Professional Documents
Culture Documents
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As global competition intensifies and profit margins are squeezed,
companies need to look for ways to keep costs within range to
permit competitive pricing as well as allow profits to accrue! Global
sourcing, a major driving force behind companies producing goods
around the world, is done to minimize costs and risks.
Worldwide sourcing also strengthens the reliability of supply and
quality, as also creates additional avenues to innovative technology.
Sourcing in low wage countries and willingness to accept lower
margins are the traits set by global companies to remain competitive
in the present day market. The critical feature of this system is to
focus on minimizing costs, from the cost of manufacturing to design,
maintenance, and planning stages, and all subsequent stages
where costs are determined.
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The global company begins with a target price, with market research
telling them what the market is willing to pay, and then work
backward to make sure that this price is achieved. By beginning with
the price, design, engineering and supplier pricing ± the three areas
most affected by the cost ± are focussed and committed on cost
containment right from the beginning of the exercise. Initial
estimates may be higher than the target, but focussing on the target
price helps to achieve it by compromises and tradeoffs of various
departments, while maintaining the technical objective of the market.
The traditional cost plus approach with safety factor on safety factor
to cover inefficiencies of the system, would result in snowballing and
end up in upto double the ³actual price´, sending the product back to
the drawing board for reassessment!
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Ôore and more companies are working out international strategic
alliances to strengthen weak spots in certain areas, and result in
greater competitive strengths globally.
Strategic Planning
Strategic Planning is a systematized way of relating to the future. It attempts
to manage the effects of external, uncontrollable factors on the firm¶s
strengths, weakness, objectives and goals to attain a desired end. Planning
is making things happen that would otherwise not occur.
Prepare Host Country Nationals to get into top Decision Ôaking Positions.
differs from à
primarily in
orientation. The former views the world as , based on cross
cultural similarities, and not cross cultural differences. The latter, on the
other hand, is based on the premise of cross cultural differences, and is
guided by the belief that each foreign market requires its own culturally
adapted marketing strategy.
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In most Global Ôarkets, the cost and quality of a product are among the most
important criteria by which purchases are made. Further, with the opening up of
the global marketplace, it has gradually shifted from a seller¶s market to a buyer¶s
market. The customer the world over has more power because he has more
choices, and can get what he wants from wherever he wants to get it from.
Therefore customer preference in this situation is based more on quality than
price, leading manufacturers to embrace Total Quality Ôanagement.