MS34B, UWI Mona, Department of Management Studies International Business Management (MS34B) Managing Export Production Facilitator : Densil A. Williams

MS34B, UWI Mona, Department of Management Studies Contents Types of Production Systems Problems of Production Systems in Developing Economies A Case Study of Challenges in Managing Export Production Concluding Remarks

MS34B, UWI Mona, Department of Management Studies Type of Production System Production systems need to be efficient and sophisticated in order to improve the Int’l competitiveness of firms, especially indigenous firms from developing economies. It is the extent to which indigenous firms can compete effectively without protection in home or international markets that will dictate the pace of development in developing economies. The type of production systems will help to determine whether or not these firms can become internationally competitive

MS34B, UWI Mona, Department of Management Studies Type of Production System The modern production systems can be traced back to the early 19 th century when US firms were involved in the production of rifles in Massachusetts The production system at that time consisted of two main elements: - a) Inter-changeability of parts, - b) Production flow

MS34B, UWI Mona, Department of Management Studies Types of Production System Interchangeability of Parts Achieved by producing parts with specialist machines according to precise specifications and in a separate manner from the product assembled from the part Production Flow The production of goods by adding inter-changeable parts in a continuous manner using machines laid out in a logical order.

MS34B, UWI Mona, Department of Management Studies Types of Production System These principles of production have helped US firms to compete effectively with British firms. However, in the early 20 th century, these principles had less success as a result of new methods developed by the Japanese.

MS34B, UWI Mona, Department of Management Studies Types of Production System Inter-changeability and production flow principles were used by the Japanese to produce not one product, but multiple products This type of production method was labelled “Just -in-Time”. Focuses on economies of scope than scale

MS34B, UWI Mona, Department of Management Studies Problems of Production Systems in Developing Countries Absence of a focus on product engineering Inconsistency of output Lack of timeliness of production Poor facility layout Poor materials handling processes Inadequate quality control/management Too much waste/wasted byproducts Input deficiencies

MS34B, UWI Mona, Department of Management Studies Case Study of Export Production Export production requires rigorous and sophisticated production systems compared to production merely for domestic purposes. Buyers in the export market are very demanding and requires higher standards in most cases, than local customers. One mistake can destroy a country’s entire export sector. For example, one bad flower in a shipment of cut flowers, can lead to the entire shipment being rejected.

MS34B, UWI Mona, Department of Management Studies Case Study of Export Production The case of Blooming Things Ltd. a firm in the horticultural industry in Jamaica highlights this phenomenon. Challenges in designing a sophisticated production system for cut-flowers Lack of Technology Lack of Technical Expertise Exorbitant Cost of Capital

MS34B, UWI Mona, Department of Management Studies Case Study of Export Production Methods used to alleviate production risks Engagement of professional (engineers, marketing professionals etc) Use of debt to acquire technology Improve training of work force in the required area (in this case, agronomy).

MS34B, UWI Mona, Department of Management Studies Concluding Remarks The production system in developing economies will have to be improved if these economies are to achieve international competitiveness and move up the developmental trajectory. Small, developing economies, need an efficient production system because, if they are to build competitive firms and industries, they will have to get involved in the export market due to their small market size.

MS34B, UWI Mona, Department of Management Studies Concluding Remarks Operation in the export market requires efficiency, flexibility and high quality. These will only come about through transformation of the production system in these countries, especially for indigenous firms.

MS34B, UWI Mona, Department of Management Studies Some Questions to Think About Which countries are world leader in the cut flower business? What are the different types of cut flower on the market and which type would Jamaica have a comparative edge in producing? What are the locational risks that entrepreneurs in the cut flower industry in Jamaica need to focus on?

MS34B, UWI Mona, Department of Management Studies Some Questions to Think About Critically analyse Blooming Things marketing strategy? How will the future challenges of the industry affect Blooming Things ability to manage its export production? What are some of the factors that led to the firm’s superior performance?