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, Temsas 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 Globals 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 if in the automotive company

manufacturing

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.

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