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Trade War is Bad News for Global Supply Chains

Global Logistics and Supply Chains ( XL001111)

Trade War is Bad News for Global Supply Chains

When it comes to fending off foreign competitors, be careful what you wish for. It can come back to bite you in nasty and sometimes unexpected ways.

In January, U.S. appliance maker Whirlpool celebrated the decision to slap import duties of up to 50% on washing machines manufactured by its Chinese and South Korean rivals. But last month the Michigan-based firm reported that higher raw material costs — driven in large part by the Trump administration’s 25% tariff on imported steel and 10% on aluminium — had contributed to a second-quarter loss of $657 million.

U.S. consumers have been asked to pick up the bill, with prices rising by as much as 20%. As a result, Whirlpool’s sales in North America have fallen by 2.2% and its share price is down 25% since the initial salvo was fired in what is looking like a global trade war.

Protectionist policies can surprise those who instigate them too. Harley-Davidson’s announcement in June that it would move some production from the U.S. to Europe — as a result of the European Union’s retaliation against the steel and aluminium tariffs — ran directly counter to President Trump’s assertion that he was taking the action to protect U.S. jobs.

Report Brief

Today’s trade policies are causing a lot of insecurity for UK car manufacturers. Please choose a UK/EU car manufacturer (it can be a brand e.g. BMW or a whole group e.g. Volkswagen Group) with operations based in UK. Conduct a research project and write a report addressing the Board of Directors on the global business environment and approaches which they can adapt to improve and sustain supply chain and logistics management. Also address the business opportunities and risks which might be faced by the manufacturer of your choice with operations in postBrexit UK.

Your task is to:

1. Use academic articles to critically evaluate the role of logistics for a car manufacturer of your choice and how logistics contributes to achieving the organisation`s international marketing and business development goals.

2. Critically reflect on chances and risks related to the development of global and pan-European logistics systems in order to offer the Board of directors some advice in respect to building a lean, robust and resilient supply chain with the prospect of UK leaving the EU. Drawing on this response consider the implications for:

a) the selection strategies and development of suppliers

b) different sources of risk and supply chain robustness in relation to the chosen car manufacturer.

c) address a range of issues involving efficiency and effectiveness of the supply chain.

3. Based on your critical analysis and discussion to address the above tasks. Offer 2 – 3 short recommendations that would help the chosen manufacturer to remain competitive.

You are expected to undertake independent research using the academic databases available to you. Many articles have been suggested to you in each unit and the background article that accompanies this brief provides a good reference list that you should engage with. You must go beyond these sources to obtain a higher award. You should search the literature using academic databases with key terms relevant to addressing this brief so to have a sound knowledge base that can be applied in practice. A poorly researched report, not written as an analytical report and not going beyond course materials will lead to an unsatisfactory report and potential to fail. Please consult the marking criteria carefully and raise issues and obtain feedback from your tutor regularly as part of the weekly VOH.

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