TRƯỜNG ĐẠI HỌC UEH TRƯỜNG KINH DOANH UEH KHOA KINH DOANH QUỐC TẾ MARKETING FINAL EXAM GLOBAL STRATEGIC MANAGEMENT Lecture Hoàng Cửu Long Student name Nguyễn Lê Cẩm Tú ID 31201022151 Class IBC04 1[.]
TRƯỜNG ĐẠI HỌC UEH TRƯỜNG KINH DOANH UEH KHOA KINH DOANH QUỐC TẾ-MARKETING FINAL EXAM GLOBAL STRATEGIC MANAGEMENT Lecture: Hoàng Cửu Long Student name ID Class : Nguyễn Lê Cẩm Tú : 31201022151 : IBC04 What benefits emerging markets champions get from OEM contracts? - Original Equipment Manufacturing (OEM) is defined as a company that manufactures and provides components, equipment or full products to the requirement of the partner company (called second company) These OEM products will be assembled as a part of equipment that the second company is manufacturing or be sold to customers under the brand name of the second company when they are released - OEM contract is between partners, one party will provide OEM products for another party In emerging countries, the practices of purchasing products in emerging countries (offsourcing)- they will import low-priced products through OEM contracts and distributors’ brands and progressively build their own distribution network; relocating manufacturing operations (offshoring) which use So what benefits emerging markets champions get from OEM contracts? + When compared to traditional manufacturing, the company will produce all the components for its own product, this manufacturing will proceed in many stages, forcing the second company to invest all the necessary equipment and machinery But when using OEM products, the second company can cut many production processes; costs; + Invest in R&D: Lower cost of researchers, high-quality scientists and technicians + Sourcing: Lower cost of procurement; quality products; Responsive; Fast international logistics Sourcing OEM products is easy, emerging market champions can be contacted domestically and internationally + Manufacturing: Create efficient manufacturing processes when a new business does not have a lot of experience, equipment and workers The investment in the facility is not high so the price of OEM products are low and more competitive when compared to the same products + Cost saving: Emerging companies not need to invest much in labor cost, equipment, machinery because almost all of components that are repurchased When purchasing OEM products, especially technology products, emering market champions not only save a large amount of labor costs but also save a large amount of labor training costs and attract white-collar worker, because technological products are produced requiring high labor skills of workers, leading to high wages for workers compared to other industries + The low-priced products attract many customers in many different segments, especially the lower-end segments, it helps emerging companies hold much market share Concentrate on the lower-end segments in their protected home markets Besides, if the product is cheap but has high quality and modernity, this will not only attract customers in the low segment but also attract many customers in other segments Brand building is expanding in the eyes of customers + Emerging market champions can access new production technologies that they can not make themselves With this advantage, their products will be more highquality and modern than competitors without spending much money to invest in technological development + Emerging market champions have many choices to choose partners who can provide OEM products , they can cooperate with many companies which provide OEM products to research and evaluate potential growth What types of competitive advantage does being a first mover provide? ● A first mover describes the first foreign company (out of a group of equivalent competitors) to enter a new market A first mover can gain a competitive advantage such as they can create their brand with customers’ recognition and loyalty, their competitive advantage only stronger than ever before having the follower join in the same market segment A first mover creates standards in key countries right at the beginning of the product life cycle ● Competitive advantages does being a first mover advantage: - As a first mover, they monopolize resources Because they are first mover, they are the first which can meet the demand in this market segment; with their potential service or product, there will be many suppliers who want to cooperate with them, not only will it provide to them a premium contract but also it is more beneficial for longterm cooperation A first mover has many choices to choose significant locations to develop They have many chances to cooperate with many suppliers who are key suppliers with a premium contract They make preemptive investments in human resources, distribution channels and production facilities - Imagine that you are a first mover who can meet the new demand of customers, your brand name and reputation will be recognized It is the most important competitive advantage When customers use their service or product for a long period, their loyalty will become bigger and bigger with your brand With your high quality product, marketing campaign and word of mouth effect from loyal customers, your brand will attract more customers After many followers enter this market segment or the same market segment, your brand has a strong foothold in this market segment, all good resources have been taken by you - When the first one that creates this new service or product, a first mover can create standards in industry, when having followers enter the market, their product will be evaluated based on these standards These standards will affect customers' satisfaction, if there is no better product, they will continue to use a product of a first mover - A first mover has a lot of time to research customers’ demands to know clearly what customers want They will have the right strategies for their customers before they have competitors - With switching costs, the followers have to invest extra resources to attract customers away from a first mover; besides, switching costs can arise because costs belong to the time and resources Over time, customers adapt to characteristics of the product of a first mover and thus it is costly to change over to another brand As we can say that, a first mover does not suffer as much buyer switching costs as the followers A first mover advantage may also arise from buyer switching costs and it affects so much on late entrants While the latter have to struggle to invest and find resources, the first mover already has all the best resources available, the best number of customers - A first mover can achieve economies of scale if they are manufacturers of technology products Technological products take a long time to research and put into practice, pioneers have a longer learning curve, in the absence of other competitors, they may create new more cost-effective means of producing or distributing products What is the “middle-class effect”? ● Middle class: - Middle class is an individual or households who are in the class between upper class and working class, their income is enough to meet the high quality life In the West, the middle class is seen as a highly educated, stable and potential class with a surplus income that meets a high quality of life For example, professionals, managers, entrepreneurs doctors they are in the middle class - The middle class is used to refer to the population that holds a central position in the income distribution, they have the ability to buy goods and services that exceed the traditional subsistence level In addition, there is a concept that, in economic terms, the middle class is a population class that can afford to buy luxury goods and services beyond what is necessary for living, but they not belong to the country’s wealthy class - An emerging middle class which is mainly increasing urban markets, customers in the middle class choose products from both global and local brands It plays an important role in economic growth and development ● Middle-class effect: - The effect by which the size of the middle class increases more rapidly than the average growth of the economy The middle-class effect derives from skewed original nature of income distribution in emerging countries - The middle-class effect is due to the skewed nature of the income distribution in emerging countries The middle-class effect shows that there is strong demand elasticity compared to population and GDP growth for durable consumer goods - The middle- class effect is an important factor in economic growth, when income of the population in middle- class has increased then it drives dramatic increases in domestic demand and consumption it leads the demand of products, services and life quality have also increased to meet their life Many researchers prove that the middle-class population is growing faster than the growth of the economy The economist Surjit Bhalla has claimed that every 10 percent-point increase in a nation’s middle class result in a 0.5 percentage-point rise in its frowth rate - The middle class is a class that possesses high knowledge and many talents, all innovations in the economy in particular and in life in particular are mostly derived from this class, the middle class effect will make labor productivity increase because more educated workers appear, people's intellectual level is increasingly improved Especially, the middle- class population will care more and focus on education, health care and housing; their income is higher, the demand of life is higher so that they will support social protection systems through tax contributions Societies with a strong middle class have lower crime rates, they enjoy higher levels of trust and life satisfaction, as well as greater political stability and good governance The effect of the middle class is also reflected in the fact that a strong middle class will make the government apparatus balanced and well functioning, promote social benefits, strongly participate in community activities such as voting and discuss social policy - From the above analysis, we can summarize that the “middle-class effect” describes the statistical phenomenon in emerging countries REFERENCES Philippe Lasserre (2018) Global Strategic Management (4th) London: Macmillan Education Lieberman, M and Montgomery, D (1998) ‘Firstmover advantages’, Strategic Management Journal, 9, pp 41–58 Luo, Y and Peng, M (1998) ‘First mover advantages in investing in transitional economies’, Thunderbird International Business Review, 40, pp 141–63 Adam Hayes,(15/03/2022) Middle Class: Definition and Characteristics Investopedia: https://www.investopedia.com/terms/m/middle-class.asp TURNITI FILE: