Assignment on the answer of the

Questions of
Case Study of Strategic Evaluation and
Control
Course Name: Strategic Management
Evening MBA 05, Section: B

Prepared For
Prof. Dr. M. Ekramul Hoque
Course Teacher

Prepared By
Md. Mohiuddin
Md. Asadullah-Al-Galib

(ID# 1405042)
(ID# 1405076)

Md. Maruf Billah

(ID# 1405010)

Rumana Rahman

(ID# 1405040)

Sumedh Chakma

(ID# 1405050)

Date of Submission: 08th August, 2015

CASE STUDY - 02
PRODUCTION AND MARKETING
STRATEGIC ISSUES

OF A GLOBAL

CAR: THE

This is about the manufacturing and marketing of a world car or

global car of an automobile manufacturing company in the United
States of America. The company has been in the automobile industry
since the beginning of the last century with varying market shares at
different times. The company has to complete with at least two other
gaint automobile manufactures in the country and many others from
japan and Europe. It produces different types of cars but it does not
have any car that everyone can buy all over the world people prefer
to call it world car or global car. A world car is a car that can be
manufactured and sold everywhere with few or no substantial
modification. A world car would have a universal consumer product
design that would cost less to make than would multiple versions of
cars. A world car is expected to enable its manufacturer to leverage
resources and balance currency fluctuations better than can be done
with multiple models for different countries.
The company tried twice to develop a world car in 1960 it developed a
small economy car for the world market. It proved far too expensive to
build a world car . So the company discontinued its development. In
1981 it again tried to develop a world car of different type but finally it
did not happen. But the company dream lived on. The company with a
determined commitment endeavored to build a world car again in
1993. With well coordinated teams engineers and designers from
around the world, the company finally produced the car. The V-6
engine, transmission and climate system were developed in the USA.
The four cylinder engine, interior, suspension and electronics were
developed in London and structural engineering was done in germany.
The company first began to sell the world car in Europe in next year in
the USA. But big question remained the profitability of the whole
project.
The car was a mid sized car in the price range of $ 15000 to $20000 in
us market but much higher in European market. The car was having
problems in the European market. But the company still hopes to be
successful because it thinks that the newly developed engines and
other aspects of the design and technology would be usable in other
cars to develop by the company in the future.

Question 1:
Is the company new car really a world car? Why or why not?
Answer:
The new car that the company came up with after a few tries in last
few decades, all of which were in vein, cannot be considered as a world
car.
The first reason for the car not being a universal one is the Price
which is way too high of the affordability range. For being a world car
which will be bought all over the world must have a price which is
within almost the average affordability.
The second reason against the car for not considering a world car is
the sourcing of the parts from different regions of the world. This is a
reason for which the car is not feasible for the average people to
afford.
The third reason is the type and engine capacity of the car. The car
was a mid sized sedan which is not common as well as popular in all
the regions of the world. The engine capacity is also not suitable for
everywhere especially the places where the fuel price is higher.

Question 2:
What are the advantages and disadvantage of trying to develop a
single product for a global market?
Answer:
The advantages of having a single product for a global market:
1. Economies of scale
Economies of scale are the cost advantages that enterprises obtain due to size,
output, or scale of operation, with cost per unit of output generally decreasing
with increasing scale as fixed costs are spread out over more units of output.
Often operational efficiency is also greater with increasing scale, leading to lower
variable cost as well.
So, the cost for making a global car is less due to production of bulk amount.
2. Leverage of the available resource
Leverage of resources means the ability to influence a system, or an environment,
in a way that multiplies the outcome of one's efforts without a corresponding
increase in the consumption of resources. In other words, leverage is the
advantageous condition of having a relatively small amount of cost yield a
relatively high level of returns.
So, leverage of their available resources can be done if an automobile company
decides to make a global car.

3. Less perplexity in design

Since, same platform is set up for the consumers all over the world, so there is
less perplexity in design and easy to implement the design.
4. Similar consumer product design
Similar product design is established for the consumer all over the world.
5. Balance currency fluctuation
Since, a global car is produced for all over the world at the same price, so it solves
the problem of currency fluctuation of the different regions of the world and
balance them.

The disadvantages of having a single product for a global market:

1. High price
2. Cosset of people from diversified areas of thoughts in the build up
3. More lead time in production
Since, the facility has to receive hundreds of orders from all over the world, so it
requires more lead time during production. Also, it requires more time to deliver.
4. Less interest among a big consumer segment who prefer variety
Not all the consumers seek for the same product. There are variety-lovers who
want to gain new experience all the time. Global car is definitely not for them as it
has no variety at all.
5. Nearly impossible due to the type of the commodity. Cars are not homogenous in
nature as commodities.
Question 3:
Should an automobile company have a strategy for developing such a
product? Will the same car be suitable for a country like plain land
Bangladesh or a country like sandy Saudi Arabia or a country like hilly
Nepal or a country like snowy Switzerland? Why or why not?

Answer:
An automobile company should never have strategy for developing a world product.
Following are the reasons:
1. The heterogeneous nature of the product.
A car is not a homogeneous product in nature because not all the landscapes of
different portions of the world are same. A low suspension car may be okay for a
plain land country like Bangladesh but for hilly place like Nepal requires high
suspension in cars which gives more ground clearance (at least 30mm in height
from the ground). Again, in a hot and sandy place like Saudi Arabia, a car must
have air cooling system and tires which have bigger diameter so that it can easily
move on sands. But in a snowy place like Switzerland, a car must have a heating
system. So, different type cars are needed for different countries of the world.
2. Difference in taste and preference
All the consumers may not like the same car. Some may prefer sedan cars, some
may prefer SUVs (suburban utility vehicles), some may prefer sports cars. So, an
automobile company should produce different types of cars, keeping in mind of
the different taste and preferences of different consumers.
3. High price
4. Problem of managing inter-regional specialization.
Different regions of the world requires different types of cars which have the
special facility to serve the purpose in that particular region. Since, a global car
will be consumed all over the world so it should have all the features in one car to
meet the requirements of all the consumers from different regions of the world.
But it will increase the complexity and cost of the car.