Reference no: EM131840208

Global Management - Portfolio Assignment

GE Moves - Manufacturing from China to the United States

Expectations: Synthesize material from all the chapters and your personal research to analyze the organization below. The Portfolio assignment must be 7 to 9 pages in length. Use a minimum of 4 references (there should be at least four in text citations to correspond to the references) to defend your position. Use 6th edition APA form and style and the provided writing template.

For decades, General Electric has been at the forefront of the move to shift production offshore from high-cost locations inside the United States to cheaper locations, such as China. But there are now some signs that the relentless flow of production offshore may be slowing down and, in some cases, starting to reverse. There are several reasons for this. Wage rates in China and some other developing nations have been rising fast, closing the differential between costs in the United States and overseas. In dollar terms, wage rates in China were some five times higher in 2012 than they were in 2000, and they are still rising fast. Labor productivity has also increased significantly in the United States, further closing the gap in labor costs. Meanwhile, high oil prices have raised the cost of shipping products across oceans, while the abundance of cheap natural gas in the United States is helping to lower production costs. If this were not enough, there are signs that there are benefits to having product design and manufacturing co-located, and in some cases, this is driving a shift in production back to the United States.

A case in point is GE's GeoSpring water heater. This was originally designed in the United States and manufactured in China. The finished product was then shipped back across the ocean for sale in the United States. In 2010, given the macro trends in labor productivity and energy prices, GE decided to see what would happen if it brought some of its appliance products back to the United States. The GeoSpring was one of its first attempts at this. GE established a team of engineers and production workers at its appliance plant in Louisville, Kentucky, to see what they could do with the GeoSpring. The team quickly concluded that the GeoSpring was not easy to manufacture due to poor design. They redesigned the product for ease of assembly, eliminating one out of every five parts and cutting material costs by 25 percent. As a result, GE cut the time required to assemble the product from 10 hours in China to 2 hours in Louisville.

The end result: Material costs went down, labor requirement went down, and product quality went up. Indeed, the cost savings were so big that GE was able to reduce the price of the GeoSpring 20 percent below that of the Chinese-manufactured product and still maintain a decent profit margin. Time to market also improved greatly. It used to take five weeks to get a GeoSpring from China into a U.S. retail store-now GE can do that in a matter of days, which improves inventory management.

Having learned from experiences like this, GE is now planning to ramp up production of other appliance products at Louisville. It has recently doubled the workforce there to 3,700, and has also hired 500 new designers and engineers to redesign many of its products for ease of manufacture. A few years ago, less than half of the revenues of the appliance business came from products made in the United States. By mid-decade, GE plans to have 75 percent of the revenue of the appliance business to come from American-made products.

Sources: Charles Fishman, "The Insourcing Boom," The Atlantic, December 2012; and J. R. Inunelt. "Sparking an American Manufacturing Renewal," Harvard Business Review, March 2012.

This is the final portfolio which is final and contains the maximum numbers of points and all the references used should be between 2014 to 2017 and all the references should be genuine and original and there should be no grammar mistake while solving the assignment. .

Please include all of the required component as specified in the assignment and meet the length and source requirement, Represent strong knowledge of content.

Demonstrate strong understanding of the role of ethical and social responsibility in a global business environment.

Demonstrate ability to analyze acceptable risk, value creation and opportunity assessment within an organization using creative and critical thinking.

Demonstrate strong ability to apply communication and human relations theory within global management.

Demonstrate strong understanding of the managerial role in promoting inclusivity and diversity through the development of vision and culture.