Case 25 Kroger and Fred Meyer: Sourcing Products in a Global Marketplace
QUESTION 1:
What factors would you list that need to be evaluated in making decision to source products overseas? Make a list of pros and cons and explain what the pressures are that impel manufacturers and retailers to not source products domestically.
Retailers around the globe aim to outsource the product to meet the needs of customers in the competitive market. It is a low-cost process, which can enhance business profitability and expansion. Several factors are to be considered by the company, like Kroger and Fred Meyer. When outsourcing the product, product quality, cost and shipment are several factors, which are to be considered in the decision-making process. For Instance, the company must have some quality and cost measures and standards. If the vendor meets these standards, the management can make positive decisions. The big advantage regarding the domestic production of lamps is reliability. On the other hand, the cost of the production in the domestic production facility is comparatively high (Rushton and Walker).
QUESTION 2:
Based on the information given, how long do you estimate it will take to import these lamps? Create a set of target dates for each step in this process that will enable these products to arrive in time for the planned advertising date and selling period.
The whole process is quite complex and long. It will take time to have the final products available for customers. The process starts with the need of buyers. Kroger buyers decide to buy the specific product. For Instance, the company wants to sell lamps, manufactured or merchandised by the Asian manufacturer. The firm will contain the partnership with the Merchandisers and review some submission. It needs time to examine the quality, reliability, and durability of this bulky product. The company may create a purchase order and ask bank of American to arrange payment. The next step is to approve the product and start manufacturing. After it, the company has to arrange the transportation for this bulky product. Finally, advertising campaigns are to be designed to enhance the visibility of the positioning (Rushton and Walker).
QUESTION 3:
What areas of expertise do the various members of the product development team have? What are the possible communication issues that might arise between them?
Product testing is a key expertise of the product development team in Kroger and Meyer. For Instance, when reviewing the submissions, it is necessary for the product development team of the company to examine the product regarding quality, reliability, and duration. Several technical aspects are to be examined or discussed by the development team. The product delivery or supply always contains if anything is beyond the standard or expectation. The communication process has to play a vital role in the product development process. The vendor’s product development team needs to have technical knowledge to communicate effectively with the product development team of Kroger and Meyer. Interestingly, it can enable rational decision making, as far as production, quality, and price of the lamp is concerned. Due to the lack of knowledge regarding global logistics, the communication process can be impaired. The nature of doing business in Asian regions is quite different from the United States. Different cultural values, perceptions and language are a form of different communication issues. These issues should be resolved to focus on outsourcing lamps and meeting the needs of customers (Moore, Bruce and Birtwistle).
QUESTION 4:
There are several opportunities for questionable ethical situations to arise in the importing of products. What do you think the weak points might be? Where in the process is there the potential for unethical actions to occur?
Many ethical issues can be raised in internal business or importing. For Instance, the questionable ethical situation may occur when Kroger employees have to work with employees of an Asian company. In global logistics, virtual meetings and many other business aspects, unethical behavior can be observed. Due to cultural differences, Kroger employees may refuse to work with other logistic teams. Also, the company aims to import lamps to save business or production costs. Despite having production facilities and capabilities, the firm decided to enter Asia. The firm saves business costs due to this consideration. However, it can compromise on the quality and employment. The domestic employment is almost zero, which is unethical. On the other hand, the firm can buy lamps which are beyond expectations regarding quality and standards, these are some areas which create the space for unethical actions. Domestic production regulations may be tough for the company, and it may decide to enter in Asian to avoid related complexities (Rushton and Walker).
Work Cited
Moore, Christopher, Margaret Bruce and Grete Birtwistle. International Retail Marketing. Routledge, 2007.
Rushton, Alan and Steve Walker. International Logistics and Supply Chain Outsourcing: From Local to Global. Kogan Page Publishers, 2007.
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