F&B JU

Course Title Strategic Management Course Code FNB 309

Department of Finance & Banking

Production and Marketing of a Global Car: The Strategic Issues
Md. Atiqur Rahman Sarker Sr. Lecturer and Course Instructor Department of Finance & Banking Jahangirnagar University.

Submitted to:

Name Submitted by: MD. Jobair Bin Habib

Student ID 602

09 September 2013 Savar, Dhaka

BBA program, Batch- 02 Department of Finance & Banking Jahangirnagar University

Summary: An US based automobile manufacturer launched different types of cars in a very competitive market. To gain the strength in the market. it finally introduced a global car. despite the fact about the profitability and sustainability. Main features of a global car  The car should be found everywhere  The cost for both manufacturer and customer should be low  The price should not vary significantly in different countries  Universal design for the whole world with a little modification if needed. The company can reduce the price of the new car especially in the European region. Criteria Availability Compatibility Note Moderate Not available in other region except for USA and European countries Cost of the manufacturer Moderate Not the lowest cost compared to others Cost for the customers High European customers have to pay more than US customers Currency fluctuations High Price of the car is significantly different in several regions Universal design Yes The car is universally designed Competitiveness Not unique It does not have the competitive advantage Leverage of resources Enabled The manufacturer can control the leverage ratio From the above description we can conclude that the company’s newly developed car is not really a ‘global car’. Now. For holding the title of a global car. it cannot be said that the global car is not a real global car. While considering the all factors. it has to compete very hard to be successful. Before going to describe it deliberately let’s have a quick view about what is a global car. it has to ensure several facts. Though it has a unique and universal design. World car: To my opinion the car is not a global car. after unsuccessfully trying to do so for two times. an engineering of three countries. the automaker is hopeful about the future of this global car.1. Here the major issue is the cost efficiency. 2. by offshoring the production to China where the Page | 1 .

the global product offers greater value and delight the customers well. When it sells the same product worldwide. technology and the process of the global product can be used in the making of regional or different products. The company can also launch the car in newly emerging economies like Brazil.  Chances for off-shore manufacturing to reduce the cost. The biggest advantage of a global product is that it enables the company to leverage economies of scale. 3. the mistake could cost it a fortune. India or in China.  The price must be equivalent or a little bit better than the local market while it is not always possible for the manufacturer to offer such prices because it costs more than the offering price in the existing market.raw materials can be accumulated from different sources where the prices are comparatively low. packaging. Some markets have particular tastes or are more sensitive to pricing.production cost is lower than any other country in the world.  Local brands can beat the global product if the brand is renowned and offers greater value. it can buy its raw materials in a huge amount. Economies of scale can save a company’s money in labor.  The design. deciding in which country a product will be popular is a problem.  Global recognition of the brand can help to enter into the new market. Advantages and disadvantages There are huge advantages of trying to develop a single product for a global market and of course a lot of other disadvantages tailed by one product for one world. production and material costs. too. It is true that a company's products are more popular in one country than another country. Major advantages:  Low cost of manufacturing.  In many local markets.  A bigger portion of profit can be drained through global product.  Government legislation can hinder the growth in any foreign country. Page | 2 .  Major disadvantages:  One product for different region with different preferences may not be successful. If a company estimates incorrectly. which will save the money a lot. saving the company hundreds of thousands of money.  Channeling the whole world is time consuming and costly.

That’s why it is wise to make some global products and secure the benefit for further usage. even for other different and modified cars. Sometimes the profit margin is very low. The reasons that an automobile company should have a strategy for developing a global products are given below The new car will create a brand image for the automobile  Profit margin from this car can be used for offsetting the risk of other cars. 4. while enjoying the benefits of economies of scale. and it will help to grow the sale of cars more.  The company can grab the global market more firmly.  Trade between different countries will happen. As well as this procedure will help the locals to survive for a long time and confirming the sustainability. Gaining the shares of other corporations will help the company to grow bigger and more successful. producing the highest will lower the total cost.  Brand recognition will help the company to introduce new cars in the foreign markets.  Strategically it is not possible to introduce the global product in some regions. Page | 3 . Automobile in making global car: Of course an automobile company should have a strategy for developing a global car. Where there is a good opportunity. there is also an opportunity cost. that is quite disappointing and discomforting the company. This strategy can be taken to compete head to head with the rivals. The company always have to take under consideration that risks bear huge profit. For expansion. Introducing a global car is an excellent idea for the development of better economy both for the automobile manufacturer and the global market. the company have to merge or co-brand with other local brands.