1. Welcome  Market Orientation, Outsourcing and New Product Development Capability  Dr. Satyendra Singh Director, Centre for Emerging Markets www.uwinnipeg.ca/~ssingh5

2. Market Orientated Products… 9 TATA NANO  World’s cheapest car  $3,000

3. Market Oriented Products 10 MO  China

5. Market Orientated Products… 19 MO through OS  Designed in USA, China made

6. Market Orientated Products… 20 OS  ATM, Post office, local suppliers

7. Why is this topic important?  OECD may not match EM now!  Costs – Tata, Nano; Chery, QQ  Quality – Indian leather, Chinese silk  Product development pace – Films  Indicates ↓ in capability of OECD  ↑ important in recession 2

8. And to match  Market Orientation and Outsourcing  OECD vs. EM  Which one is better?  Is there a trade-off between the two?  Capability – New Product Development  Competition vs. Cooperation 3

9. Market Orientation (MO) – OECD  Meets customers’ needs  Anticipates market conditions  Explores and develops new products  Develops more desirable products  $  Takes long-term perspective, so viable  Develops its own capability 4

10. Market Orientation – EM  Needs meet customers!  Demand > Supply (now)  Growth  Not obsessed with change  Like permanence, memory, colony  No culture of product return  Shy, contamination by touch! 5

11. Market Orientation – Measurement  Customer orientation  Customer commitment, create value, understand customer needs and satisfaction, after sales service  Competitor orientation  Salespeople share competitors’ info, respond quickly to competitors’ actions, top managers discuss competitors’ strategies, target opportunities for competitive advantage  Inter-functional dept co-ordination  Info sharing, functional integration strategy, all depts contribute to customer value, share resources with other business units 5

12. Outsourcing (OS) – OECD  Outsources activities despite its ability to make in-house, so focus  core capability  Quick response to market conditions   On time delivery,  lead time  No need to manage $ fluctuations  Competitive if benefits > costs 6

13. Outsourcing – EM  Abundant skilled labor   Fixed costs and wages   BE point   performance and capability  But, may depreciate existing capabilities  Masks the decline skills  If outsource, firms do not learn 7

14. Key Factors for Sourcing Abroad 8

15. Outsourcing Strategy 9

16. Outsourcing – Measurement  Core and Peripheral Outsourcing  Ratio of outsourced production to in- house production  Ratio of outsourced products to manufactured products 10

17. Capability – Measurement  Speedy introduction of new products to markets  Access to distribution network for products  Creative marketing strategies for new products  Secure resources for marketing new products 11

18. Trade-off between MO and OS MO OS Capability Performance ↑ Costs Time Complex Expertise  Costs ↑ Savings Labor Mrf. Risks 12

19. What managers need to do?  Firms need both—MO and OS   MO because difficult to imitate  Trade-off exists  OS needed, not to  costs but  MO  No difference b/w firms in OECD and EM  Low-risk firm  MO, high-risk firm  OS to build capability 13

20. Competition vs. Cooperation LO OS HI HI LO MO Create value  Capability  OS Initially  OS to be MO  MO Manage risks LO risk-taking firms   MO HI risk-taking firms   OS  MO Coop? Comp? Comp/Coop? 14 I II IIIIV

21. Outsourcing: Privacy and Legal Issues  PIPEDA: Personal Information Protection and Electronic Documents Act  Obtain consent from customers to collect, use and disclose information -- outsourced service provider  US Patriotic Act: Anti-terrorism Law  Allows FBI to secretly access info held by US service provider, and gag such organizations from revealing that FBI has sought/obtained this info. 15