LOGISTICS

Logistics & Operations Management

Logistics & Operations Management

Question 1

After choosing the target country for initial expansion, a company needs to determine the nature of the expansion:  What market entry strategy will be used to enter the market?  What level of ownership will the company have; franchises, joint ventures, or wholly owned subsidiaries?  (Norberto 1998, pp.29 - 37)Will the company tailor its business to local taste or will the company use a “cookie cutter” approach?  Will logistics be a problem?  How a company enters a market is important.  It will often determine the long-term success of the company's foreign ventures.  There are basic strategies for a company to use when expanding internationally:  an investment strategy, a multinational strategy, or a global strategy.  An investment strategy is the purchasing existing operations. (Nicholas 2000, pp.334 - 353)  A multinational strategy is the development of fully or partially owned subsidiaries adapted to the local market.  A global strategy is the use of similar operations domestically and internationally.  A company's strategy for entering any market may depend on many factors including the ability to finance the expansion process adequately and not to the detriment of other operations.  Some of the factors a company must consider when choosing a strategy for market entry include location of operations, size of operations, availability of suppliers or transportation cost, and the legal environment for general business practices.  Expansion is a risk; to limit the risk a company must have a clearly defined plan for expansion.  While it is easier for a company to open a store in Chicago than Budapest, the market entry strategy the retailer uses should allow the retailer to meet the local consumer's needs. (Simpson 1995, pp 54-58)

The nature of the operation influences the market entry strategy.  As previously stated, the larger the retail space needed in Europe the harder it is to expand using a multinational strategy or global strategy.  Large format retailers are often limited to an investment strategy.  The use of the investment strategy is due to population density and land usage regulations.  Smaller retailers, meaning those needing less space, may find either a multinational or a global strategy adequate for their expansion purposes

Question 2

In the nineties there was a significant shift in the manufacturing of apparel to low wage countries throughout the world. Over the past few years in some cases retailers have sourced products internationally in order to achieve a cost advantage. In other cases, domestic markets have been selected on the assumption that the longer the chain, the more a significant part of the merchandise bought must be cleared out through discounting with a relevant impact on revenue. Recent marketing literature has focused on the key questions in choosing a global sourcing strategy or, instead, a domestic supply chain(Fernie and Sparks, 2009, pp. 45-51). The focal position of apparel retailing appears symptomatic of the transition from a production-driven to a market-driven characterization of the apparel manufacturing sector. This observation is in tune with a tendency already noted in diverse geographic contexts, ...