This particular context is about how international logistics can be used as a reference and even as an example of the development of the local markets and the best alternatives which can be used to improve their businesses. Through logistics, you can be able to differentiate your business by offering new value-added services and improved levels and will allow you to expand your network of new customers. (Harrison 2008)
The international logistics explains how the firms can transfer their products from the company afar being processed to transport them to their required destinations (i.e. from the company the consumer for his/her final consumption). First foremost the company has to ask itself the following questions; one, what to manufacture, how and to who to be able to meet the market demand by the customer. First, before the goods are delivered, the company has to do what we call the customer acquisition (the concept) and ending with on-time, on-budget deliveries (customer) this means they are good as their last shipment. (Christopher 2005)
Concerning what a particular customer may want in the market, one has to segment the market to be able to realize what may be required in the market. This can be done by first identification of both low-end and single-use products and even high-end-luxury goods that would create the market for you. (Christopher 2005)
Health and beauty aids and cosmetics are very much essential mainly when one wants to pursue the local market. Segmentation is more acute than in western countries since companies are offering them at very low costs in the market. The other thing is that the marketer should just instead factor in the needs of the consumers and present their value proposition in localized terms, this will result in a very big success as far as the marketing industry is concerned and in improving the market for the local goods as a whole. Also for a company to achieve its goal it has to avoid the application of the mind which is set globally without trying first to localize. These are some common mistakes which should not be made while looking for the market for the local goods. For one to be successful he/she need not be in a hurry but be very strategic. You need to be a good planner and also to be bold enough to face the business. (Cousins 2008)
Customers locally situated need the local goods and even that local language for you to market and be able to sell all your commodities in that market. The people you are dealing with must ensure that their tastes and preferences are met with your marketing strategy. So what we mean here is that the right product can be consumed by the local consumers and obtain maximum utility. One of the things one has to master is that local goods should just be easily affordable to avoid much cost of storage and even much space. The marketing strategy requires that you look forward to the class with huge purchasing power; through this one has to bring value propositions that are indeed very attractive and very much affordable. It is very much critical to meet the local needs, by even providing some free samples to show that the quantity is of a better size. (Harrison 2008)
Another very important aspect is the kind of marketing one has to employ such that sellers can access good financial mechanisms for developed economies, this is good for high-cost products such as appliances. Concerning these commodities, consumers look at them as long-lasting commodities and need to have good money to afford them. By this, we call it valuable buying (i.e. buying of good value for your taste). This will also make the local market grow and increase the purchasing power locally. (Cousins 2008)
Another very important aspect is also the kind of language used during the transaction. This is very important since it is the backbone of communication as far as the business is concerned. It is very valuable to ensure that you work with your local celebs to market your products. You need to have a very good network by using the local vendors to allow you to market. Any firm or any individual does business with only one aim of making a profit and therefore tries very hard to avoid or minimize the losses as fast as possible. (Harrison 2008)
For one to achieve his/her dream of making big profits and minimizing losses, one has to make sure that he minimizes the losses to be incurred as possible. First and foremost one has to know the cost of transport may be the goods or services to budget for transport of the products without less or no losses to be incurred in the process of doing business transactions. Transport should be that which is very convenient and the one which is very reliable in the first place to avoid very many inconveniences as far as moving or locating these goods are concerned. (Cousins 2008)
Another thing we need to dwell on very much is the kind of the customer who has may be ordered for the goods. First, we should avoid dealing or operating in debts since this might transform the company into liquidation. Customers must be well known to deliver the goods which can generate cash almost immediately. Customers who normally operate in debt should be realized so that the first ones are collected in advance before the second delivery. Debt collectors should be assigned purposely for collecting debts especially when the firm has expanded and gathered much experience in the field of the business. Priority should be given to the first orders to ensure that the delivery is done at the right time without any delay to the customer, this will promote the general firm’s reputation and also to even increase a lot of service efficiency to the company. All the customers are good but others are better than others in that they pay promptly as agreed when the contract has been made. This is why customers should be weighed so that the best ones are the ones to operate with to avoid much debt operations in the business. The best customers are given the priority to retain them and also to make the business continue smoothly in an organization (Harrison 2008)
There is also another aspect of what we call time, this concept is very important since it is the first thing that will allow the business to run very first without much delay to some customers and even for the business at large. Time should be kept to ensure that everything goes as per the schedule. Everything or any activity to be operated should be assigned the correct time and even a very convenient one to avoid many contradictions and even wastage. When there is a collection or even delivery to be made, it is very important to work with the estimated time which is set for that particular activity in that matter. (Christopher 2005)
The aspect of economies to scale is just the advantages that a business obtains especially when it expands. Some factors contribute to this concept for it to work out properly. The opposite of this is the disadvantages that hinder it from actually achieving its goal (i.e. the diseconomies of scale.) Economies of scale are sensible perception which is essential in escalating in the real-world phenomena (i.e. the styles or the types of the international trade, the magnitude of firms in the sell, and the companies get too large fall short.) The perception can be incorporated with some theories’ economic notions of the returns to scale. (Harrison 2008)
By explanation, returns to scale are those relationships of both the input and output functions. Construction purpose is said to be very stable in terms of income to scale in that if all inputs are raised by the same input, output also does the same. Profits are declining if let’s say, we have also raised the input in may be less as compared with the output and rise if more than the output. In representing this mathematically, it depends on the degree of homogeneity of a particular function. (Christopher 2005)
There is also the aspect of the natural monopoly (i.e. this is where the firm is benefitting in the economies of scale alone since a firm can just expand without other companies competing with it). It enjoys economies of scale for all reasonable firm sizes; because it is more efficient for one firm to expand very easily, simply because it has no competition, it is very easy for it to overtake the market and be the controller of the market. That is why you find that some industries are publicly owned. In that, the petite run where one factor is said to be fixed, here the curve will fall then rise again as the withdrawing income sets in. For the long run side, here the production factors are varying so that the long-run curve will therefore change with economies of scale and diseconomies of scale. (Cousins 2008)
For the local company to achieve the economies of scale: one, it has to have all the fixed cost and constant marginal costs together. Secondly to obtain low or no fixed cost at all and declining the marginal costs. The local or young firms need to decrease the cost per unit as the output tends to be increasing. This is just very clear that the investment is incorporated according to the units of the output and hence the marginal cost to produce goods or services is not as that of the average cost per unit. What comes out very clear is that the initial investment of capital is diffused over as per the number of the increasing number of units since the output and the marginal cost of producing a good or service is less than the average total cost per unit ( this is for only the industry which is experiencing the economies of scale. (Lysons 2003)
Responsiveness to local markets
In this case, we analyze how a firm can use its existing industry position to respond to the needs of a local market. As has been highlighted economies of scale are normally associated with big firms, this is due to the large-scale nature of the operation. These economies may include, managerial, bulk buying, monopoly, financial, etc.
Responsiveness to local markets implies understanding the prevailing conditions in a local market. These conditions may have been created by small and medium-size firms perceived to be company rivals in the industry.
However, owing to the nature of large firms they are better equipped to counter all these conditions and that is what is discussed below:
In a case where a market requires an adequate and steady supply of commodities, small firms may be phased out as a result of not having sufficient capital to stock adequate inventory to meet the needs of the market. A big firm can source finances from anywhere and consequently purchases adequate stock to meet the needs in the local market. By doing this a firm will have responded to the needs of local markets.
If there are gaps in the market that results from bad management, for example, poor customer service and care, big firms can employ a different caliber of professionals who possess relevant and diverse qualifications in customer care. A firm can be able to penetrate the market, improve customer relations and attract and retain more clients.
In a market situation where customers are price-sensitive, firms must adopt a cost leadership approach. Big firms can negotiate with suppliers and therefore are given big discounts. They can pass these discounts to customers by lowering market prices. If the prevailing conditions are that customers demand lower prices then the firm will have responded by drastically lowering its prices to win the customer’s attention. These are just examples of how firms can use their existing positions to respond to local markets.
Cousins P et al, 2008, Strategic Supply Management: principles, theories, and practice. Harlow: Prentice Hall/ Financial Times.
Christopher, M 2005, Logistics and Supply Chain Management; creating value-adding networks, Harlow: Prentice Hall/ Financial Times
Harrison, A, Van, Hook, R 2008, Logistics Management and Strategy, Harlow: Prentice Hall/ Financial Times.
Lysons, K, Gillingham, M. 2003, Purchasing and Supply Chain Management. Harlow: Prentice Hall/ Financial Times.