Case Studies 1

SUPPLY CHAIN MANAGEMENT WEEK 5-LECTURE 2

CHAPTER 10

DR. ISMAIL CIVELEK

MEASURING INDUSTRY DRIVERS

• Measuring market globalization drivers requires making some qualitative judgments in addition to quantitative estimates.

• Common customer needs and tastes is perhaps the most difficult driver to measure, because customer need in a product or service category is actually a bundle of different needs.

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MEASURING INDUSTRY DRIVERS

• An important consideration is to distinguish between changeable and unchangeable differences in country needs.

• Changeable needs arise from customer tastes and preferences.

• Unchangeable needs arise from legal, technical, or physical differences.

• Managers using these types of measures usually find that customer needs are much more common than they might have seemed before applying the measures.

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MEASURING INDUSTRY DRIVERS

• Cost globalization drivers are easy to measure because they can be quantified.

• From a practical point of view, they are often the most difficult because most companies seem to collect little cost information that applies on a global basis.

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MEASURING INDUSTRY DRIVERS

• Differences in country costs can be measured in two ways.

• One measure is to compare fully loaded hourly cost of the most common form of production labor in the industry.

• The second is to compare the total unit cost of production between the highest and lowest cost countries.

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MEASURING INDUSTRY DRIVERS • By counting the number of continents that are the home of global

competitors, one can gauge the extent of competition from different continents.

• Globalization of competitors can be measured by determining each competitor’s extent of globalization and calculating an average for the industry.

• Transferability of competitive advantage can be measured by determining how long it would take for companies in the industry to recreate advantages in new countries and how much it would cost to make the transfer.

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MEASURING GLOBAL STRATEGY LEVERS

• The first of the global strategy levers that should be measured is global market participation.

• Global market share is measured by the worldwide business’s global volume divided by the total volume of the worldwide market.

• The extent of market presence can be measured by the number of selling countries and by global coverage.

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MEASURING GLOBAL STRATEGY LEVERS • Three key metrics are relevant in global marketing.

• Comparative marketing intensity is measured by the standard deviation of the expenditure-to-sales ratio in each country for each marketing element.

• Marketing element uniformity can be measured either by the share of the business’s worldwide revenues accounted for by the countries that have a uniform approach or by the degree of similarity of each country’s marketing element to that in a base country.

• Overall marketing uniformity can be measured by the similarity score on each element weighted by each country’s share of the business’s worldwide revenues and by each element’s importance.

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