Chapter 10 (Cont)
Location Evaluation Techniques
The Weighted-Factor Rating Model
Compares the attractiveness of several locations along a number of quantitative and qualitative
- Identify the factors, Assign weights to each factor. The weights sum to 1, Determine a
weighted score for each factor.
- The location with the highest total weighted score is the recommended location.
Total Cost Model
Financial analysis when fixed and variable costs can be determined
- Determine the fixed costs (land, taxes, insurance, equipment, buildings…)
- Determine the unit variable cost (labor, materials, utilities, transportation…)
- Construct the total expected cost formula for each location.
- Determine the Total cost of each location based on planned production levels
- Identify the range over which each location has the lower cost.
International Trade Management
1. Opportunities and Challenges
2. Trade Legislation
3. Regulatory Authorities
4. Trade Compliance
5. Trade Intermediaries
6. Imports Process
7. Export Process
8. Penalties for Violations
Global Supply Chain
- Presents opportunities including increased revenue through global businesses, and
increased sourcing options with more potential sources of supply to choose from including
potential economic opportunities
- Can also provide challenges – tariffs, transporting across borders, foreign markets are not
homogenous even within the country
International Trade Legislation
- Global supply chains must comply with the ever changing laws and regulations in every
country they do business.
- Often countries impose conflicting regulations or different standards. Import and Export
- US companies must also abide by regulations that impact their foreign operations - e.g.
Foreign Corrupt Practices Act (FCPA), embargos, etc
Total Compliance - A major concern as dozens of laws, regulations and rules must be checked
and complied with for every import / export transaction - Millions of shipments enter the US annually; businesses violating trade regulations face
fines of up to 40% of the value of the merchandise for “negligence,” which can mean simply
making a paperwork mistake or keeping necessary records.
Global Logistics Specialists
- Companies can outsource custom clearance activities:
- Import / Export Customs Brokers
- Move global shipments through customs and handle all required documentation on behalf
of the company.
- Company handles the financial transaction directly based on the broker’s instructions
- Trading Companies / Import Merchants
- Put buyers and sellers from different countries together and handle export/import
arrangements, documentation and transportation buy purchasing in the sellers market, handling
the export and import, and selling in the buyers market.
- DHS is the government agency who’s mission is to:
- Prevent terrorist attacks within the United States
- Reduce America's vulnerability to terrorism
- Minimize the damage from potential attacks and natural disasters
- On March 1 2003, DHS assumed responsibility for securing our nation's borders and
transportation systems at 328 official ports of entry.
- The Department's first priority is to prevent the entry of terrorists and the instruments of
terrorism, while simultaneously ensuring the efficient flow of lawful traffic and commerce.
US Customs and Border Protection
- Originally established in 1789, U.S. Customs and Border Protection (CBP) controls the
- It is the gateway agency for more than 20 other government agencies each of which has
some control over various aspects of international trade.
- Its’ mission is to safeguard America’s borders thereby protecting the public from dangerous
people and materials