Professor, Marketing and International Business How Business Intelligence and Outsourcing Build New Product Development Capabilities for Firms in Emerging Markets Dr. Satyendra Singh Professor, Marketing and International Business s.singh@uwinnipeg.ca http://abem.uwinnipeg.ca

Why is Business Intelligence (BI) important? Globalization  to compete globally Preferred over competitor Firms must be known for something! Meet customers’ needs Need to build capability 3

To build capability Market Orientation (MO) Strategy Outsourcing (OS) Strategy Combine the two Competition vs. Cooperation 4

What is MO strategy? Meets customers’ needs: Current and Future Develops more desirable products  $ Takes long-term perspective MO   firms capability But if you do it alone, Expensive and time consuming 5

But in Emerging Markets… Meet customers’ needs   price Demand > Supply!? (Not always)  purchasing power Not obsessed with change No culture of product return Wal-Mart  Please return products It’s business intelligence 6

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

Market Oriented Products MO  China 8

World’s Slimmest Watch 9

We need to add value to be market oriented Commodity Goods Service Experience 1₡-2₡ 5₡-25₡ 75₡-$1.5 $3 - $4 Experience may be more market oriented than commodity 10

different value propositions Different brands have different value propositions Firms must be known for their distinct capabilities 11

Different MBA, Different Value At our university in Canada, you need to complete any 5 mandatory courses of your choice from: Arts Science Business Humanities Social Science So students could customize their degrees  Market Orientation 12

Mercedes Customization  Value Creation

900 vs. 90 parts. 0 in electronic watch 14

Franck Muller: Master of Complications 15

Lamborghini bicycle: $25,000 -- Lightest 16

Beyond Lifetime Value 17

What you received What you ordered 18

If you cannot do it yourself, Outsource. But it should be strategic outsourcing 19

Quick response to market demand/turbulence What is Strategic Outsourcing? Outsource activities despite firms’ ability to make in-house, so focus  core capability Quick response to market demand/turbulence 20

Why Outsource? Costs lead time  On time delivery Fixed costs and wages   BE point Competitive, if benefits > costs Business performance 21

 borrowed capabilities However, OS may  existing capabilities, but  borrowed capabilities May mask the declining skills, Because firms may not learn 22

So, what can we outsource? Anything not critical to your mission statement  call center, HR, Accounting?? Even luxury brands outsource But strong brand/value/quality offsets negative perception of outsourcing e.g., Made in China… It’s a strategic choice 23

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

Market Orientated Products… OS  ATM, Post office, local suppliers 25

Trade-off Between MO and OS ↑ Costs Time Complex Expertise OS Performance MO  Costs ↑ Savings  Manufacturing Risks Capability 27

Strategy: Competition vs. Cooperation Comp/Coop? Comp/Coop? Create value  Capability  OS Manage risks Take  risks   MO Take ↓ risk   OS HI MO I II IV III LO Initially  OS to be MO  MO  MO Comp? Coop? LO OS HI

Questions? Dr. Satyendra Singh s.singh@uwinnipeg.ca http://abem.uwinnipeg.ca CANADA