Hey Chegg, I really need your help with this question. Plot the position of the
ID: 1104813 • Letter: H
Question
Hey Chegg, I really need your help with this question.
Plot the position of the following firms on Figure 12.6: Procter & Gamble, IBM, Nokia, Coca-Cola, Dow Chemicals, US Steel, McDonald’s. In each case justify your answer.
I know that cost reduction pressures are greatest when:
- a commodity type product is a universal need
- major competitors are located in low-cost locations
- there is constant excess capacity
- consumers are powerful and face low switching cost
Pressures for local responsiveness:
- differences in consumer taste and preferences
- differences in traditional practices and infrastructure
- differences in distribution channels
- host government demands
Please tell me if Procter & Gamble, IBM, Nokia, Coca-Cola, Dow Chemicals, US Steel, McDonald’s are in high or low pressures for cost reductions and in high or low pressures for local responsiveness. Please explain why. The more explanation you provide, the better it will help me understand.
Also, I know this question has been asked before on Chegg, and I have seen the answers, but for me it just does not make sense it is not explained very well. So if someone can answer this question again, I would appreciate it.
Explanation / Answer
As you have rightly pointed out the features of pressure for cost reduction and local responsiveness.Pressure for cost reduction will be higher for businesses who have international presence ,their products are standardized and they serve similar needs across different geographies.Therefore,Coca cola,IBM,Mc Donalds,Nokia,procter and gamble,dow chemicals should be in high pressure for cost reduction.
On the other hand high pressure for local responsiveness arises when the companies need to provide customized solutions or products suiting their customer needs.Across different countries their products are not equally accepted due to difference in culture/heritage.Therefore, coca cola ,Mc donalds,IBM ,Nokia,procter and gamble,dow chemicals are in low pressure for local responsiveness as they offer standardized products across the globe.