CASE ANALYSIS

Global product development strategy at Bosch: Selecting

a development site for the new low-cost ABS platform

● The role of low-cost markets for high-tech companies-

High-tech Company is a company that using a cutting-edge technology in their product, in
this case are ABS technology. A disruptive innovation is an innovation that helps create a
new market and value network, and eventually disrupts an existing market and value network
(over a few years or decades), displacing an earlier technology. The term is used in business
and technology literature to describe innovations that improve a product or service in ways
that the market does not expect, typically first by designing for a different set of consumers in
a new market and later by lowering prices in the existing market. Bosch did in India to
develop a new ECU, The R&D team in Suzhou can also use the same concept for Hydraulic
Units and Wheel speed sensor with lower cost so it will create new product and competitive
advantage.

● DIFFERENCE BETWEEN YOKOHAMA AND SUZHUO

YOKOHAMA
➔​Already has a successful technical centre for more than 20 years

➔​The Bosch ABS System for motorcycles has already made a success

➔​Regional president of chassis system control division has broad experience and strong
network in Japan.

➔​Average cost of engineer is high

➔​New challenges in hybrid and EV required high investments

➔​R&D costs in Japan had already reached a very high level

​SUZHUO

➔​A complete 4-year plan aiming to build up know-how for ABS system in 2007 and create
the same competences of the other regional R&D centres

➔​Average cost of engineer is 40% of Japan's

➔​Engineers were highly motivated and productive (could work on several projects at the
same time)

➔​In 2007, Chen was appointed as the leader of the engineering team in China with deep
knowledge and could easily engage with the team.

➔​Chinese automotive market had a high potential in growth.

● Analysing the role of Suzhou site and its worth considering for Bosch
to develop ABS

SWOT analysis comparison-

FACTORS SUZHOU YOKOHAMA

DEVELOPMENT SITE DEVELOPMENT SITE
STRENGTH ● Growing project ● Pillar of the CC
handle in engineering
development project organisation
● R&D cost 6% of ● Biggest engineering
sales in 2007 centre outside
● Engineer cost 40% Germany
compare to japan in ● Good product
2008 knowledge and focus
● R&D head on customer needs
(Li-Chen): had good
product knowledge,
spent many years in
engineering
 department, easily
engages with the
team as he was
Chinese, Good with
local customer
WEAKNESS ● Lacking of deep ● R&D cost in Japan
knowledge required already reached very
for develop a new high level
program ● R&D cost 6.5% of
sales in 2007
OPPORTUNITY ● Market Growth ● Hybrid and
● Was push to build electronic vehicle
the competencies of
another regional
R&D centre
● R&D in China are
expected to be
independent in
dealing with local
customer projects
THREAT ● Intellectual property ● High investment due
issue to product
complexity

So according to me Bosch Development Strategy applies 10 key factors for sustainable

business success consist of:

1. Decision power in region

2. Market oriented product
3. High share of local value
4. High share of local supply
5. Substantial local R&D activities
6. Local Management
7. Continues capital expenditure
8. Consistent competence management
9. Relationship management
10. Continuity

● Overall performance of the Suzhou development site

⇒​The Strategy of Bosch: Innovation ​←​ globally dispersed development centres

​ ​The Strategy of Suzhou development site Goal​←​ to ensure that CC/CN would be
⇒
successful on the market (localization) How: Four-year strategy (2007-2010)
 Capabilities for unique differentiations & alignment with headquarter

1.Whether it can compete with other brands in the market of China?

2.Whether it has deep knowledge of know-how?

3.Whether it can become independent when developing and executing local customer
projects?

Structure-​ Whether and how its structure can support the strategy?

Process​- 1. Whether its process is in line with structure?

2.How decisions are made?

3.The degree of autonomy of CC/CN (Decision-making process)

Metrics & Rewards-​ 1. How it measures their results of Four-year plan?

2.How it creates incentives for guiding employees to achieve goal?

People Practices​ 1. Whether it has a qualified and long-term leader? (skilled &
familiar with the market)

2. What competences are required to achieve its goal and whether they are sufficient?
3.How it retains talents?

● Characterizing role of Suzhou within the Bosch global product

development strategy

1. Access to new knowledge in China (universities and competitors) Development to

market at a faster pace (lead-time for the adoption of an ABS system as short as 8–10
months in China)
2. R&D costs of the CC division in China were 6 percent of sales Average cost of a
Chinese engineer is 40% that of a Japanese engineer
3. Young and fast-growing market: 8.88 million vehicles sold on the automotive market
in China in 2007 (+21,8%, third year with a double-digit growth) Competitive
pricing: War price except for some differentiated OEM perceived as luxurious brand)
High number of local OEM: 154 companies in China “entitled” to produce “vehicles”
4. Safety awareness is rising in the country Minibus: versatile low-cost vehicles used for
transportation of people/goods not equipped with ABS. IP leak: high turnover rate in
the first years. Risks of know-how being brought to other companies

● Competitive advantage base analysis of ABS’ Bosch that links

between business strategy and technological strategy
According to me based on Competitive Advantage there are four pillars that can be divided
as:

1. Cost Leadership Strategy- Creates new ABS unit through innovation, that had
lowering the cost of production and economic of scale, and this idea can happen in
China car market because of its growth.
2. Differentiation Strategy- Creates an ABS product for minibus that in 2007 had
1-million-unit sale and the top growing car sales because of low price.
3. Innovation Strategy- Using disruptive innovation to develop new ABS unit.
4. Operational Effectiveness Strategy- R&D development focus in Suzhou and start
finding suppliers of materials needed for new product development

SUBMITTED TO

PROF. RAKESH KUMAR MEET

SUBMITTED BY

SARANSH SINGH

ABDULLAH JAMAL

​RAHUL BOSE

SUNNY ANAND

SACHIN PATEL

PRAVEEN YADAV

HEMANT SHARMA