Go Back   ManagementParadise.com | Management & Business Education Learning Platform Management Students Voices ( MBA,BMS,MMS,BMM,BBA) > International MBA

Too Many Products?

Discuss Too Many Products? within the International MBA forums, part of the Management Students Voices ( MBA,BMS,MMS,BMM,BBA) category; If you visit a McDonald’s in India, you might notice the Chicken Maharaja Mac on the menu. In Norway you ...

Reply

 

Thread Tools Display Modes
Too Many Products?
Old
 (1 (permalink))
Maya Raichura
MayaRai has a spectacular aura aboutMayaRai has a spectacular aura about
 
MP_ROBOT
Management Paradise Guru
Status: Offline
Posts: 42,862
Join Date: Nov 2004
Age: 56
Too Many Products? - July 20th, 2012

If you visit a McDonald’s in India, you might notice the Chicken Maharaja Mac on the menu. In Norway you might dine on a McLak, a grilled salmon burger with dill sauce. By decentralizing their decision making, multinational firms such as McDonald’s are able to create specialized products and better cater to local tastes.

But just how many specialized products should firms offer? Not that many, says Professor Catherine Thomas.

In a Columbia Ideas at Work article, Thomas explains why less might be more when it comes to offering localized varieties. “The benefit of being a multinational and having a brand is that a company can take advantage of economies of scale by producing the same product in bulk selling it everywhere, minimizing unit cost and increasing profits,” Thomas says. “But acting against that are differing market demands. So, if a company were to sell the same product range in each country, it may well lose brand-level market share.”

By employing some form of decentralized decision making, companies are better able to target the tastes of their customers. “An executive in the company headquarters in Brussels,” Thomas explains, “can’t make the best decisions on what to offer in various European markets because that person doesn’t know the local markets well enough to understand preferences.”

Using research on the sales of different varieties of laundry detergent across Europe, Thomas created a model to determine how sales were affected by replacing localized varieties with more standardized ones. She found that detergent manufacturers could produce far fewer varieties without diminishing profits.

Still, Thomas warns that firms should think twice before centralizing their decision making — it may result in having too few localized products on the shelves.

“Multinational consumer product firms operating in complex product markets should stick with some form of decentralized decision making as the best way to ensure their products are aligned with the local preferences of customers,” Thomas says. “But understand that a decentralized organizational design includes an inbuilt bias towards the manufacture of too many products.”

For more information on the dilemmas faced by multinational brands, as well as Thomas’s research, see “Too many products?” in Columbia Ideas at Work.

Photo credit: blmurch



More...
Advertisements

Friends: (0)
Reply With Quote
Reply

Bookmarks
Related to Too Many Products?
 

Similar Threads

Thread Thread Starter Forum Replies Last Post
Untapped Market (Africa) vipinair Final 100 Mark Project 7 March 1st, 2016 06:54 PM
View of a MARBLE industry chaitalithakker Miscellaneous Projects 13 June 13th, 2015 05:45 PM
Berkshire Hathaway Vijith Pujari Company Profiles & News !! 1 October 14th, 2013 01:08 AM
Leather Products Marketing Projectstransfer Marketing Management 4 July 12th, 2011 12:49 PM
Infosys Technologies Ltd. Vijith Pujari Company Profiles & News !! 1 March 3rd, 2006 10:06 PM
 


Thread Tools
Display Modes

Posting Rules
You may not post new threads
You may not post replies
You may not post attachments
You may not edit your posts

BB code is On
Smilies are On
[IMG] code is On
HTML code is On
Trackbacks are On
Pingbacks are On
Refbacks are Off


ManagementParadise.com is not responsible for the views and opinion of the posters. The posters and only posters shall be liable for any copyright infringement.



Search Engine Optimization by vBSEO ©2011, Crawlability, Inc.