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Amar KJR Nayak/IB/XIMB. The Globalization of Markets. Theodore Levitt Key Concerns: How to customize products for the demands of new markets? Differences in culture and values among nations (Month of Ramadan, Bank Lending rates, etc.). Amar KJR Nayak/IB/XIMB. - PowerPoint PPT Presentation
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Amar KJR Nayak/IB/XIMB
The Globalization of MarketsTheodore Levitt
Key Concerns:
How to customize products for the demands of new markets?
Differences in culture and values among nations
(Month of Ramadan, Bank Lending rates, etc.)
Amar KJR Nayak/IB/XIMB
Differences in tastes of people in different regions / nations
Customization of goods / services for different
market segments
Different character of people and companies under the influence of new technology
Amar KJR Nayak/IB/XIMB
Vindication of Model T
General Rule!
Lower the cost and price
Improve the quality & reliability
Henry Ford – Production of Model T
Need for Global imagination
Amar KJR Nayak/IB/XIMB
Strategic issues
Knowing a lot about many things v/s knowing everything about one great thing
Give customers what he says he wants or what he
can take
Lower cost international product – patronage expands exponentially
Amar KJR Nayak/IB/XIMB
Global Corporation accepts and adjusts to the differences only reluctantly, after relentlessly testing their immutability, and after trying in various ways to circumvent and reshape them
Amar KJR Nayak/IB/XIMB
Summary
Converging commonalityDevelopments in technology
From customizing items to offering globally standardized products
Only Global companies will achieve long-term success by Concentrating on what everyone
wants rather than Cater to details of what everyone thinks they might like
Amar KJR Nayak/IB/XIMB
A strategy!!
Offer everyone simultaneously high-quality, more or less standardized products at optimally low prices
Samsung’s (Washing Machines, Refrigerators, TVs, etc)
Amar KJR Nayak/IB/XIMB
A strategy!!
Examples? Global Corporations will seek sensibly to force suitably standardized products
and practices on the entire globe!!
Prof. Amar KJR Nayak
Global Production Strategies
Factors that influence international production
Trade Restrictions
Import duties
Exchange Rates
Opportunity for international businesses to specialize and integrate manufacturing
plants
US Companies in W. Europe in 1970s
A process of rationalization &International value addition
Nissan, Seimens, Ford Motors
Prof. Amar KJR Nayak
Prof. Amar KJR Nayak
International Division of Labor
Production of standardized products moving to low cost regions
Ex.: Chemicals, Drugs, Automobiles, Textiles, etc
Critical functions like R&D
concentrating in a few advanced countries
Production Cost Reduction Methods
India, US, Japan
Prof. Amar KJR Nayak
Production Cost Reduction MethodsGlobal Bench Marks
United States JapanMarket Research
Product Characteristics
Design
Engineering
Supplier Pricing
Cost
If cost is too high, return to design phase
Manufacturing
Periodic Cost Reduction
Market Research
Product Characteristics
Planned Selling PriceLess Desired Profit
Target Cost
Design Engineering Supplier Pricing
Target costs for each component force marketers, designers, and engineers from all departments and suppliers to struggle
and negotiate trade-offs
Manufacturing
Continuous Cost Reduction
Prof. Amar KJR Nayak
Four production strategies
Global concentrated production
Host market production
Product specialization for a global or regional market
Transnational vertical integration of
production
Business Strategy
European – Merchandize: Colonization
American – Technology: IPLC
Japanese – Mass Production (M&S, T&H)
Case Analysis
Case of
Matsushita
The Transformation
Amar KJR Nayak/IB/XIMB
A case of home videocassette recorders (VCRs)
SONY JVC/MG
Product Betamax VHS
Introduction 1975 1976
Quality (Technically)
Superior Not Superior
Amar KJR Nayak/IB/XIMB
SONY JVC/MGSize Compact Bigger
in SizeMarket Position(End of 1980s)
34 66
Market Position(2000)
0 100
How did this happen?
Summary:Strategic Moves
Amar KJR Nayak/IB/XIMB
Strategic Moves of Matsushita Group
Complement Strengths in Product Development /Mass Production
Managerial Attitude to work with Partners
Make the video cassette players (VCP) compatible with Video Cassette recorders
Respond to Market Demand(play duration of VCP)
Amar KJR Nayak/IB/XIMB
Standardize and promote the production of VHS formatted cassettes
Collaborate with video rental shops to promote VHS cassette players
Tie-up with other players in the value chain of the product both in the in home market and foreign
markets
Standardize product through increased production and increased sales in home and overseas markets:
Critical Volume to Market Standardization
Is the Strategy applicable to you?
Business Strategy – Summary
European – Merchandize: Colonization
American – Technology: IPLC
Japanese – Mass Production (M&S, T&H)
Asian & Indian - ?
