Assignment on the answer of the Questions of PRODUCTION AND MARKETING OF A GLOBAL CAR: THE STRATEGIC ISSUES

Course No: MBA 600/ EMBA 600 Course Name: Strategic Management Section: 3, Summer-2010
Prepared For Dr. M A Mannan
Course Instructor

Prepared By Md. Irfanul Hoque (ID# 2008-2-95-028) Syed Zakaria Habib (ID# 2008-2-95-032) Fazle Rabby Khan (ID# 2008-3-91-009) Md. Badruzzaman Molla (ID# 2008-2-95042) Md. Shahin Shah Alam (ID# 2009-1-95-082) Md. Tanbir Hossain (ID# 2009-1-95-114)

Date of Submission: 21st August, 2010

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.

QUESTIONS
1. Is the company new car really a world car? Why or why not? 2. What are the advantages and disadvantage of trying to develop a single product for a global market? 3. Should an automobile company have a strategy for developing such a product? Why or why not? 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 2. Leverage of the available resource 3. Less perplexity in design 4. Similar consumer product design 5. Balance currency fluctuation

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 4. Less interest among a big consumer segment who prefer variety

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? 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. 2. Difference in taste and preference 3. High price 4. Problem of managing inter-regional specialization.