Study on Strategies for Promoting Retailers Brand
Rethinking Emerging Market StrategiesFrom offshoring to strategic expansion | |
Ron Donald knows that good deeds seldom go unpunished. As the head of emerging market business at a major manufacturer, he has received many accolades pertaining to cost savings. His last review with the executive committee was no different; he highlighted, with careful detail, the formidable challenges associated with meeting new cost targets while managing risks. Nonetheless, the committee saw significant growth potential and decided to double its investment in his region. Ron worries that something has to give, but it’s his job to come up with a plan.
For more than a decade now, manufacturers have flocked into emerging markets under the banner of globalization to access low-cost sourcing in high-growth economies. Many of these organizations have established fairly successful operations and realized significant cost arbitrage. Just below the surface, however, sizable sourcing risks—from contaminated pet food to lead-based paint in toys—fill headlines with dramatic falls from operational grace, leaving a wake of bludgeoned brand names and skeptical consumers to question the wisdom of offshoring.
Strategic Expansion in Emerging Markets
Perhaps these alarming headlines reveal only a partial story. If offshoring is the sole culprit of such operational demise, manufacturers would inevitably seek safer harbor somewhere else. Indeed, there’s no shortage of risk when it comes to ensuring quality. A mid-2007 study found that only 40 percent of respondents felt they could trust a major retailer to protect them from safety problems in products coming from China. 1 Similarly, European Union consumers rank food safety alongside terrorism as a key concern. 2
The underlying reality of the situation may be somewhat rosier based on a study Deloitte performed involving interviews with several executives and a survey of 247 executives from consumer and industrial product companies with presence
Ron Donald knows that good deeds seldom go unpunished. As the head of emerging market business at a major manufacturer, he has received many accolades pertaining to cost savings. His last review with the executive committee was no different; he highlighted, with careful detail, the formidable challenges associated with meeting new cost targets while managing risks. Nonetheless, the committee saw significant growth potential and decided to double its investment in his region. Ron worries that something has to give, but it’s his job to come up with a plan.
For more than a decade now, manufacturers have flocked into emerging markets under the banner of globalization to access low-cost sourcing in high-growth economies. Many of these organizations have established fairly successful operations and realized significant cost arbitrage. Just below the surface, however, sizable sourcing risks—from contaminated pet food to lead-based paint in toys—fill headlines with dramatic falls from operational grace, leaving a wake of bludgeoned brand names and skeptical consumers to question the wisdom of offshoring.
Strategic Expansion in Emerging Markets
Perhaps these alarming headlines reveal only a partial story. If offshoring is the sole culprit of such operational demise, manufacturers would inevitably seek safer harbor somewhere else. Indeed, there’s no shortage of risk when it comes to ensuring quality. A mid-2007 study found that only 40 percent of respondents felt they could trust a major retailer to protect them from safety problems in products coming from China. 1 Similarly, European Union consumers rank food safety alongside terrorism as a key concern. 2
The underlying reality of the situation may be somewhat rosier based on a study Deloitte performed involving interviews with several executives and a survey of 247 executives from consumer and industrial product companies with presence