Article Review: The Threat of Global Gridlock

Summary

According to this article, the inability of international transportation networks to support the rising demands of global economy could lead to economic disaster. But such a predicted disaster would not seem to happen with the rising trend of protectionism, massive layoffs in the transportation industries, and the billion-dollar stimulus spending of the United States on transportation infrastructure. However, Stalk (2009, p.126) warned that if lack of transportation channels coupled with rising oil prices would still continue despite economic recovery, the result could be global trade constraint and even higher costs of commodities.

Unfortunately, only a few corporate managers understand the enormity of the problems that are about to confront them. Worse, only a very few companies are trying to trim down transport expenses, gain market advantage, and enhance logistics. The article suggests that at present, executives should think of creative ways to respond to the economic meltdown if they are to outmaneuver competitors. The article points out that at present, there are three modes of transportation being used by companies competing in the global market—by air, by train, and by ship.

It suggested that there is a need to improve and upgrade these means of transportation in order to better respond to the projected increase in the demand of global economy in time of economic recovery. Thus, the article advises companies to respond to impending gridlock, like slow or erratic supply chain, which can have two negative consequences—stock-outs and  overstocks. To avoid being sideswiped, companies must be able to realize the time trade-offs and costs built into their logistic systems. They must also reevaluate their business footprints by paying attention to their markets. Finally, companies must implement good practices in logistics, like the improvement of flow of information within the supply chain network.

Application of Textbook Contents

Planning with objective plays an important role in effective and successful management. Planning, which is defined as setting goals and deciding how to achieve them, entails coping with uncertainty by preparing courses of action to reach projected or targeted goals. In strategic management, planning must be tied to the company’s vision and mission, wherein strategic planning must be devised by top managers, tactical planning by middle managers, and operational planning by first-line managers.

Planning and strategic management must be guided by a step-by-step process, which should start from the establishment of the company’s mission and vision, to be followed by the formulation of grand strategy to strategic plans and tactical and operational plans to the implementation of such strategic plans up to the management or control of this strategy.

Planning plays a crucial role in the success of a company as it can be used in checking the progress toward the company’s goals; defining the duties of a particular department; considering what may happen in the future; and predicting unpleasant contingencies. One of the most important goals of planning is to predict uncertainty, which has the following types—state uncertainty, effect uncertainty, and response uncertainty. Moreover, Management by Objectives, which is designed to motivate employees, must have the following aspects: committed top management; organization-wide application of such objectives; and the implementation and dissemination of these objectives.

Application of Experience:

The main gist of the article echoes my experience in management and my personal opinion about the ways by which companies should respond to recession, most especially to a possible economic recovery. It is indeed true that most company executives today are more preoccupied of how to get out of this economic meltdown than of how to react to a possible economic resurgence. At this point in time, there is a need to look at the many ways to improve a company’s supply chain. Through effective supply chain management, a company may be able to reduce transportation expenses, improve logistics supports, and gain market advantage.

Thus, management planning plays a crucial role now that recession has leveled the playing field for companies in the global market. It is expected that in case of economic recovery, there would be more demand in the global economy. Planning should also include predicting possible uncertainties like higher costs of oil, transport gridlock, more demand for commodities, among others. This challenge actually presents opportunities rather than problems. This is the reason why company executives must clearly understand the many consequences of a possible economic recovery and its impact on the organization’s competitive advantage.

Reference:

Stalk, G. (2009). “The Threat of Global Gridlock.” Harvard Business Review, 126-129.