Decisions concerning global manufacturing

• The success of a global manufacturing decisions strategy

depends on four key factors:
• Compatibility:- The degree of consistency between FDI
decisions and a company’s competitive strategy .Here are
some company strategies that managers must consider:-
• Efficiency cost:- reduction of manufacturing cost
• Dependability:- degree of trust in a company’s product,
its delivery, and price promises
• Quality: - Performance reliability, service quality, speed
of delivery and maintenance quality of the product.
• Innovation: - ability to develop new product and ideas.
 Decision concerning Global Manufacturing

• Manufacturing Configuration:-There are three basic configurations

that MNEs consider as they establish a global manufacturing
strategy are:-

 Centralized Manufacturing: - The Centralized manufacturing that

offers a selection of standard lowered price products to different
markets.

 Regional manufacturing strategy:-This configuration is the use of

regional manufacturing facilities to serve within a specific region. For
example :- Samsonite had done initially in Europe with its production
facilities in Belgium and Toyota is also expanding business in
developing countries.
 Decision concerning global manufacturing

 Multidomestic manufacturing strategy:-Multidomestic

approach in which companies manufacture products close to
their customer, using country-specific manufacturing facilities
to meet local need. For example :-Samsonite chose not to
manufacture in every European in which it marketed its
products but segmented according to manufacturing facilities.

• Coordination and Control: - Coordinating is the linking or

integrating of activities into a unified system. Control can be
the measuring of performance so companies can respond
appropriately to changing condition.
 Material management:-

• Managers of IB need to address two issues

relating to material management:-

• Flow of material, parts ,and supplies from the

suppliers to the firm

• Flow of material, parts, and supplies within and

between units of the firm itself.
 Material Management

• Three factors differentiate domestic and international

management function:-
• First is simply distance involved in shipment.

• Second point of difference is the sheer number of transport

modes that are likely to be involved in shipping material from one
end to another.

• Third, the regulatory context for international material

management is much more complex than for domestic material
management .Most countries regulate many aspects of their
internal transport system such as price, safety, and packaging.
Managing the costs associated with purchasing, currency
exchange, inbound and outbound transportation.
 managing global supply chains
• A Supply chain is a sequence suppliers, warehouses, operations, and retail
outlets. A comprehensive supply chain includes the following element:

• Customer service requirement

• Plant and distribution center network design
• Inventory management
• Outsourcing
• Key customer and supplier relationships
• Business processes
• Information system
• Organizational design and training programmes
• Performance metrics
• Performance goals
 
 outsourcing factors

• Strategic flexibility:-

Switching orders between suppliers as circumstances

dictate
• Cost reduction
• Minimize inventory, material handling, and other non-
value-added cost
• Reduced development and production cycle times
• Improve efficiency
• Possibility of obtaining orders from the country where
supplies are located
 Outsourcing:-
• When an international business decides to buy a service or process,
it is restoring to what is known as an outsourcing strategy.
Outsourcing is the act of moving some of the firm’s internal
activities and decision responsibility to external service provider.

Risk of Outsourcing

• Loss of control
• Conversion cost
• Possibility of being tied to obsolete technology
• Exposure to supplier risk: financial strength, loss of
commitment to outsourcing ,slow implementation, promised
feature lack of responsiveness, poor quality
• Loss of protection over proprietary technology
 
 PRODUCT AND BRAND

• A product is anything which is capable of

satisfying customer need

• Branding is the process by which companies

distinguish their product offerings from those
of the competition
 BRANDING DECISION
• Process by which companies distinguish their product
offerings from competition

• Branding shapes customer perceptions about the

product

• Brand superiority leads to high sales, the ability to

charge price premiums, and the power to resist
distribution power

• Brand created by differentiation

 UNDERSTANDING A BRAND
• Brand not just a name, term, sign, symbol, or any
combination of these
• An indispensable activity of any organization

• Sole purpose of branding is to create differentiation

• Strength of the brand is directly proportional to the

expectations of the customer about it

• One interaction alone cannot build or tarnish the

brand image, unless particularly strong
 BRAND ATTRIBUTES

• Provides the benefits that customers desire

• Stays relevant
• Pricing strategy based on consumers’
perception of value
• Properly positioned
• Consistent
• Brand portfolio and hierarchy make sense
 BRAND ATTRIBUTES
• Makes use of and coordinates a full repertoire
of marketing activities to build equity
• Brand managers understand what the brand
means to consumers
• Brand is given proper support, and support is
sustained over long run
• Company monitors various sources of brand
equity
 TYPES OF BRANDS
• Manufacturer brands

• Own label or distributor or store brands

 BRAND BUILDING
• Quality
• Positioning
• Repositioning
• Well balanced communication
• Being first
• Long term perspective
• Internal marketing
 BUILDING A CORPORATE BRAND

• Corporate identity must align with the

company’s strategic direction, the image of
the brand among customers, the company’s
culture and value system of employees to
create harmony
 BRAND NAME STRATEGIES
• Choosing a brand name

• Family brand name

• Individual brand name

• Combination brand names

 BRAND EQUITY
• Brand is an intangible asset for an organization

• Brand equity originated in order to measure

the financial worth of this significant, yet
intangible entity

• Brand equity is the value and power of the

brand that determines its worth
 GLOBAL BRANDING
• Brand elements
Brand form :Quality, formulation, design, variants.
Brand additional: Delivery, Services, guarantees.
Brand communication : Name, execution, packaging
advertising , publicity.

• Methods of achieving global brand presence

Geographic extensions
Brand acquisition
Brand alliance
 Methods of achieving global Brand presence
Speed control Investment
Geographic expansion Slow High Medium

Fast Medium High

Brand acquisition

Moderate Low Low

Brand alliance
 GLOBAL BRAND PORTFOLIO
• Right mix of standardization and adaptation of
elements of marketing mix

• Middle ground between a truly global brand

and isolated local brands

• Local brand would have learnt important

lessons in its journey to being successful

• The corporate should institute common

processes of brand building for all its markets
 Global Brand Portfolio
• Need for a central authority who will be responsible
for the brand across all its markets
• Execution of the brand building programs and the
discrete activities to be undertaken have to be
chalked out
• Put in place a system for measurement of the
performance of the brand
• No need to develop as many local brands as there
are markets
• Global brand must be localized in certain aspects,
and a brand running in a particular market will have
some elements common with all other markets
 Managing distribution channels

• A distribution is a route from the producer of

a good to the final consumer. There are four
categories of distribution system, as follows:
• Direct to consumer
• Producer to retailer
• Producer to intermediary
• Through agents
 Choice of distribution system
• Cost of the channel

• Extent of the control

• Geographical coverage

• Reliability of distributors

• Product presentation and the provision of the information to customers

• Ensuring continuity of supply

• Adequacy of customer care and after-sales services

• Consequences for the duration of the total order cycle

 
 Pricing Policies
• Cost oriented pricing: (a) Full Cost Pricing
(b)Direct Cost Pricing
• In the Full cost pricing variable and fixed per unit
is added to the desired profit margin. In the direct
cost pricing the desired profit margin is added to
the direct cost. Price does not cover full cost and
the company would be making a loss. The
strategy is valid if there is idle capacity as margin
is covering some part of fixed cost.
• It is useful for the period of low demand as they
can be stored.
• Competitor oriented pricing: a) Going rate
pricing: There is no product differentiation.
All companies charge same price and smaller
players follow the price set by market
leaders.
• Competitive Bidding: The usual process
involves drawing up a detailed specification
for a product and putting out for a tender.
Major focuses for suppliers are the likely bid
prices of competitors. For e.g. Continue on
the next ppt.
Bid Price Profit PROBABILITY Expected
OF WINNING Profit

2000 0 .99 0

2100 100 .9 90

2200 200 .8 160

2300 300 .4 120

2400 400 .2 80

2500 500 .1 50
 Marketing oriented pricing
• An MNC that follows a polycentric approach to international
marketing will use a market pricing policies . A firm utilizing
market pricing customizes its prices on a market-by-market
basis to maximize its profit in each market. These marketing
oriented pricing have the following categories:
• Rapid Skimming

• Slow Skimming

• Rapid Penetration

• Slow Penetration
 The Push-Pull Mix
• Promotion may be categorized as push, which uses
direct selling techniques, or pull, which relies on
mass media.
• For each product in each country, a company must
determine its promotional budget as well as the mix
between push and pull
• Factors in Push-Pull Decisions:
– Type of distribution system
– Cost and availability of media to reach target
markets
– Consumer attitudes toward sources of information
– Price of the product compared to incomes
 Standardization of Advertising Programs
• Advantages of standardized advertising include:
– Some cost savings.
– Better quality at local level.
– Rapid entry into different countries.
• Major problems for standardizing advertising among
countries are:
– Translation
– Legality
– Message needs