Download Global Trade and Business Models: Case Studies of Li & Fung, Daihatsu, and Emerging Econom and more Study notes English Language in PDF only on Docsity!
riassunto-dei-testi-lingua-inglese
Li & Fung - the "Made in China" Giant You
Have Never Heard Of
Key Concepts
Li & Fung is a trading house and a one-stop shop that does not own any factories. Li & Fung realizes three types of outsourcing: off-outsourcing, near- outsourcing, and onshoring.
Notes
Li & Fung is one of the biggest players in the global retail market. It is a trading house, a special type of business that facilitates transactions between a home country and foreign countries. Li & Fung is a one-stop shop, meaning it offers a wide range of products such as beauty products, clothing, toys, and sporting goods, allowing customers to save time and money while increasing trust. One of Li & Fung's strengths is that it does not own its factories, allowing the company to move production to the cheapest locations and take advantage of market gaps. Li & Fung realizes three types of outsourcing: Off-outsourcing: Sending production to a foreign country. Near-outsourcing: Outsourcing production to a nearby country. Onshoring: Instead of exporting products from China to the USA, the company opens a base in the USA and becomes an importer.
Special Report: Daihatsu Dismantling "Toyota
Way" as Market Changes
Key Concepts
Daihatsu has dismantled the Toyota business model, the "keiretsu," because it was no longer efficient. Daihatsu has improved its management of foreign pressure, its account system, and its on-time delivery.
Notes
Daihatsu is an automotive company partially owned by Toyota, but it has some differences from Toyota, such as its target consumer and top- tier products. Daihatsu launched the MIRA E:S MINICAR in 2011, which was eco- friendly, low-priced, a city car, and light, making it a hit.
After the launch of this car, Daihatsu's advisors decided to cut manufacturing costs by dismantling the Toyota business model called "keiretsu," which required a close relationship with suppliers and was no longer efficient. Keiretsu was no longer efficient due to: Despecialization The presence of both North and South trades, with the South trades having lower prices Quickly changing markets, driven by the growth of emerging markets and the automation of production Toyota was also unable to compete against its competitors in China and India due to its higher prices. Daihatsu can provide important lessons to Toyota regarding: Foreign pressure: Daihatsu specializes in "kei" cars, which represent 40% of the Japanese automotive market. Account system: Daihatsu's purchasing office was previously composed of non-technical agents with little knowledge and competence to evaluate costs. On-time delivery: Daihatsu produces directly in Japan, Indonesia, and Malaysia, eliminating middlemen and opening an office in China to search for low-cost parts.
The Rise of Middle Kingdoms: Emerging
Economies in Global Trade
Key Concepts
With the financial crisis, there was a shift in economic power, with the growth of emerging countries due to several reasons, such as unilateral trade reforms, global production networks, specialization, and division of labor. These "South" countries are characterized by hyper-specialization and dynami-specialization.
Notes
The recent global financial crisis led to a shift in economic power, with advanced countries (the "North") slowing down and developing countries (the "South") starting to grow, particularly China and India. Low-income countries started trading among themselves due to: Unilateral trade reforms that decreased trade costs Global production networks, which represent an advantage Specialization of each country in specific parts of the production process, considering their know-how, resources, traditions, and other factors Division of labor, where each person specializes in a part of the process, which can be an advantage if the companies produce in large quantities South countries are characterized by:
China has seen a rapid increase in outward foreign direct investment (OFDI) abroad, supported by the government, but this has caused fears among some people, such as unfair competition, the impact on employment levels, and the risk of losing key technological capabilities. China is interested in Italian knowledge related to design and high quality. The motivations behind Chinese OFDI are: Natural resources seeking Market seeking Strategic assets seeking Efficiency seeking Chinese enterprises invest in Italy due to the importance of the "Made in Italy," Italy's positive position for trade, the size of its domestic market, lower labor costs compared to other European countries, and its specialization in certain sectors like clothing. Some enterprises do not invest in Italy due to corruption, poor infrastructure, the large number of small and medium enterprises, and the many market regulations. Chinese OFDI in Italy has been increasing since the 2000s, and these investments are usually part of a European investment strategy, with the objectives of acquiring superior technologies, competences, and know-how regarding design, creativity, manufacturing, and learning processes. Italy is also strategic in terms of consumer tastes, as it is considered sophisticated. The acquisitions were made to overcome European customs barriers and improve products to fit better in the European market.
From Niches to Riches: Anatomy of the Long
Tail
Key Concepts
Niche markets' products can be viewed by customers, who must be helped in the decision-making process with active and passive search tools.
Notes
Chris Anderson introduced the term "Long Tail" in 2006 in his book. A niche market is a market where products are in fewer quantities but have higher prices and are less popular than other products. This market has spread thanks to the expansion of internet marketplaces. The advantages of internet marketplaces include: The possibility to find all types of products The ability to shop directly from home Lower prices Easier and faster product comparison The possibility to buy products from around the world, even those that would otherwise not be known
However, there are also some disadvantages, such as the customer not knowing the product's quality, the possibility of the product getting lost, and the risk of banking transactions. On the supply side, there is a change in costs and benefits, as stocking costs are reduced, and the demand can be extended to a global scale. Due to the increased number of products, retailers must help consumers choose with: Active search tools, such as samples of books or CDs on Amazon or iTunes Passive search tools, using consumers' preferences from past purchases or page views to identify new products The Second Order Effect of the Long Tail shifts based on the consumers' diversified tastes, which can be reached via the internet.
