COUNTRY OF ORIGIN AND MARKET PRESSURE

Simona-Diana Saptebani

MSc. International Marketing

Master Thesis

2012-

Agenda:

Findings

Market Pressure

Value Chain

The smile of value creation

Location and control

Reflections and conclusions

Findings:

The origin of the brand is more important

than the origin of the product!

Market Pressure:

Competitive pressure to reduce costs

Market making flexibility more valuable

Cost

Fle

xib

ilit

y

High Low

Lo

wH

igh

Research and development

Production MarketingSales and

service

Value Chain:

Intangible resources

High value added

Intangible resources

High value added

Tangible resources

Low value added

The Smile of Value Creation:

R&D, Design,Commercialization

Manufacturing

Marketing and Brand management,

Specialized logistics,After-sales services

Value added

R&D knowledge

Marketing knowledge

Location 1 Location 2 Location 3 Location 4 Location 5Input Market

Intangibles

Advanced economies

Tangibles

Emerging market economies

Value added

R&D knowledge

Marketing knowledge

Loc1

Loc2

Loc3

Loc5

Loc6

Input Market

APPLE (US)R&D, Product Design,Commercialization

Chip Design (UK)ARM Holdings

Parts – touchscreenBalda (Germany)

Parts chipsSamsung (Korea)NXP Semiconductor (The Netherlands) Assembly

Inventec (Taiwan)Hon Hai Precision Industry

(Taiwan)

Advertising (US)TBWA/Chiat/Day

APPLE (US)Marketing,

Brand managementAfter--sales services

Loc4

Loc7

The Smile of Value Creation:

R&D, Design,Commercialization

Manufacturing

Marketing and Brand management,

Specialized logistics,After-sales services

Value added

R&D knowledge

Marketing knowledge

Location 1 Location 2 Location 3 Location 4 Location 5Input Market

CreationCreation

The Smile of Value Creation:

Strategic choice – Location and Control:

1. Onshore in-house 3. Captive Offshore

2. Onshore outsourced 4. Offshore outsourced

Concentrated Dispersed

Geographical location strategyC

on

tro

l st

rate

gy

Spec

iali

zati

on

Ver

tica

l In

teg

rati

on

Reflections:

is product specific

is more concerned with companies from advanced countries

offers just a guideline, do not offers details

Companies from advanced economy countries producing

hybrid products (electronics) when facing market pressure

should consider outsourcing or relocation of the parts of the

value chain that bring less value to the products.

However there should be considered the control and the

specialization implications in that decision.

Conclusions:

Thank you for listening!