Choose your location to get a site experience tailored for you.

Remember my region and language settings

Creating a Regionalized Asia Business Model

Any original equipment manufacturer (OEM) aspiring to strengthen its global reach would be lured to Asia, with its promising overall growth and even higher profit growth amidst a market segment shift toward more sophisticated trucks. This was an attractive proposition for a leading European OEM truck manufacturer, but several challenges stood in the company’s way.

The European multinational faced rising competitive pressure from Indian and Chinese players exporting more competitively priced models to the region, along with other triad players pushing domestic and better localized models. It also had to contend with its own interesting, yet fragmented footprint in developing Asia, where it had an assembly volume of around 50%, but a far larger sales volume standing at 80%.

To capture additional market share and secure a strong position in an important region, the company needed a regional business model that would leverage the strengths of its existing organization in Asia. This fresh approach would offer several key benefits:

  • By bringing together the various markets within Asia under one operation, the company could gain considerable scale and balance their assembly and production footprint.
  • By fully localizing the value chain in Asia, the company could develop agility and a locally competitive offering that surpassed what they could deliver in the previous fragmented setup. An integrated and localized product portfolio would be better suited to the relevant market characteristics.

BCG partnered with the OEM on three waves of action:

  1. The first was defining the new business model and taking instant actions that facilitated quick results. This included installing a pan-Asian procurement board.
  2. The second focused on finding synergy across markets in areas such as R&D.
  3. And the third was launching a completely integrated local value chain for the region. This included everything from product portfolio alignment and a supporting R&D network, to production and sourcing footprints. It also included building a local marketing and sales/after sales network.

The project was supported by an enhanced regional governance model that enabled the OEM to remain agile to the dynamic marketplace in Asia.

The overall result was a fundamentally new Asia business model featuring a strong growth trajectory and a significant profitability boost.

Globalization
Previous Page