Returning the logistics system in responce to changing customer requirements
Fiat, in the case of preserving and developing in the European market might consider the fact of implementing joint ventures and agreements with several distributors or even automobile brands in order to reach the captive market of each country. This is considering the fact that, every country has its own special market and environment, as well as government issues that could be adapted to Fiat, only by outsourcing the market knowledge, in the joint venture and agreement figure.
Otherwise, the company will be forced to invest larger quantities of money in developing a strategy, hiring external experts, and even with such tools, the company would not be able to figure out every single issue related to this new market. In the case of Europe, it will be useful to create a joint venture in France, for instance, that could involve Renault Company in the distribution of the Alpha Romeo line, due to the fact that this company does not have a specific french model of car that could compete with other luxury brand automobiles.
This will represent a competitive advantage for Renault, because it gives the company the opportunity to offer a wider selection of kinds of cars, which could satisfy other market segments that by this time are not covered. It could also bring the potential customers, a sense of strengthen confidence that a company of luxury cars, such as Fiat, is interested to distribute its product thought this company.
On the other hand, for Fiat Company, this joint venture for distribution will bring benefits such, as an immersion in an unknown market, that will diminish introducing costs, and expenses in experts and introduction to the market advertising, since this kind of expense could be prorated between the two companies, creating a greater resource and creativity for such situation. Fiat, could use Renault, and France as a trampoline, to distribute its car along the European market, such as Spain for instance, because it is a very related market to the french one, and could use a very similar approach as the used in this country.
The company as well could watch closely, the results of the french approach to the market, and take advantage that Renault is a very well known brand along the European countries. It is important to mention that France could be a major distributor to Europe, due to the European union block, that standardizes facts such as currency, and some taxation barriers, added to the fact that the European needs of transportation are quite similar from country to country.
Another strategy to continue the domestic development within the Italian market is to develop a conscience of corporate social responsibility, which is a growing importance issue in the actual organizational environment. Corporate Social Responsibility implies that the company is involved in several activities that promote social development; such activities in the case of Fiat could be focused in environmental issues, for instance.
The impact of developing policies and agreements that reflect a benefit in the environmental side, could lead to very important conclusions, such as an increase in competitive advantages, and cost savings, two of the company’s main goals explained in the case. According to a research study developed by Price Waterhouse and Coopers Financial Firm during year 2000, among the impact of Corporate Social Responsibility in the performance of the companies, competitive advantage (75%), cost savings (73%), and industry trends (62%), are the most common reasons why a company invests in such activities.
The competitive advantage that brings to an organization, the investments that it makes in environmental issues, and then publicly show it, are unimaginable. These kinds of approaches create in the potential consumer a natural influence, and if this influence is also strengthen by a public or government organization could have a double effect in the preferences of the market. Therefore, Fiat for instance, should develop in its new models of cars for domestic purposes, an engine choice of car that would lower the pollution levels, than conventional cars have.
Once developed this approach, Fiat could start selling at lower costs, to the government of its country, the cars it needs for its organizations fleet of transportation, such as the police corps. In exchange to this benefit, the government could advertise the improvements made to benefit the environment( e. g. television advertisement), and the company will be benefited with the advertisement is made to the cars, by the consumer view of such parts.
If the company would like to go further over, they could design a non gasoline engine, supplementing this engine with an electric or gas operated one, which could lower the polluting gases in the atmosphere, requiring the government support to diffuse it, and to support the implantation of distribution centers of the new combustible. As a definition a free trade area is a group of countries that have agreed to eliminate tariffs, quotas and preferences on most goods between them. Unlike a customs union, members of a free trade area do not have the same policies with respect to non-members.
Free trade areas include NAFTA and EFTA. Taking in consideration the last mentioned facts, the company is interested in developing in free trade areas, due to the fact that the countries involved in the trade, have lower tariffs and duties in goods that come into the country to be involved in manufacturing processes, and this added to lower labor costs in some Latin American and Asian countries such as Brazil and China, bring incredible opportunities to companies interested in manufacturing processes.
On the other hand, there might be special consideration for domestic taxation purposes, such as benefits to the direct manufacturing company, according to the benefits given to the employees in security benefits, such as benefits labor plans, compensations, and assurance, that could be in certain way a minimum investment for the company, receiving in exchange a great benefit or value. On the other hand, the company could use a similar approach and a joint venture contract with Turkey, that could be in charge of the distribution of all over the Arabic countries, in order to have a participation in this country.
It is important to mention the specific situation of the German market, that because of the majority participation of German automobile distributors in the European market and certain cultural barriers, such as nationalism (the situation that generates the citizens of a country to buy only products produced inside their country), would create incredibly high barriers to enter this market. Therefore, Fiat should try a different approach, creating a well consolidated fame along their European neighbors, and then extending this fame inside the german market.
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