ECONOMICS FOR EXECUTIVES (AFE228)

Group Case Study :

Global Product Development Strategy at Bosch (ESMT-312-0130-1)

EMBA Class of March 2014
Page 1


Group 1. GangNam Economics :
Dian Budiani - Donggu Lee - Dwisesanti - Eddy Prabowo Hayriantira - oe !artin
Analyze the foundation to choose the right location for the development of the new anti-lock braking
system (ABS platform for the low-price vehicle (!P" to serve# first and foremost# the $hinese market#
but also in the long run other developing markets in Asia Pacific# South America# and even Africa%
1. E"amine t#e ro$e o% $ow-cost mar&ets %or #ig#-tec# companies' E"p$ain'
&igh-tech $ompany is a company that using a cutting edge technology in their product# in this
case are ABS technology% A disrupti(e inno(ation is an innovation that helps create a new
market and value network# and eventually disrupts an e'isting market and value network (over a
few years or decades# displacing an earlier technology% (he term is used in business and
technology literature to describe innovations that improve a product or service in ways that the
market does not e'pect# typically first by designing for a different set of consumers in a new
market and later by lowering prices in the e'isting market%
!earn from what Bosch did in )ndia to develop a new *$+# (he ,-. team in Suzhou can also use
the same concept for &ydraulic +nits and /heel speed sensor with lower cost so it will create
new product and competitive advantage (Approach 0



ECONOMICS FOR EXECUTIVES (AFE228)
Group Case Study :
Global Product Development Strategy at Bosch (ESMT-312-0130-1)

EMBA Class of March 2014
Page 0



). *na$y+e t#e growing importance o% $ow-cost segments, bot# in de(e$oping countries and in
de(e$oped mar&et suc# as in Europe and t#e -.'

Accenture on one of the article stated1 )n the new competitive reality# companies must develop
and innovate products specifically for and in
emerging markets# and look for opportunities
to leverage those products back to the
developed world% )n economics# B,)$ is a
grouping acronym that refers to the countries
of Brazil# ,ussia# )ndia and $hina# which are all
deemed to be at a similar stage of newly
advanced economic development%
See from the picture# *arly stage $ountry has
bigger portion of !ow $ost and also in
Advanced stage like *urope and the +S to be
more competitive%
)n *merging countries# price level is 23-435
lower for 6id-price segment% And this can be
the !ow-Price segment in developed 6arket%
(herefore the )nnovation breakthrough for low
cost strategy become crucial in *merging
country like $hina%











ECONOMICS FOR EXECUTIVES (AFE228)
Group Case Study :
Global Product Development Strategy at Bosch (ESMT-312-0130-1)

EMBA Class of March 2014
Page 2


/. E"p$ain0ana$y+e t#e ro$e o% t#e .u+#ou site' 1#y it is wort# considering %or Bosc# to de(e$op
*B.2
.134 ana$ysis comparison
7actors Suzhou .evelopment site 8okohama development site
Strength 1% 9rowing pro:ect handle in development
center%
0% ,-. cost 45 of sales in 033;
2% *nginner cost <35 compare to =apan in
033>
<% ,-. head (!i $hen 1 deep product
knowledge# spent many years in
engineering department# easily engage
with the team because he is $hinese#
good with local customer
1% Pillar of the $$ engineering
organization
0% Biggest engineering center outside
9ermany
2% 9ood product knowledge and focus
on customer needs

/eakness 1% !acking of deep knowledge re?uired for
develop a new platform

1% ,-. cost in =apan already reach very
high level
0% ,-. cost 4%@5 of sales in 033;
Apportunity 1% 6arket growth
0% /as push to build the competencies of
other regional ,-. center
2% ,-. in china are e'pect to be
independent in dealing with local
customer pro:ects
1% &ybrid and *lectronic "ehicles
(hreat )ntellectual property issues &igh investment due to product comple'ity

ECONOMICS FOR EXECUTIVES (AFE228)
Group Case Study :
Global Product Development Strategy at Bosch (ESMT-312-0130-1)

EMBA Class of March 2014
Page <


Bosch development strategy applies 13 key factors for sustainable business success consists of1
1% .ecision power in region
0% 6arket oriented product
2% &igh share of local value add
<% &igh share of local supply
@% Substantial local ,-. activities
4% !ocal management
;% $ontinues capital e'penditure
>% $onsistent competence management
B% ,elationship management
13% $ontinuity%


5. E"p$ore t#e c#a$$enges o% organi+ing 67D on a g$oba$ sca$e' 8n doing so, use a certain ana$ytica$
too$ we #a(e discussed in t#e c$ass. 1#at di%%erence9s: is 9are: t#e ro$e o% #ome-based
e"p$oiting and #ome-base augmenting 67D sites2 E"p$ain'

(he challenge of organizing ,-. on global scale related to the organizational model#
capabilities# cost# trends# and finally protection of intellectual property ()P%

Base on discussion with managers of 21 companies# Anil Curana in his article about strategies for
global ,-. Summary of process framework for globalizing ,-. as below%




ECONOMICS FOR EXECUTIVES (AFE228)
Group Case Study :
Global Product Development Strategy at Bosch (ESMT-312-0130-1)

EMBA Class of March 2014
Page @


/alter Cuemmerle define home base augmenting and home base e'plationg as follow 1
1% &ome base augmenting 1 As overseas ,-. centre which aims to absorb knowledge locally
available# create new knowledge and transfer it to the companyDs head?uarters%
0% &ome base e'ploiting ,-. centre1 An overseas ,-. centre which absorbs knowledge from
head?uarters and applies it to local manufacturing and marketing activities%

)n the below picture Cuemmerle e'plaining further about phase in establishing new ,-.
sites and how information flow between home base and foreign ,-. sites



ECONOMICS FOR EXECUTIVES (AFE228)
Group Case Study :
Global Product Development Strategy at Bosch (ESMT-312-0130-1)

EMBA Class of March 2014
Page 4


;. De(e$op your competiti(e ad(antage 9<*:-base ana$ysis o% *B.= Bosc# t#at $in& between
business strategy and tec#no$ogy strategy and #ow t#is is managed on a g$oba$ sca$e2

Based on porter competitive advantage there are < pillars can be divided as1
1% $ost !eadership Strategy# create new ABS unit through innovation# that had lowering the
cost of production and economic of scale# where this idea can happen because growing of
china car market%
0% .ifferentiation Strategy# create an ABS product for minibus that in 033; had 1 million units
sale and the most top growing car sales because of low price%
2% )nnovation Strategy# using disruptive innovation to develop new ABS unit%
<% Aperational *ffectiveness Strategy# ,-. development focus in Suzhou and start to finding a
suppliers of material needed for new product development%

.iagram of basic competitive advantage









ECONOMICS FOR EXECUTIVES (AFE228)
Group Case Study :
Global Product Development Strategy at Bosch (ESMT-312-0130-1)

EMBA Class of March 2014
Page ;


3t#er prob$em cou$d arise are o(ercome t#e inte$$ectua$ property rig#t, we can c#oose eit#er going to
o%%s#ore or outsource and protecting data $ea&age base on be$ow %igure :





ECONOMICS FOR EXECUTIVES (AFE228)
Group Case Study :
Global Product Development Strategy at Bosch (ESMT-312-0130-1)

EMBA Class of March 2014
Page >


6e%erences :
Churana# Anil# Strategies for 9lobal ,-.
,atnapharke# "i:ay# )ndia 7uture of $hange1 .esign and )nnovation E$hange .rives
!iddell# 6aurice =# Protecting )ntellectual property1 )dentifying and preventing data leakage
http1FFen%wikipedia%orgFwikiF.isruptiveGinnovation
6arkus# Bube# Bosh .evelopment strategy
6undim#Ana H Sharma#6itali H Arora#Praveen H 6c6anus#,yan 1 *merging-markets Product
.evelopment and )nnovation (he Iew $ompetitive ,eality

http1FFhbr%orgF1BB;F32Fbuilding-effective-rd-capabilities-abroadFarF1
http1FFwww%strategicmanagementinsight%comFtopicsFcompetitive-advantage%html
http1FFen%wikipedia%orgFwikiF$ompetitiveGadvantageJ)nnovationGStrategy