Chapter 1 Terminology

Question 1

Global value chains (GVC)

Answer 1

refer to international production sharing, a phenomenon where production is broken into activities and tasks carried out in different countries. They can be thought of a large-scale extension of division of labour dating back to Adam Smith’s time.

Question 2

Ro/Ro Technology

Answer 2

Roll-on/roll-off (RORO or ro-ro) ships are cargo ships designed to carry wheeled cargo, such as cars, trucks, semi-trailer trucks, trailers, and railroad cars, that are driven on and off the ship on their own wheels or using a platform vehicle, such as a self-propelled modular transporter.

Question 3

International identification code of containers

Answer 3

Proposed by the Bureau International
des Containers (BIC) since 1969, and has been standardized by the International Organization
for Standardization (ISO) in 1972. It forms an
essential part of the ISO 6346 standard

Question 4

What main trade organizations or members formed “The Triad” in the 1980s?

Answer 4

EU (European Union), NAFTA (North American Free Trade Agreement) and Japan/ROK (Republic of Korea)

Question 5

5 basic types of GCV Governance

Answer 5

1. Markets
2. Market Value Chains
3. Relational Value Chains
4. Captive Value Chains
5. Hierarchy

Question 6

Markets (GCV Governance)

Answer 6

Market linkages do not have to be completely transitory, as is typical of spot markets; they can persist over time, with repeat transactions. The essential point is that the costs of switching to new partners are low for both parties.

Question 7

Modular Value Chains (GCV Governance)

Answer 7

Typically, suppliers in modular value chains make products to a customer’s specifications, which may be more or less detailed.

Question 8

Relational Value Chains (GCV Governance)

Answer 8

In these networks we see complex interactions between buyers and sellers, which often creates mutual dependence and high levels of asset specificity. This may be managed through reputation, or family and ethnic ties.

Question 9

Captive Value Chains (GCV Governance)

Answer 9

In these networks, small suppliers are dependent on much larger buyers. Suppliers face significant switching costs and are, therefore, ‘captive’. Such networks are frequently characterized by a high degree of monitoring and control by lead firms.

Question 10

Hierarchy (GCV Governance)

Answer 10

This governance form is characterized by vertical integration. The dominant form of governance is managerial control, flowing from managers to subordinates, or from headquarters to subsidiaries and affiliates.

Question 11

Offshoring

Answer 11

relocating an entire service or manufacturing operation to another country (e.g. call center, sweat shops)

Question 12

Insourcing

Answer 12

delegating operations to someone else that specializes in those operations (e.g. UPS)

Question 13

CAGE Distance Framework

Answer 13

identifies Cultural, Administrative, Geographic and Economic differences or distances between countries that companies should address when crafting international strategies. It may also be used to understand patterns of trade, capital, information, and people flows. The framework was developed by Pankaj Ghemawat