Category Archives: Global Marketing

Global Clusters Based on Energy Consumption, Carbon Dioxide Emissions and Paper Consumption Per Capita

Oil RigIn a recent journal article co-authored with Adam Sulkowski, we use model-based cluster analysis to examine 121 countries across three measures of environmental efficiency. The three measures – energy consumption (barrels of oil equivalent) per capita, emissions of CO2 (metric tons) per capita and per capita paper/paper products consumption (kilograms per person) – are all related to a country’s comparative resource usage efficiency and contribution to climate change, a primary global concern. Using the most recent complete data available from the World Resources Institute, and the R statistical software program, we find six distinct clusters (or groupings) of countries based on similarities in per capita resource use within the clusters and differences (known as distance) between the clusters.

We developed names for the resulting clusters based on the cluster centroids and the countries contained within each.

Developing countries:

The average per capita of energy consumption, CO2 emissions and paper product consumption in this cluster, as compared to Cluster 6, is 96, 98 and 95% less, respectively. More than half (14 out of 27) of the countries contained in this cluster are identified by the United Nations as Least Developed Countries. The countries contained in this cluster include Angola, Bangladesh, Benin, Cameroon, Congo, Democratic Republic of the Congo, Côte d’Ivoire, Eritrea, Ethiopia, Ghana, Haiti, Kenya, Morocco, Mozambique, Nepal, Nigeria, Pakistan, Paraguay, Peru, Senegal, Sudan, Tanzania, Togo, Vietnam, Yemen, Zambia and Zimbabwe.

Rapidly growing energy consuming countries:

The average per capita of energy consumption, CO2 emissions and paper product consumption in this cluster, as compared to the average consumption per capita of the members of Cluster 6, is: 85, 80 and 57% less. Of the 12 countries represented, the majority is from the Americas and Caribbean. The countries contained in this cluster are: Argentina, Azerbaijan, Brazil, Chile, Costa Rica, Iran, Jamaica, Mexico, Romania, Thailand, Uzbekistan and Venezuela. It is interesting to note that half (six of the twelve) are oil-producing states (Argentina, Brazil, Chile, Iran, Mexico and Venezuela).

Advanced developing countries:

In this cluster, the member countries consume on average 93% less energy, generate 99% less CO2 and use 79% less paper per capita than do the consumers of Cluster 6. Most of the countries in this cluster are considered to be emerging markets and/or contain moderate levels of income per capita. This cluster consists of the following countries: Albania, Algeria, Armenia, Bolivia, Botswana, China, Columbia, Dominican Republic, Ecuador, Egypt, El Salvador, Georgia, Guatemala, Honduras, India, Indonesia, Jordan, Kyrgyzstan, Macedonia, Moldova, Namibia, Nicaragua, Panama, Philippines, Sri Lanka, Syria, Tajikistan, Tunisia, Turkey and Uruguay.

Middle energy paper consuming countries:

The members of this cluster consume an average of 46% more paper per capita than do the members of Cluster 6, while consuming an average of 72% less energy per capita and expelling an average of almost 59% less CO2 per capita. It is interesting to note that 19 out of the 30 countries in this cluster are members of the European Union. Just as interesting is the membership of some developing countries within this cluster. The countries are Austria, Belarus, Bulgaria, Croatia, Cyprus, Denmark, Gabon, Germany, Greece, Hungary, Ireland, Israel, Italy, Japan, Korea, Latvia, Lebanon, Lithuania, Malaysia, Malta, Netherlands, New Zealand, Poland, Portugal, Slovakia, Slovenia, South Africa, Spain, Ukraine and the United Kingdom.

High energy tree destroying countries:

This cluster is characterized by the highest per capita consumption of paper products, with its members consuming an average of almost two times more paper products per capita than Cluster 6. While member countries consume an average of 45% less energy per capita and expel an average of 37% less CO2 per capita than do the countries contained in Cluster 6, they are the second least energy efficient cluster. Contained within this cluster are countries with the reputation as having some of the most green-oriented consumers and policies on the planet. The countries in this cluster include Australia, Belgium, Canada, Czech Republic, Estonia, Finland, France, Kazakhstan, Kuwait, Luxembourg, Norway, Oman, Russia, Saudi Arabia, Singapore, Sweden, Switzerland, Trinidad and Tobago and the USA.

Extreme energy usage and CO2 producing countries:

This cluster leads the world in average per capita energy consumption and average CO2 emissions per capita. This is the smallest cluster containing only Bahrain, Iceland and the United Arab Emirates. It seems fair to label these countries as the extreme in their energy use because of their relatively large average per capita consumption of energy: an average of almost 82% more than the second least energy efficient cluster, over 257% more than the third least energy efficient cluster and almost 567% more than the fourth least energy efficient cluster. These countries also produce extreme levels of CO2 per capita as compared to the other clusters (35% more than Cluster 5, 142% more than Cluster 4 and 393% more than Cluster 3). Furthermore, many of the countries in Cluster 4 and Cluster 5 have GDPs per capita and/or average standards of living that are higher than those found in the countries contained within this cluster.

White, D. Steven and Adam J. Sulkowski (2010)

By examining per capita consumption of resources, green marketers gain useful information on which to base their strategies. Likewise, the information may assist governments, public policy makers and private enterprises in their efforts to stimulate sustainable businesses and business practices. Thus, rather than being seen as a threat, measures of per capita consumption should be viewed as an opportunity – an opportunity to foster the development of new products or services designed to minimize resource use per capita while retaining or increasing standards of living globally.

Reference:

White, D. Steven and Adam J. Sulkowski (2010), “Relative Ecological Footprints Based on Resource Usage Efficiency per Capita: Macro-level Segmentation of 121 Countries”, International Journal of Sustainable Economy, Vol. 2, No. 2, pp. 224-240.

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Global Logistics as an Employment Growth Area for Marketing Graduates

Container ShipThe demand for global logistics managers is expected to remain high for the foreseeable future. Entry-level jobs pay on-average more than $80,000 per year. Logistics, in general, refers to the management of material, service, information and capital flows into and out of an enterprise. According to McKinsey and Company, by 2025 over 80 percent of goods traded will be produced in countries different than where they are consumed. Thus, demand exists for students who are educated in how to manage the complications associated with global logistics such as distance, time, exchange rates and customs barriers. Efficient management of global logistics has a major impact on a firm’s bottom line. The purpose of this article is to provide an overview of basic logistic problems, global logistics macro trends and the concept of fast-cycle logistics.

Basic Logistic Problems

In order for logistics to add to your bottom line, managers face two unique challenges: 1) how to lower the costs of value creation, and 2) how to add value by better serving customer needs. Logistics managers must seek simultaneous solutions for minimizing costs, maximizing efficiency and service, managing just-in-time inventory systems, optimizing degree of ownership of logistics services, managing returns, reducing shipping errors, damage and/or shrinkage, determining the optimal location of production and distribution facilities and keeping up with rapidly changing regulations, environments and technologies. Broadly, these tasks can be classified as either core logistics services, value adding services and support services. Logistic management decisions are hierarchical in nature progressing from operational to tactical to strategic. One of the basic strategic decisions is how much of the logistical process to handle in-house and how much to out-source:

First Party Logistics (1PL) – The supplier

Second Party Logistics (2PL) – The company purchasing the product that is being stored or shipped

Third Party Logistics (3PL) – The company that provides warehousing and transportation outsourcing

Fourth Party Logistics (4PL) – An integrator that assembles the resources, capabilities and technology of its own organization and other organizations to design, build and run comprehensive supply chain solutions

Macro-Trends in Global Logistics

From 2008 through 2028, the world economy is projected to grow at an annual rate of 3.1 percent. World cargo traffic is expected to grow at 5.4 percent per annum for the same period. Trade between the triad of North America, Europe and Asia will continue to make up the bulk of global logistics transactions and flows. As the degree of integration of global economies continues to grow, expected trends include an increase in the flow of high-tech, high-value goods, fast-cycle logistics, increased importance in the impact of technology and technological innovation, new models of asset flexibility and improved flexibility in customer service costs per ton shipped. Managers of global logistics deal with unique challenges including distance, exchange rate fluctuations and the role of foreign intermediaries. Basic decisions include mode of transportation utilized, warehousing and inventory management and intra-company versus inter-company (3PL) logistic Management. Decisions related to the first two include:

Concerns: Modes of Transportation

Value-to-volume ratio

Perishability

Cost of transportation

Freight mode

Inter-modal transportation

Concerns: Warehousing and Inventory Management

Hedging against inflation or exchange rate fluctuation

Benefiting from tax differences

Logistic integration and rationalization

Fast-Cycle Logistics

Fast-cycle logistics requires real-time access to the information needed to make strategic and operational decisions. The goal is to move from purchase orders to continuous replenishment. Of critical importance is replacing truckload or container load economics with route economics. Fast-cycle logistics requires managing and motivating trade partners for performance, developing and deploying the metrics of fast and frequent, developing the expertise needed to guide the change process and institutionalizing fast and frequent management practices. The keys are information technology, information sharing, strategic partnerships and shorter manufacturing cycles, all made possible through increased information systems integration. Barriers to fast-cycle logistics include the lack of real-time visibility or access to data, incentives to order in large batches, truckload or container load economics, poor trading partner performance, inadequate metrics and insufficient process management.

Strategic Management of Global Logistics

Utilizing fast-cycle logistics may provide your company with a competitive advantage and higher margins. The key is to integrate the management of logistics and information systems into the strategic focus of the business while keeping the overall focus on customer satisfaction. By strategically managing global logistics, you can differentiate yourself from your competitors. Fast-cycle logistics allows companies to do business faster and smarter through replacing inventory with information and managing inventory in motion rather then at rest. Fast-cycle logistics provides global logistics managers with the opportunity to reduce overhead and obsolescence while speeding time to market.

Specializing in global logistics management provides marketing and management students with exciting career opportunities for the foreseeable future. Chart your course for success today.

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