Internal manufacturing groups competed with external companies, reducing both cost and manufacturing time. Operations: Instead of outsourcing production, SEC continued its own manufacturing and set up its plants and R&D facilities in China and India, respectively, resulting in cost reduction. SEC also customized its production that was allowed by in-house manufacturing. Marketing & Sales: The “New Management Initiative” represented the reimaging of SEC as a premium brand. SEC’s product diversification and customization, and its focus on mid-range and high end products,
The question why do multinational corporations establish or purchase production plants abroad actually means why MNCs invest in FDI (Foreign Direct Investment). There are many reasons why MNCs invest in FDI they are as follows * Reduce transport and distribution costs When multinational corporations invest in foreign direct investment, one of their aims is to reduce the cost of either transportation of raw materials or distribution of the finished goods. To reduce the cost of transportation of raw materials the MNCs usually setup their firms close to the supply of raw materials so that they can bring them in for processing much more quickly and to reduce the distribution costs the MNCs setup their plants close to the consumer markets so that they can supply the finished goods to the market quickly. * Low-cost locations Multinational companies usually setup their firms at locations where the factors of production like (land, labour, and capital) are cheap. Most of the multinational companies are based in developed countries where the land value is very high so they sometimes setup in countries where the land value is low to reduce the overhead of cost of production.
Company’s Strengths Dell’s key strategy and strength is its business model: eliminating the retailers from the sales channel and selling directly to customers. Under this model, a customer orders a computer online or via phone according to his/her preferred configuration. After receiving the order, Dell would start to manufacture this computer based on customer’s requirement, and deliver it to customer directly. This model enables Dell to keep manufacturing cost lower than its competitors, since it doesn’t only save Dell money from logistic by delivering to customer directly, but also helps Dell to reduce inventory cost because it builds to order. It also helps Dell to reduce the lead time it costs for customer to get the computer after placing an order, thus helps improve service level and customer satisfaction.
However, free trade policies could make International trade much easier (Laurndee et. al. 1999) and can creative more job opportunities for developing countries (Bhagwati 2002). But in another side, free trade policies could also disaster to developing countries, which need to develop their own manufacture (List). Moreover, these policies helps developed countries receive raw materials in a low price, and sell finished products in a high price to those developing countries (Baldwin,2005).
However, the degree of flexibility and ease of conducting businessvaries between the three.From the case study of Aldi¶s & Lidl¶s international expansion it can beseen that the company has engaged in both acquisitions as well as Greenfieldinvestment. However, in recent years it is evident that the strategy of these twocompanies has tilted in favor of the Greenfield investments. Aldi and Lidl are bothefficiency seekers and more focused on supplying Fast Moving Consumer Goods(FMCG) at the lowest costs possible. They plan to capitalize on an increasednumber of units sold rather than the profits realized on a per unit basis. Tesco,Sainsbury and other such chains are more focused on the latter factor to realize profit.
Dyson invests heavily in Chinese and Asian manufacturing in order to make their products more cheaply, so they can maintain profit margins. This emphasis on design in their organizational planning means not as many products go out, but what they do sell they can sell to a specialized market for higher prices. Given the innovation that is present in Dyson’s business strategy, it is quite clear that their strategic capability is high, though their risks can be high as well, due to the experimental and ‘out there’ nature of their products, which may be too daunting for normal consumers. 2 To what extent do you think any of the
- Small firms can also offer a better more flexible service than larger firms- helping to establish customer loyalty - Able to do deals with customers where as large firms may lose out because customers are unable to negotiate prices - May be able to offer unique products not available in larger chain and stores. - Specialisation of products can benefit smaller firms as well. A larger firm is likely to target its product mix to suit a large market audience where as smaller firms such as Morgan car manufacturer produce highly sought after cars due to its unique niche product. People travel a long way in order to purchase them. And as a result they do not need to compete on price and does not need to worry about the price advantage of larger rivals.
The reasoning behind this idea of off-shoring is lower the cost of business, usually overseas where the labor costs are considerably lower. Outsourcing involves the practice of paying another company to carry out a task or produce a product that could be made or done by the firm paying. Outsourcing typically is comprised more of coordination and information exchange. Outsourcing is progressively associated more with firms located overseas, due to the salaries being considerably lower. Outsourcing and off-shoring started in the 1960’s and 70”s with the shifting of physical manufacturing processes to areas with lower labor costs.
. 4. Alternatives / choices available Relocate the factory where raw materials are located so as to achieve lower shipping cost and be able to compete with the emerging companies Expand the business by producing the supplies needed to make products and
According to Training Magazine, corporations save between 50-70% when replacing instructor-led training with electronic content delivery. Opting for e-learning also means that courses can be pared into shorter sessions and spread out over several days or weeks so that the business would not lose an employee for entire days at a time. Workers can also improve productivity and use their own time more efficiently, as they no longer need to travel or fight rush-hour traffic to get to a class. In addition to lower delivery costs there is a strong argument that e-learning is more cost-effective because there is a reduction in training time known as learning compression. This is because the single largest cost of training in organizations is the cost of staff attending the training course, rather than the direct delivery costs in terms of trainers, course materials, travel and accommodation.