport in China not only reliable but also cheaper than in other countries which do not have electric trains.

Since the trains are powered using electricity, they move fast and are able to reach their destinations within a short time. Wales should, therefore, borrow the example of China and boost its economy and social well-being of its people through the high-speed rail.

Part two

Rail transport is a very reliable mode of transporting heavy goods. The reason is that the cost of transporting heavy goods using rail transport is usually less than the cost of transporting them using road transport. Transporting heavy goods using road transport also makes the roads to wear out too fast.

When that happens, governments incur a lot of expenses in repairing the roads, which negatively affects the economy of countries. As a result, rail transport is not only cheap, but it is also durable because it does not require frequent repair like roads (Lysons & Farrington 2012).

In terms of conservation of the environment, rail transport is better than road transport because trains do not emit a lot of carbon dioxide like vehicles. Carbon dioxide is associated with greenhouse gases which lead to global warming. Rail transport is not affected by adverse weather conditions like road transport.

For instance, when it rains heavily, vehicles may be unable to move due to flooding or poor visibility. Rail transport is also better than road transport when it comes to connecting with different countries.

The reason is that there are more railway lines which connect countries than roads and as a result, firms are able to import goods in bulk from other countries and transport them using rail transport. Rail transport is also more secure for transporting containers carrying valuable goods than road transport.

Even though the high-speed rail would have various benefits to various stakeholders, it might not provide long-term solutions to the problem of poor transport infrastructure in Wales.

As mentioned earlier, rail transport is just a part of a wider transport network and as a result, the high-speed rail would need to be complemented by other modes of transportation such as air, sea, and road.

An integrated transport system would have a higher economic value than the high-speed rail. It would also be more sustainable than the high-speed rail because it would provide various options for firms to transport their goods, labor, and raw materials.

Using an integrated transport system lowers the cost of transport in a given sector or country. The reason is that in an integrated transport system, each mode of transport transports what it is capable of transporting. In other words, the transport infrastructure is not strained.

Allowing each mode of transport to transport what it is capable of transporting enables firms to avoid the risks which are associated with transporting goods using the wrong mode of transport. For example, rail and sea are suitable for transporting heavy goods while road and air are suitable for transporting light goods and people.

An integrated transport system also increases the competitiveness of a country. According to the theory of absolute advantage, competitiveness refers to the ability of a country to take a share of foreign markets. For countries to become competitive, they aim at exporting more than what they import.

In fact, the theory of absolute advantage states that the objective of any country is to export almost everything and import nothing. However, it is almost impossible for any country to achieve this objective. Using an integrated transport system produces higher returns than using one type of transport such as rail.

The reason is that an integrated transport system relies on public and private infrastructure. For example, a government of a country may authorize private companies to operate commuter services. It may also authorize them to operate cross-border transportation of commercial goods.

At the same time, the government may operate air and sea transport services. This combination enhances efficiency and maximizes productivity of different sectors of the economy.

In addition, an integrated transport system has the benefit of enabling people of different social and economic status to get access to transport. For example, the elderly, the sick, and the disabled may be uncomfortable when they travel in a train.

However, they may be comfortable when they travel in a vehicle because it enables them to reach their destinations within a short time.

In any country, there are people of different economic status. Some are low-income earners, while others are high-income earners. The low-income earners may not be able to afford air transport, but they may be able to afford road transport.

As a result, having an integrated transport system makes life comfortable for everybody because people use the type of transport which they are able to afford.

Further to that, an integrated transport system is associated with minimal energy consumption. The reason is that each mode of transport uses a different type of energy. For example, some trains use electricity while vehicles use fuel. Relying on one type of transport may put pressure on a particular type of energy.

For example, if a country relies on road transport alone, it means that the consumption of fuel in that country is higher than in a country which relies on several modes of transport. As a result, there is minimal pollution of the environment in a country with an integrated transport system (Mangan, Lalwani & Butcher 2008).

From the above discussion, it can be argued that the transport industry plays a vital role in enhancing the economic and social well-being of people in any country. It is therefore essential for governments to ensure that they have integrated transport systems which are reliable and sustainable.

Sustainability addresses the issue of how resources are utilized. Economic analysts have argued that there is need for countries to utilize their resources in a sustainable manner so that the future generations would not face shortages of crucial resources. Utilisation of resources in a sustainable manner is the basis of sustainable development.

The concept of sustainable development has gained popularity in recent years (Rugman & Collinson 2006). In the transport industry, the reliance on high-speed rails is not sustainable as reliance on integrated transport systems.

According to Elkington, sustainable development must emphasize on economic and social development as well as protection of the environment (Elkington 1994). As a result, it is unethical for corporations to be driven by utilitarianism.

According to Sher, utilitarianism focuses on maximizing profits irrespective of the effects of the maximization. According to utilitarians such as Jeremy Bentham, any outcome which is desirable is also justifiable. It means that the means of arriving at a particular end are not as important as the end itself.

An outcome is, therefore considered as good if it makes many people to be happy (Sher 2012). For example, if an organization is able to increase its profits by exploiting its employees by overworking them, then the act of exploitation is justifiable as long as the employees do not complain.

If a legal action produces outcomes which do not make many people to be happy, then the action is not ethical. On the other hand, if an illegal action makes many people to be satisfied, then the action is not only ethical but also morally acceptable. Utilitarianism has the danger of destroying the values in a society.

There is, therefore, the need of governments to enforce regulations which govern ethics in the society as well as in business.

Utilitarianism makes many firms to use unethical means to generate profits. For example, some firms have been accused of giving false information to shareholders regarding the number of profits generated in a year with the aim of denying them their dividends. Other firms have been accused of failing to pay taxes to the relevant government authorities. These practices are not only unethical, but they also compromise the ability of any country to realize sustainable development.

Conclusion

Based on the above discussion and analysis, I would advise the Welsh government to set up an integrated transport system comprising of road, rail, air, and sea transport. The reason is that for the proposed high-speed rail to be effective, it needs to be complemented by the other modes of transport.

The integrated transport system would also be more sustainable than the high-speed rail. The Welsh government, therefore, needs to set aside resources for upgrading all the other modes of transport in Wales. For instance, it needs to expand the existing roads and build new ones. It also needs to expand the ports and the airports.

The integrated system would not only boost the confidence of multinational corporations, but it would also attract other investors to invest in Wales. As a result, the economy of Wales would realize an exponential growth.

The growth would have multiplier effects such as creation of employment opportunities, reduction of pressure on various energy resources, and increased competitiveness of Wales in international trade.

Reference List

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