Negotiation Strategy Paper

Negotiation Strategy Paper - Paradiso Government 11/11/08...

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Paradiso Government 11/11/08 Prof. Helm IBUS 160 Negotiation Strategy Paper Section 1: Industry Analysis Over the past decade, the microanalyzer industry has grown at a tremendously high rate. Following its development by Megatronics ten years ago, the product was an immediate success. The consistent level of high demand is understandable, as the microanalyzer’s utility in improving industrial and manufacturing processes is a source of substantial added value to companies in many industries worldwide. Currently, the industry appears to be approaching the maturity stage of the product cycle. Developed markets are already fruitful, and the three main players in the industry are prepared to continue worldwide expansion to seek a competitive advantage and increase profitability. In the next five years, it is expected that the large multi-national producers of microanalyzers will begin to focus on emerging markets for greater extension of their already profitable enterprise. As world market demand is estimated to double in the next six years, it is likely that many domestic manufacturers will be established, hoping to obtain a share of their local and regional markets. Considering the continued success of 21 st century technological revolution, developing countries are eager to welcome high- technology industries. By all means , the trend toward low-cost manufacturing in developing countries will boost production and international sales of microanalyzers. One of the greatest benefits of the augmentation of the microanalyzer industry is the realization of worldwide economies of scale. As multinational companies (MNCs) target resource rich emerging markets, production levels can be increased with the
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expectation of lower manufacturing costs and increased margins. This growth is a natural fit, as developing economies are eager to seek the benefits of the industry. Naturally, one of the main considerations in emerging market production is the cost structure associated with domestic production. Component unit costs in developed countries are generally lower than that of the emerging markets, specifically in Paradiso and Tropicalia. Understandably, the more capital intensive and technologically advanced aspects of the microanalyzer – the logic unit in chief – have a cost advantage in developed countries. However, assembly costs are considerably lower in emerging markets, resulting from lower labor costs (and little worker knowledge restrictions). Another important cost factors are transportation and tariff, with the latter being a more substantial factor in production costs. Regional transportation costs are low, while international transportation costs are higher. Tariffs, put in place to limit the emerging markets exposure to cumbersome import levels, are additional factors in the manufacturing costs of the microanalyzers. Many of the aforementioned costs must be considered when evaluating the
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This note was uploaded on 10/20/2010 for the course IBUS 160 taught by Professor Srividyajandhyala during the Spring '08 term at GWU.

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Negotiation Strategy Paper - Paradiso Government 11/11/08...

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