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1. SIVA SIVANI INSTITUTE OF MANAGEMENT
ARTICLE REVIEW SESSION
ARTICLE TITLE: VALUE FOR MONEY STRATEGIES FOR
RECESSIONARY TIMES
BY - PETER J. WILLIAMSON AND MING ZENG
NAME:M.HARISH,BIFAAS(NRP),2B4-15

2. AUTHORS
PETER J.WILLIAMSON MING ZENG

3. INTRODUCTION
 Despite the global recession, the value-for-money segment -- made up of
people who want to be more effective (do more but spend no more), become
more efficient (do the same for less), or economize (do less and spend less) -- is
likely to grow in both developed countries and emerging markets.
 Companies from emerging markets are better prepared to cater to this segment
than Western multinational giants are.
 Enterprises can employ several approaches -- using their subsidiaries in
developing countries to design new products and teaming up with emerging
giants, to name two – to break into these markets worldwide.
 This recession is the right time for Western companies to develop the capabilities
that will allow them to crack open the value-for-money market and thereby
remain competitive

4. Value for money
 A utility derived from every purchase or every sum of money spent. Value for
money is based not only on the minimum purchase price (economy) but also on
the maximum efficiency and effectiveness of the purchase.

5. IMPORTANCE OF COST INNOVATION
The importance of cost innovation in this process is stressed
in terms of the three ways that emerging giants have
developed the ability to deliver cost innovation:
Selling high-tech products at mass market prices
Offering choice and customization to valued customers
Turning premium niche markets into mass markets

6. Selling high-tech products at mass market
prices
 BYD turned into a global market leader by bringing
down the cost of manufacturing lithium-ion batteries so
dramatically that they became viable substitutes for the
lower-performance nickel cadmium cells.

7. Offering choice and customization to
valued customers
 UNITED SPIRITS has maintained its position as India's
largest alcoholic beverage manufacturer by using
flexible processes to offer 140 brands of spirits that cover
almost every price point in the market.

8. Turning premium niche markets into mass
markets
 HAIER captured 60% of the U.S. wine-refrigerator market
in less than a decade by lowering prices so much that a
small, unguarded niche became a volume business.

9. COUNTERSTRATEGIES FOR MULTINATIONALS
 Go beyond low-cost sourcing in emerging markets
 Develop products in emerging markets and bring them home
 Invest in brands as you would in emerging markets
 Combine your capabilities with those of emerging giants
 Invest in growing mass markets in developing countries

10. STRATEGY - 1
Go beyond low-cost sourcing in emerging
markets
Multinationals should launch in their home markets the products their
overseas subsidiaries have developed.
 EXAMPLE Hewlett-Packard's laboratories in India are developing a
simple and inexpensive device that local retailers can use to track
inventory. The company is finding that small U.S. enterprises will
constitute a lucrative market for the device, as well.

11. STRATEGY - 2
Develop products in emerging markets and
bring them home
Enterprises can treat developing nations as more than cheap
manufacturing bases
 EXAMPLE Logitech has located its global product design center in
China, which allows it to draw on relatively inexpensive local talent.
Chinese engineers not only develop products quickly but also
design them in such a way that they can be manufactured
relatively inexpensively.

12. STRATEGY - 3
Invest in brands as you would in emerging
markets
Companies should deploy at home the cost-effective marketing
techniques used in developing countries.
 EXAMPLE Taiwan's Acer puts its name on the luggage trolleys at
several airports in Asia, which gives its products tremendous visibility
relatively inexpensively

13. STRATEGY - 4
Combine your capabilities with those of emerging giants
Companies in the developed world can team up with emerging giants
 EXAMPLE 3Com in the U.S. and Huawei in China have forged an alliance that has
enabled them to give Cisco a run for its money in the networking business. The
venture has launched several new products and is offering them at prices lower
than Cisco's.

14. STRATEGY - 5
Invest in growing mass markets in developing
countries
Western firms must invest in growing mass markets in developing
countries
 EXAMPLE Nokia initially went after the top end of China's cellular
telephone market, but its share declined as local companies
developed better value-for-money products. Only when Nokia
targeted consumers in the middle and bottom segments did it
become the leader.

15. Conclusion
 Companies in emerging markets are transforming the value for money
equation.
 The threat that poses to western multinational giants, combined with the
squeeze on future incomes that the developed world will feel as it pay off
the debt racked up to cope with the current financial crisis , calls for
change in mind set.
 Rather than wait for the recession to run its course, Western companies
must rethink the role of emerging markets right away if they wish to develop
cost innovation capabilities that will help them secure long term
competitive advantage.