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Case 1

Logistics plays a pivotal role in organizing the movement of goods through a network of
activities and services operating at global, regional, and local scale. Efficient logistics
connects businesses and firms to markets and opportunities and helps them achieve higher
levels of productivity. Thus, the performance and reliability of supply chains is crucial which
inherently depend on factors ranging from trade facilitation at the border to infrastructure,
regulations, urban planning and managerial skills.

A major segment in logistics is the cargo and shipping industry segment. A peculiarity of this
industry has been that despite the high average growth of global container volumes -at
approximately 5 percent per year since 2010, container freight levels have remained low
which is having a substantial impact on operational efficiency and eroding competitive
environment in container shipping segment

One of the major reason for the same has been the growth of air cargo. According to
Boeing, air cargo currently constitutes only about 1 percent of world trade when calculated
by tonnage, but represents about 35 percent of world trade when calculated by the value of
goods shipped. Further, Airbus predicts a 4.4 percent annual growth from about 200 billion
freight ton kilometres in 2015 to about 480 billion by 2034 citing that it will be largely driven
by emerging markets, especially in the Asia and Pacific region.
Develop a competing strategy for the cargo and shipping industry from a global and Indian
perspective countering the expansion of air cargo and express cargoes at all three levels-
local, regional and global.

In this industry, customer would expect for cheap, reliable and less time to complete the
delivery. So, when it is mentioned that air cargo comprises of only 1% by tonnage which is
equivalent to 35% of world trade, it is clear that small or medium size (by weight) valuable
goods are being transported through air. Although it costs high through air cargo, customers
are still preferring it because of less time consumption and better tracking facilities of cargo
from end to end. Taking into consideration of above points, for cargo and shipping industry,
in order to survive at local level, delivery time has to be reduced by effective use of inland
waterways (rivers) connectivity, if theres any. All places might not have the port, waterways
facilities nearby. Hence in the absence of this customer will opt for other means. In order to
overcome this problem, one has to setup offices at places where there is a movement of
high growth of volumes of cargo. Similarly, above strategy can be used at regional level and
global level.
Case 2

Moores Law states that the number of transistors will double every 2 years, but more than
just the purely technical prediction, he also predicted that the cost of the integrated circuit
would remain same, a halving of cost with every doubling of the number. The latter one
seems in trouble now. The semiconductor industry is bleeding capital and being crushed
under enormous debt.

In the semiconductor industry, decisions have to be made long before the products are sold
and require billions of dollars even before the manufacturing begins. The products are
mostly undifferentiated and even when the prices fall below costs, they continue to
manufacture to recover the variable costs and justify their upfront investments. The most
advanced chip manufacturing technology of 14 nm require approximately 5 billion dollars of
initial investments.

This has been largely been driven by two major factors- the rapid pace of technological
development and ever increasing demand of semiconductors, estimated to grow at 5%
(approx.) annually. In such a situation, the industry trend too has shifted from a complete
production centre with designing, manufacturing and selling to specialised centres with
customised resources- only design or only manufacturing centres, largely to cut down the
costs. Still, majority of small players are being forced out of competition and only larger
players seem to survive the onslaught in future. The government backing, has thus emerged
as a major factor determining the survivability of the industry and has led to an eastward
shift where China and Taiwan have emerged as leading players.

In the end, it is important to realise that semiconductor industry does not just produces
chips engraved with tiny pieces of silicon, but produces an essential resource which shall
power every man-made object on earth in future, but for that to happen, it needs to survive
today.
Design a comprehensive survival strategy with a special emphasis on the role of
government for the ailing industry from a global and Indian perspective for the national
and international markets.

Its mentioned that huge amount of initial investments are necessary, which might be next
to impossible for small or medium scale companies. In order to ensure the survivability of
such companies, government has to give the financial assistance through loans/ grants etc
just like power sector has been supported in India. With financial support, companies can
focus better on research and day to day operations (manufacturing and delivery).
Companies should not invest high amounts on traditional equipment because when the shift
happens because of technology development (which is bound to happen as the industry is
transforming at high pace because of technology development) company would no longer
be able to survive in the market if their business is not ready to implement the changes (for
ex: transformation from Pentium 1, 2, 3 and 4 to i3, i5 and i7). Companies which are still
stuck with manufacturing of Pentium core processors would be out of business as the world
is moving gradually to better/upgraded technology.

At local perspective, government should impose certain type of duty/restrictions on imports


(just like it has done for importing steel from china) so that companies would prefer to take
it from local players provided their quality standards and service matches with other
players.

At global/local perspective, in order to sustain/ survive, all small and medium companies
should join hands in manufacturing and delivery so that they can compete with large/MNC
players. (When IKEA announced its foray in Indian furniture Industry, all local players in
Mumbai decided to work together so that they wont be out of business).