PhD Dimitrov I. T., PhD Dimitrova A. M.

Prof. Dr. Ass. Zlatarov University, Burgas (Bulgaria)

STUDY THE STRATEGIC STRUCTURING OF LOGISTICS ACTIVITIES IN MULTINATIONAL COMPANIES

 

Nowadays, an effective way for Multinational companies (MNCs) to achieve global success is through deepening their value chain in foreign locations. As a consequence, logistics becomes an area of strategic importance and a source for competitive advantage, because it is of great value-added potential and best position to provide supply chain optimization in the international transaction process.

The objective of the paper is to present approach for studyhow MNCs structure their logistics activities in the global business environment with regard to strategic competitive performance. The main research question can be divided into several partial research questions: 1. What impacts do the variables: logistics strategy, supply and distribution structure, location determinants, and regional logistics infrastructure have on the design of MNCs international logistics structure? 2. What strategic considerations, corresponding to the variables presented above, should be involved in the process of structuring logistics activities in MNCs?

The use of appropriate distribution channels in international markets increases the chances of success dramatically.Logistics strategy is no longer solely a functional strategy, especially in the global context. Global logistics strategy enables MNCs to meet the challenge of global competition, because it has great impacts in unifying formerly disparate responsibilities into new patterns of efficiency.

Industrial firms do not operate independently, but rather in a chain of organizations, which includes the goods flow from the extraction of raw materials via required manufacturing processes and intermediate transports up to and including the distribution of finished products to customers. National resource conditions exert a dominant influence on a firms competitive advantage and a firms location.

International distribution includes various activities involved in the flow of goods from plants to customers located in different countries. These activities are categorized as: transportation, handling-in, handling-out, storage, and reconditioning. A firms international distribution structure should be designed to guarantee the efficient organization of finished product flows.

Economies of scale can be used to determine the annual capacity and number of manufacturing plants and distribution centers. The trade-off between economies of scale in manufacturing and distribution costs would provide a good first approximation for plant capacity and plant number decisions.

An MNCs choice of its manufacturing and distribution location affects its cost competitiveness since countries may differ with respect to the availability and the price of production factors. There are three groups of plant location determinants: proximity to other network nodes, access to factors of production, and national and regional characteristics that can be applied in the design of logistics activities.

The research methodology includes interview and questionnaire. This research emphasizes the multinational companies. The interview questions are divided in two sections. First, eleven questions are discussed during the interview. Two other questions regarding the location determinants are answered by the respondents after the interview.

Section One Design International Logistics Activities includes following questions:1.How do you look at the strategies for logistics and distribution that your company has today? 2.Do you see logistics activities as a weapon of competition? 3. How do you describe your current distribution structure? 4.How do you describe your current supply chain structure? 5. Can you basically describe your process of developing logistics and distribution strategy? 6. What is your view upon third-party services for warehousing or transportation? 7. Whats your opinion about the character of the Regional logistics infrastructure in terms of air, railroad, telecommunications, motorways and water? 8.How do you describe the necessary improvements of the existing regional logistics infrastructure with regard to the efficiency of the supply chains and the distribution chains of today? 9. How do you treat the environmental issues e.g., air pollution with regard to the existing logistic structure? 10.What do you think about building of Regional Logistic Infrastructure Centers? 11. Do you think that regional logistic infrastructure centers including different logistic companies and services would increase the coordination and efficiency of your companys logistic activities and functions?

Section Two Location Determinants includes the following questions. 1. To what degree did the following factors e.g., closeness to important markets, customers, suppliers; access to raw materials, energy, capital, labor; protected markets; tax conditions; regional trade barriers; government subsidies; exchange rate risk;language; culture; politics;labor practices and regulation; environment regulation influence your plant location decision? 2. To what degree did those factors list above influence your distribution location decision e.g., regional logistics center, international logistics center?

This paper examines approach for research of the manufacturingand logistics interaction in international manufacturing. The overall purpose is to determine the impact of a firm's globalization perception and manufacturing/logistics integration on competitive performance. In relation to this overall purpose, there are two sub-purposes. The first is to identify the major impacts of the research variables on the design of international logistics structure. The second is to identify the significant strategic considerations of global logistics strategy and evaluate relevant determinants to support MNCs decision-making in structuring their logistics activities.

 

List of references:

1. Choi, C. J.Global competitiveness and national attractiveness,International Studies of Management and Organization; White Plains, Spring, 2009.

2. Grant, R. M.Contemporary strategy analysis, Blackwell Business, 2010.

3. Pfohl, H., Zöllner, W., and Weber, N. Economies of scale in customer warehouses: Theoretical and empirical analysisJournal of Business Logistics, Vol. 13, 2002.

4. Wood, D. F., Barone, A., Murphy, P. and Wardlow, D. L.International logistics, New York: Chapman & Hall, 2002.