Internal and External Influences on Global Manufacturers

By Krumwiede, Dennis; Tokle, Joanne et al. | SAM Advanced Management Journal, Winter 2009 | Go to article overview

Internal and External Influences on Global Manufacturers


Krumwiede, Dennis, Tokle, Joanne, Vokurka, Robert J., Hackert, Ann M., SAM Advanced Management Journal


Around the world, manufacturers base their planning decisions on similar internal factors, such as previous sales, machine and labor capacity, and inventory levels. They are subject to many of the same external factors, such as customer order backlogs, customers' future plans, and sales forecasts. But companies in different countries may give greater or lesser priority to these factors depending on cultural differences. A statistical analysis based on data collected by the Global Manufacturing Research Group for six countries (U.S., Canada, Hungary, Italy, Taiwan, Lebanon) found that cultural factors do, indeed, influence the relative importance assigned to these internal and external factors affecting decision-making. The role of customer preferences and attention to the customer should be particularly interesting to those who manage supply chains or work with companies in other countries.

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Introduction

Production plans at companies are based on intertwining internal and external factors. Internal factors affecting production planning include previous sales, machine capacity, labor capacity, and inventory levels. Customer order backlogs, customers' future plans, and sales forecast are external factors. The decision to begin actual work on an order is also based on several internal and external factors. External factors are customer orders and the importance of customers. Production plans, detailed production schedules, parts shortage lists, inventory levels, and idle labor or equipment are internal to companies and affect start-of-work decisions.

A firm's response to external influences defines its customer interactions and orientation. Recognizing the importance of both internal and external influences is critical to success. Examining these interactions from a global perspective provides insights into the role of national culture on the interaction with customers in the production process.

Data for this study were collected by the Global Manufacturing Research Group (GMRG), a group of researchers who began surveying manufacturers around the globe 20 years ago. GMRG collected several rounds of data worldwide over time. Vastag (1993) describes the motivation and methodology of these surveys. The data have been used to study a variety of issues comparing similarities and differences among companies in different countries as evidenced by list of Global Management Research Group Publications (http://www.gmrg. org/Publications.html, 2008). For example, Vokurka et al. (2007) used GMRG data from companies in the United States, Canada, Hungary, Italy, Lebanon, and Taiwan to examine whether total quality management and just-intime initiatives affect manufacturing flexibility. The research found that companies identifying themselves as flexible across product, volume, and delivery were implementing JIT and TQM, suggesting the continuing value of these techniques. Although the study indicates the importance of TQM and JIT across countries and cultures, the issue of cultural differences in manufacturing is not specifically addressed.

This study is the first to consider cultural differences in manufacturing planning and scheduling within the framework of cultural differences. Understanding cultural differences is increasingly important in a world characterized by outsourcing and global manufacturing. Analysis of GMRG survey data indicates the importance of customer or external factors in production, as explained by cultural differences.

Literature Review

There is a well-developed literature portfolio on the role of cultural differences and their influence on business practices. Hofstede et al. (1990) developed a framework that explains how an individual's national culture affects the way this person operates a firm. Hofstede studied a large database of IBM employees from 1967 to 1973 covering more than 70 countries.

Hofstede's cultural dimensions included power distance, individualism, masculinity and uncertainty avoidance. …

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