Global Value Chains And Its Impact On The World Economy

Modern production is increasingly growing around the so-called global value chains. According to World Trade Report for 2014, they are one of the main trends in modern economy and trade. Their growth in the last two decades have not only significantly change the nature of the world economy, but also had a strong influence on individual countries. However, the extent and nature of these effects are still not well understood by experts. Typically the value chain include the steps of: design, production, marketing, distribution and after-sales customer service. These steps may exist within the same company and shared between many firms. The fact that a growing number settles in various countries indicates the globalization of value chains.†¦show more content†¦Understanding the functioning of the administrative structures needed to assess the impact of economic policy on businesses and the location of production. The concept of global value chains was born back in the 1970s. This could be classified as commodity chains. The main idea of this chains is to trace the transformation of the entire set of source materials and the cost of products and turning them into a final product consumption. Later, the global supply chains were traced on the example of garments ranging from raw materials (cotton, wool, synthetic fibers) and ending with the final product (clothing). In the 2000s, there was a transformation of the concept of global commodity chains in the concept of global value chains. The second concept is trying to determine the most important factors of the organization of global industries, it offers a theoretical basis and practical tools to analyze value chains and different types of management. The idea of the value chain has been proposed by Michael Porter in his book Competitive Advantage to identify the sources of competitive advantage through analysis of certain types of activity of the company. In foreign economic literature makes a clear distinction between the chains, initiated by producers and buyers. Value chain divides the company s operations in the strategically important activities to examine the costs and existing and possible means of differentiation. The competitiveShow MoreRelatedMarketing Analysis : Global Supply Chain Essay1721 Words   |  7 PagesGlobal supply chain remains a highly contested theme and there have bee n many attempts to define the real winner and competition of market power in the literature. The participant network varies in size and scope, depending on the products involved, geographic dispersion of supply and demand, and customer service requirements. Martin Christopher (2011: 15) states that within global supply chains the real competition is not company against company but rather, supply chains against supply chains. 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