Implications for Globalcast
Changes in the business environment are inevitable. This is because the global financial market can change thus affecting prices in the economy as well as the industry. Regulations and policy reforms as well as competition in the industry can affect a company. The major changes in the market and their impact on Globalcast included: In the late 1990s, major customers like Hewlett Packard, Dell, Ford, GM and Black and Decker started building new factories in developing countries. This was done so that the companies could benefit from lower wage costs and to expand their businesses.
Globalcast was one of the important worldwide suppliers therefore the customers said that it would be good for the company to establish themselves in the same regions. If Globalcast established them in those regions, they will be close to their suppliers on the site and they would have benefited from ongoing business and growth. “Proximity to the customer is necessary for business growth (Gill, 2006, 17). ” Forecasts were done and partnerships were to be developed where the Globalcast was the main supplier to the customers. The trend for customers’ products to be of globally standard designs was another change.
This meant that the customers would purchase
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The selling prices had also been influenced by the prevailing economic conditions in the individual countries but the costs of production had never been informed to their customers. This move gave the customers an alternative to look for the lowest priced products. Another major change in the market was that the customers wanted suppliers to do more assembly work. This would entail complex purchasing, assembly and testing of major sub-assemblies. These valued added activities are aimed at offering extra services that relieve the clients of time and excess costs (Barrar and Gervais, 2006, 305).
This meant that Globalcast needed to invest in more equipments and support systems. Customers knew the suppliers they wanted to deal with and those who incorporated such procedures into their system would benefit more. This would take 12 weeks to deliver the products to the customer but satisfying client needs would be a boost for the businesses. Other than the costs involved; this type of initiative would be beneficial to the business as it would bring in approximately 10 times the profit for a simple moulded part.
Globalcast in trying to keep up with the global standard designs, the company’s General Manger tried to sustain the profitability of the business by buying components from other company sites and increasing their revenue before selling to their customers. But this strategy was already known to the customers. The company also engaged itself in assembling products for its customers so that they could benefit from the extra revenue they would get which will in turn cancel with the investment costs of the new equipment. Moreover, supplying global customers was the proper strategic plan as used by businesses for the new decade.