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DISCUSSION QUESTIONS (PAGE 219)

1. What was the product strategy of Temsa Global in 2009? How was it different from

product strategy in 1984? What organizational changes were required to support this

shift?

The product strategy of Temsa Global in 2009 is low cost customer driven strategy;

characterized by modular design and green design. This is because Temsa is

focusing on customers in different markets that have specific requirements and also

moving toward hybrid power technologies. Modular design is a design in which parts

or components of a product are subdivided into modules that are easily interchanged

or replaced. In terms of Temsa Global, the modular design helps in offering

customized products to different customer segment in different countries. Other than

that, Temsa’s green design is aimed to reduce the weight of the locomotive and

introducing hybrid technologies that helps to reduce the energy consumption which is

fuel.

Through these product designs, Temsa is able to compete competitively with its

competitors and become a global brand in less than a decade. In contrast, the

strategy used in 1984 was a licensor of Mitsubishi products, where Temsa only

manufactured the licensed products. In order to support the shift in its product

strategy; from simple strategy in 1984 to the innovative strategies in 2009, Temsa

Global has made several necessities organizational changes. First, they make a

higher investment in research and development (R&D), where they cooperate with

universities and research institutes on advanced technologies and break-through

applications. These will help Temsa to cope with the changes in market and also

customers. Second, Temsa has make collaboration with European partners which is

Arriva since its first city bus model which is Avenue is primarily designed for the

European markets. Third, Temsa also make more investments in mass customization

infrastructure and also improving the service network that covers markets with

seemingly different characteristics.

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2. What are the possible advantages of investing in the R&D center for advanced

technologies? Discuss the implications, considering the changing perceptions and

demands of customers.

For a progressive company like Temsa Global, regular investment in R&D is a must

because requirements of customers change over time and design and production

also should follow these changes. Not only the changing perceptions and demands

of customers, requirements of the society also change. For example, the increasing

environmental regulations by the government aimed to protect the environment.

Competitors also invent new products regularly and hence to stay ahead of the

competition, investment in R&D is needed. These are the possible advantages of

investing in the R&D center for advanced technologies.

Advantages

Unique products These can give businesses a unique selling point

(USP). They can then acquire patents for these

products. The patent is a legal protection that prevents

other companies from copying them

Competitive advantage Through R&D, Temsa Global is able to build

advantage over its competitors by bringing innovative

products to the market

Long term income Once a product has been developed it can generate a

strong stream of profits for many years

Leads to new opportunities Researchers cannot always anticipate what the results

of their research will be. Often chance discoveries

open up whole new channels of research

Enhanced reputation Engaging in research helps to build Temsa Global’s

brand. Customers and investors are more likely to trust

a company with a strong scientific research and

development base

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Although R&D gives lots of advantages to the company, it still has few implications

due to the changing perceptions and demands of customers. Below are the

implications of R&D center for advanced technologies.

Positive Implications

Lower cost of production Through R&D, company will be able

to reduce costs significantly due to

the achievement in finding optimal

way to produce products, so they will

be able to offer competitive price to

the customers

Able to increase profitability since

they are able to produce products

with lower cost

Good quality of product R&D helps the company to bring

continuous improvement in the

quality of products offered

Market leader Aggressive R&D will help to be the

leading player in automotive

manufacturing if the company

managed to discover new innovations

or technologies faster than its

competitors

Able to release products more quickly

and anticipate changing consumer

demand more rapidly

Able to differentiate and stay ahead

of the competitors by providing

newer, better and unique products

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Negative Implications

High cost The cost of conducting R&D might be

expensive due to the need of hiring

technical expertises and acquiring

new technologies to cope with the

new product development

Eg: Syngenta spent $1 billion on R&D

in 2009

Long timescales R&D acquires longer time to be

completed; for example 3-10 years to

bring a new product to the market

Eg: Syngenta required 10 years to

bring a new product to market

Uncertain outcomes There are always uncertainties about

whether the product will meet the

original brief and customer

requirements

Difficulties in anticipating with the changes R&D could not ensure that

customers’ needs may or may not

change during the long R&D process

While the company is focusing on

R&D, its competitors may come up

with a rival product that is just as

effective

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3. What should be the focus of Temsa Global in supporting its market-driven product

strategy and customized designs?

If Temsa Global wants to support its market-driven product strategy and customized

designs, it should focus on improving its infrastructure in order to support its fast

growth. Customer service, for example is an important component of the new global

leadership strategy that should be the focus of Temsa Global. Other than that,

Temsa Global needs sufficient investments in developing an adequate service

network that helps to cover markets with different characteristics. But, Temsa may

need to train its employees with new skills to improve their service culture.