Market size, competition and the product mix of exporters

Recent empirical evidence has highlighted how the export patterns of multi-product firms dominate world trade flows, and how these multi-product firms respond to different economic conditions across export markets by varying the number of products they export. In this paper, we further analyze the effects of those export market conditions on the relative export sales of those goods: we refer to this as the firm's product mix choice. We build a theoretical model of multi-product firms that highlights how market size and geography (the market sizes of and bilateral economic distances to trading partners) affects both a firm's exported product range and its exported product mix across market destinations. We show how tougher competition in an export market - associated with a downward shift in the distribution of markups across all products sold in the market - induces a firm to skew its export sales towards its best performing products. We find very strong confirmation of this competitive effect for French exporters across export market destinations. Our theoretical model shows how this effect of export market competition on a firm's product mix then translates into differences in measured firm productivity. Thus, a firm operating a given technology will produce relatively more output per worker when it exports to markets with tougher competition. This productivity gain is further compounded by the effect of competition on the mix of exported products.

Consumer Preferences for Mass Customization

Increasingly, firms allow consumers to mass customize their products. In this study, the authors investigate consumers’ evaluations of different mass customization configurations when asked to mass customize a product. For instance, mass customization configurations may differ in the number of modules that may be mass customized. The authors find – in the context of mass customization of personal computers – that mass customization configuration affects the product utility consumers can achieve in mass customization as well as their perception of mass customization complexity. In turn, product utility and complexity affect the utility consumers derive from using a certain mass customization configuration. More specifically, product utility has a positive, and complexity has a negative effect on mass customization configuration utility. The effect of complexity is direct as well as indirect, because complexity also lowers product utility. The authors also find that consumers with high product expertise find mass customization configurations less complex than consumers with low product expertise and that for more expert consumers complexity has a less negative impact on product utility. The study has important managerial implications for how companies can design their mass customization configuration to increase utility and decrease complexity.marketing ;

Data-driven through-life costing to support product lifecycle management solutions in innovative product development

Innovative product usually refers to product that comprises of creativity and new ideas. In the development of such a new product, there is often a lack of historical knowledge and data available to be used to perform cost estimation accurately. This is due to the fact that traditional cost estimation methods are used to predict costs only after a product model has been built, and not at an early design stage when there is little data and information available. In light of this, original equipment manufacturers are also facing critical challenges of becoming globally competitive and increasing demands from customer for continuous innovation. To alleviate these situations this research has identified a new approach to cost modelling with the inclusion of product lifecycle management solutions to address innovative product development.The aim of this paper, therefore, is to discuss methods of developing an extended-enterprise data-driven through-life cost estimating method for innovative product development

The Role of the Mangement Sciences in Research on Personalization

We present a review of research studies that deal with personalization. We synthesize current knowledge about these areas, and identify issues that we envision will be of interest to researchers working in the management sciences. We take an interdisciplinary approach that spans the areas of economics, marketing, information technology, and operations. We present an overarching framework for personalization that allows us to identify key players in the personalization process, as well as, the key stages of personalization. The framework enables us to examine the strategic role of personalization in the interactions between a firm and other key players in the firm's value system. We review extant literature in the strategic behavior of firms, and discuss opportunities for analytical and empirical research in this regard. Next, we examine how a firm can learn a customer's preferences, which is one of the key components of the personalization process. We use a utility-based approach to formalize such preference functions, and to understand how these preference functions could be learnt based on a customer's interactions with a firm. We identify well-established techniques in management sciences that can be gainfully employed in future research on personalization.CRM, Persoanlization, Marketing, e-commerce,

An Economic Study of the Effect of Android Platform Fragmentation on Security Updates

Vendors in the Android ecosystem typically customize their devices by modifying Android Open Source Project (AOSP) code, adding in-house developed proprietary software, and pre-installing third-party applications. However, research has documented how various security problems are associated with this customization process. We develop a model of the Android ecosystem utilizing the concepts of game theory and product differentiation to capture the competition involving two vendors customizing the AOSP platform. We show how the vendors are incentivized to differentiate their products from AOSP and from each other, and how prices are shaped through this differentiation process. We also consider two types of consumers: security-conscious consumers who understand and care about security, and na\"ive consumers who lack the ability to correctly evaluate security properties of vendor-supplied Android products or simply ignore security. It is evident that vendors shirk on security investments in the latter case. Regulators such as the U.S. Federal Trade Commission have sanctioned Android vendors for underinvestment in security, but the exact effects of these sanctions are difficult to disentangle with empirical data. Here, we model the impact of a regulator-imposed fine that incentivizes vendors to match a minimum security standard. Interestingly, we show how product prices will decrease for the same cost of customization in the presence of a fine, or a higher level of regulator-imposed minimum security.Comment: 22nd International Conference on Financial Cryptography and Data Security (FC 2018

Mass Customization in Wireless Communication Services: Individual Service Bundles and Tariffs

This paper presents results on mass customization of wireless communications services and tariffs. It advocates for a user-centric view of wireless service configuration and pricing as opposed to present-day service catalog options. The focus is on design methodology and tools for such individual services and tariffs, using altogether information compression, negotiation algorithms, and risk portfolio analysis. We first analyze the user and supplier needs and aspirations. We then introduce the systematic design-oriented approach which can be applied. The implications of this approach for users and suppliers are discussed based on an end-user survey and on model-based calculations. It is shown that users can achieve desired service bundle cost reduction, while suppliers can improve significantly their risk-profit equilibrium points, reduce churn and simplify provisioning.negotiation;mass customization;service configuration;mobile communication services;individual tariffs

Profitability of Mass Customization in Electrical Motor Manufacturing : Does Customization Improve Product Level Profitability

The current market environment forces manufacturing companies to produce such customized products that are at the same time relatively cheap and finished with top quality to respond demanding requirements of customers. The concept of mass customization has been presented as a solution that offers economies of scale while producing customer tailored products. The aim of this research is to review the impact of mass customization on product level profitability in complex manufacturing environment. The theoretical framework is constructed on the main themes of mass customization, cost accounting, and product profitability analysis. All these mentioned topic areas are reviewed from the viewpoint of a manufacturing company that produces large variety of customized products with different order fulfillment methods. The research problem is divided into two separate questions of evaluating available product costing systems in complex manufacturing environment, and seeking evidence if mass customization is profitable in the case company that for this research is made as an assignment. Based on previous research, financial effects of mass customization are not sufficiently studied through empirical research. Furthermore, related research focuses mostly on product configurations and modules, and their effect on operative and technical development instead of financial measures. The empirical section of this research is conducted as a quantitative single-case study that aims to seek evidence if mass customization of electric motors is profitable for the case company. Operative data is collected from the case company’s ERP-system, and it is combined with financial information. This constructed data set is used for performing statistical analysis similar to methods that are applied in econometrics. The collected data set consists of 3900 statistical units thereby constructing a representative sample from the population. The findings show that mass customization is profitable for the case company when customization is measured through customer selected and otherwise optional variant codes, and by comparing profitability levels in between of different engineering groups. As a results, it was discovered that more customized statistical units were seen to be more profitable than those less customized units. This research contributes filling the recognized research gap of lacking empirical studies related to financial effects of mass customization. In addition, it also presents important information for the case company regarding of how different variant codes and engineering groups affect product level profitability in their manufacturing operations. Furthermore, the presented statistical method offers possibility to analyze and estimate how different product features influence product profitability levels based on statistical methods commonly used in econometrics. Therefore, this research can be seen to have central managerial and practical implications within management accounting practices in manufacturing environments.Kiristyvä kilpailutilanne markkinoilla sekä vaatimukset räätälöidyistä tuotteista ajavat yrityksiä tarjoamaan asiakaskohtaisia tuotteita saavuttaakseen kilpailuetua muihin kilpailijoihin nähden. Joustavan tuotevalikoiman lisäksi, asiakkaat odottavat samanaikaisesti edullisia hintoja, nopeita toimitusaikoja sekä hyvää laatua tuotteilta. Massakustomoinnin on esitetty tarjoavan mahdollisuuden hyödyntää suuruuden ekonomiaa samalla tarjoten asiakaskohtaisesti valmistettuja tuotteita, jotka täyttävät asiakkaiden erityiset vaatimukset. Tämän tutkimus tarkastelee massakustomoinnin vaikutusta tuotekohtaiseen kannattavuuteen korkean teknologian teollisuusympäristössä. Tutkimuksessa esitetty teoreettinen viitekehys muodostuu massakustomoinnin, kustannuslaskennan sekä kannattavuusanalyysin aihealueista, joita tarkastellaan erityisesti valmistavan tuotannon näkökulmasta. Tutkimuksen tavoitteena on luoda eheä kokonaisuus yhdistäen näitä mainittuja tutkimusaiheita sekä konkretisoida kustomoinnin taloudellisia vaikutuksia empiirisen tutkimuksen avulla. Tutkielman tutkimusongelma on jaettu kahteen erilliseen tutkimuskysymykseen. Ensimmäinen tutkimuskysymys tarkastelee kustannuslaskennan mahdollisuuksia tuotekustannusten määrittämiseksi ympäristössä, jossa tuotteiden määrä on suuri sekä valmistus monivaiheista. Toinen tutkimuskysymyksistä käsittelee massakustomoinnin vaikutusta kannattavuuteen kohdeyrityksessä. Aikaisempi tutkimus tunnistaa puutteet aikaisemmassa empiirisessä tutkimuksessa liittyen massakustomoinnin taloudelliseen vaikutuksiin sen keskittyessä yleisesti kustomoinnin operatiiviseen järjestämiseen sekä kehittämiseen tuotekonfigurointien ja -moduulien avulla. Tämän tutkielman empiirinen tutkimus on muodostettu hyödyntäen kvantitatiivista yksittäistapaustutkimusta, jonka tarkoituksena on tutkia tilastollisia menetelmiä hyödyntäen, miten massakustomointi vaikuttaa tuotekannattavuuteen kohdeyrityksen yhdessä tuote- ja kokokategoriassa. Aineisto on kerätty kohdeyrityksen toiminnanohjausjärjestelmästä sekä taloudellisista raporteista, joista on muodostettu yhtenäinen havaintoaineisto. Koottu havaintoaineisto muodostuu yhteensä 3900 havaintoyksiköstä, joiden voidaan nähdä kuvastavan yleistä tilannetta valitussa tapauksessa. Tulokset osoittavat, että massakustomointi parantaa keskimäärin kohdeyrityksen tuotteiden kannattavuutta, kun kustomoinnin mittana käytetään asiakkaiden valitsemien tuoteoptioiden määrää sekä insinööriprosessin muotoa. Tutkielma osallistuu tunnistetun tutkimusaukon täyttämiseen esittämällä empiirisiä tuloksia kustomoinnin taloudellisista vaikutuksista. Esitelty tilastollinen menetelmä esittää tavan yhdistää kustannuslaskentaa, kannattavuuden analysointia sekä tilastollisia menetelmiä johdon laskentatoimen menetelminä myös muilla massakustomointia hyödyntävillä teollisuudenaloilla lisäten tutkielman hyödyntämisen mahdollisuutta käytännön sekä liikkeenjohdon keinona

Market Size, Competition, and the Product Mix of Exporters

We build a theoretical model of multi-product firms that highlights how market size and geography (the market sizes of and bilateral economic distances to trading partners) affect both a firm\'s ex-ported product range and its exported product mix across market destinations (the distribution of sales across products for a given product range). We show how tougher competition in an export market induces a firm to skew its export sales towards its best performing products. We find very strong confirmation of this competitive effect for French exporters across export market destina-tions. Trade models based on exogenous markups cannot explain this strong significant link between destination market characteristics and the within-firm skewness of export sales (after controlling for bilateral trade costs. Theoretically, this within firm change in product mix driven by the trading environment has important repercussions on firm productivity and how it responds to changes in that trading environment.