Guest Lecturer Flashcards
What are factors that are affecting industrial production?
1) Technological development
2) Climate change
3) Regulations
4) Customer demand focusing more on quality
What else needs to be considered in industrial production?
Population growth
Why is population growth important to consider?
Population growth will lead to increased demand. Firms need to be aware of this so that they know what markets will change in the future and then can prepare for these changes
How will preparation for population growth differ depending on where it is taking place?
Depending on where the population growth is taking place the growth in demand will be different e.g. 5% pop growth in Singapore will see demand increase less than a 5% pop growth in China
What issues do established firms need to be aware of in developing markets?
Their products being replicated and being sold for cheaper e.g. Chinese car manufacturers replicating western cars and selling them for half the price
Why may product replication not really be an issue?
The target markets for the 2 products will be different e.g. middle-class is targeting by BMW, Chinese producers don’t target that same market. Also, in some markets owning the replica may reduce your public image
Why do replica producers still need to be taken seriously?
If they are left to establish themselves in a market, they can start to dominate it and become a future competitor. They could find and exploit a new niche in the market
What are reasons for global trade decreases?
Increased nationalism -> shown through increased trade barriers
Information and Communication Technology (ICT) development
Increased localisation due to changing production costs
Technology changes that change production e.g. 3-D printing
Climate change may reduce motivations to trade due to high environmental costs
What external developments can occur that threaten western industrial companies?
1) new competitors from emerging markets with cost advantages
2) growth in population or wealth
3) globalisation or political changes
4) new technology or convergence of technology
5) global warming protection policies
6) new competitors from ICT industry with customer advantages
What is the traditional strategic focus to competition from emerging markets?
Supplying advanced premium products
What options are there for strategic development to competition from emerging markets?
1) Complex service solutions
2) Even better advanced premium products
3) No-frills products
How can western suppliers adapt to global market competitors?
Set up their own budget supplier to compete with the emerging market suppliers e.g. Lufthansa buying GermanWings
What is an example of a hidden champion offering advanced premium products?
Lürssen in the mega-yacht industry -> only build yachts from 65-180m in length and build them specialised to each customer’s requests -> not made unless an order comes in
14 of the top 20 yachts in the world since 1990 are Lürssens
What is an example of a No-frills product?
Haier -> developing a washing machine that could wash clothes and potatoes as well -> was developed after a complaint was made in China that the washing machine clogged up when they did this
In China alone, Haier divides the customers into 70+ segments -> a much more detailed appraoched than their western competitors
