Project Experience

Manufacturing…Globalization Brings New Rivals.

Client Situation
Global competition is a fact of business today. A domestic manufacturer must look beyond North America to the movements of multinationals and prepare itself against competition from foreign firms. This is nothing new, but the risks of not paying attention are greater than ever. This requires the capability to understand foreign competitor's strategies, movements and tactics. Our client had been a leader in the North American market for a product sold to the retail market. Recently, a competitor in Asia decided to build a plant in the United States and announced plans to sell its product far below existing prices. Our client needed to understand how and when this company would enter the North American market, as well as how they could sell the product at such a competitive price given they would compete with the same manufacturing wage rates and so on as the domestic competitor.

Fuld Approach
We benchmarked the competitor's manufacturing strategies in Asia against our client's strategies. This included mapping their overhead, plants, employee wage rates and so forth. We also investigated government subsidies that are available to the competition which turned out to be a key factor. We demonstrated to our client that the competitor was not able to produce the product for less but, in fact, was using this pricing strategy to make a big entrance in to the U.S. market and would not be able to hold that pricing for an extended period of time. We also demonstrated, however, that the company needed to be watched carefully as they were able to leverage their government subsidies to further advance R&D and technology developments abroad and fund marketing research on foreign markets. They would be able to use that information to further their business here to the U.S. giving them an advantage over the domestic companies.

Benefits and Implications
The study gave our client the information needed to realign its manufacturing and business strategies to compete against the onslaught of this competitor. For more information on studying new rivals, building market radar screens and studying government subsidies and pricing strategies in the manufacturing industry, contactnbulger@fuld.com.