Dynamics of the Manufacturer-supplier Relationships in Emerging Markets: A Case of Thailand

Purpose – The purpose of this paper is to analyze the nature and the evolution of manufacturer–supplier relationships in Thailand's automobile industry and to identify the factors that influence the evolution of these relationships. Design/methodology/approach – The study is based on case research method involving in-depth interviews with 120 local and expatriates of 7 companies and their 14 suppliers. Findings – In Thailand, the manufacturer–supplier relationship starts out as a market-exchange-type relationship, and then gradually moves to a partnering type. The stages in evolution involve constant efforts on the part of foreign manufacturers to develop the suppliers by offering resources, training, feedback and solutions. The supplier capability building programs, bridging of cultural differences and formation of trust provides the basis for enduring partnerships. These partnerships are symbiotic relationships in which manufacturers benefit from suppliers' knowledge of local production and market factors and suppliers benefit from manufacturer's technical and managerial support. Additionally, closer collaboration with suppliers helps to prevent the leakage of business intelligence and theft of intellectual property and to prevent suppliers from working with competitors, thus allowing manufacturers to devote undivided attention to smooth supply of parts without any shortage. Practical implications – In emerging markets, the local suppliers play key role in the success of foreign automobile companies. However, the local suppliers need technical and managerial support from manufacturers. The process of building a network of competent local suppliers consumes time and resources, therefore manufacturers should take a long-term view of the market. The undeniable importance of overcoming cultural differences and building trust is the hallmark of successful partnerships. Originality/value – The paper highlights the importance and process of developing local suppliers in emerging markets using Thai automobile industry as an example

Complementary Role of Organizational Learning Capability in New Service Development (NSD) Process

Purpose – The purpose of this paper is to investigate the role of organizational learning capability in relation to leadership tasks performed by executives and organizational performance by bridging the concepts of organizational learning and NSD. Design/methodology/approach – The NSD processes of seven telecom service providers in Thailand are adopted as the research context. Conceptual framework is developed based on literatures and expert interviews. Multi-item questionnaires are designed mostly based on interviews with 12 experts involving in NSD processes of those seven providers. Survey is conducted with 497 executives and employees in NSD processes of those providers. The structural equation modeling and LISREL 8.72 application are employed in data analyses. Findings – Leadership tasks performed by NSD executives significantly affect the development of organizational learning capability, which in turn significantly affects organizational performance. The effectiveness of executives' leadership tasks and organizational learning capability development are symbiotic. Research limitations/implications – The validation and generalization of the results are still limited to the context of NSD processes of telecom service providers in Thailand. The analyses based on second-order factors and perceptual data. Practical implications – In today's context, NSD process should be managed as the dynamic learning process. The integration of executives plays a key role in facilitating the development of organizational learning capability in such a process. Originality/value – The integrative framework of collective and collaborative leadership tasks, organizational learning capability, and organizational performance are tested empirically and discussed based on real practices. The complementary role of organizational learning capability is introduced

Insurer and Intermediary Perceptions on the Response of Thai Local Non-life Insurance Companies to Deregulation

Purpose – The purpose of this paper is to examine insurers’ and intermediaries’ perceptions of the response to Thailand's non-life insurance industry to deregulation. Design/methodology/approach – This research paper is based on existing literature and consultation with industry experts, resulting in the development of a 13-variable questionnaire on perceptions of the local non-life insurance industry's response to deregulation. A convenience sampling technique was used for the survey respondents, who comprised two groups (insurers and intermediaries), involved in the non-life insurance industry in Thailand. Factor analysis was applied to the 246 responses to provide some exploratory analysis of underlying factors that account for the patterns among the variables. Findings – The results of the factor analysis derived four factors that explain the perceptions of insurers and intermediaries to the response of local non-life insurance industry to deregulation. The four factors include survival, alliance, local knowledge, and mergers and acquisitions (M&A). Furthermore, the findings indicate that whereas insurers perceived that survival would be the highest priority for local insurers, it was considered to be a secondary priority by the intermediaries. The latter group perceived that alliances and local knowledge were the most significant priorities for local insurance companies after deregulation. Research limitations/implications – The data gathered for the study are limited to the perceptions of two respondent groups from one industry. Moreover, this paper did not consider the views of policy makers or the variables that relate to or are caused by deregulation factors. Therefore, future research may extend these findings to other industries, countries, and respondents to provide a more general application. Practical implications – The research findings offer managerial implications for both insurers and intermediaries and also implications for researchers on refocusing their efforts in managing non-life insurance companies. Local insurers should improve and generate factors such as financial strength, accurate pricing, innovative sale methods, an understanding of the local culture, and alliances with other industries. Originality/value – The paper presents an original insight into an important element of insurers’ and intermediaries’ perspectives on response of local insurance companies after deregulation to the Thai non-life insurance industry

Managing Local Employees: Expatriate Roles in a Subsidiary

Purpose – In order to identify expatriate roles in a subsidiary it is necessary to go beyond those functions which are subservient to the headquarters. This paper sets out to prescribe a new spectrum of development roles with respect to varying capabilities and development needs of local employees. Design/methodology/approach – The roles of expatriates are analyzed based on seven case studies conducted with top automobile manufacturers in Thailand: Toyota Motor Thailand; Hino Motors (Thailand); Honda Automobile (Thailand); Isuzu Motors (Thailand); BMW (Thailand); DaimlerChrysler (Thailand); and Auto Alliance (Thailand). Findings – Four types of expatriate roles – commander, conductor, coach, and connector – are proposed; the roles correspond to the degree of task readiness and managerial capabilities of local employees. Practical implications – The paper provides a tool that will help expatriates understand their roles according to the technical skills and managerial capabilities of local employees. Originality/value – The paper offers practical advice for diagnosing expatriate roles and their training prior to assignment to a subsidiary

Localization Drivers in an Emerging Market: Case Studies from Thailand

Purpose – The purpose of this paper is to analyze the drivers that influence subsidiaries of international companies in the automobile industry in Thailand and how automobile companies pursue localization in response to these drivers. Design/methodology/approach – Using case research method, examined seven leading automobile manufacturers – Toyota Motor (Thailand); Hino Motors (Thailand); Honda Automobile (Thailand); Isuzu Motors (Thailand); BMW (Thailand); DaimlerChrysler (Thailand); and Auto Alliance (Thailand) – as well as 14 of their dealers and suppliers in Thailand. In total 120 Thai and expatriate managers were interviewed. Findings – Extending the knowledge body from existing research, this study found that there are four drivers for automobile manufacturers to adopt localization strategies. Those are host country characteristics, industry characteristics, company characteristics, and market characteristics. The results show that automobile manufacturers react to drivers by localization of their decision making, building and exploiting knowledge pool of local suppliers and distributors, increasing numbers of Thais at the management level while decreasing the number of expatriates, increasing R&D activities locally, localizing products, increasing usage of local suppliers, adapting manufacturer processes, reinvesting at subsidiary, and localizing corporate image. However, these vary in degree from company to company. Localization strategies produce benefits that go beyond allowing automobile manufactures to compete within the local situation, also enabling them to overcome challenges and use their successes to transform the parent company and other subsidiaries and eventually contribute to the parent company's globalization strategy. Practical implications – Managers in subsidiaries may first implement localization strategies to cope with driver factors to mitigate risks and uncertainty. By adopting localization, managers should not focus only on short term benefits to gain local advantages in host countries, but these advantages at the subsidiary should be transmitted to the parent company and other subsidiaries to build a competitive international strategy. Originality/value – CEOs of subsidiaries in emerging markets can learn what drivers influence localization strategies and how to cope and create local advantages for global competitiveness by implementing wide range of localization strategies

Impact of Business Strategies of Automobile Manufacturers in Thailand

Purpose – The paper aims to investigate automobile manufacturers in Thailand and the effects that their business strategies had on their organizational performance. Design/methodology/approach – For empirical analysis, the method of confirmatory factor analysis and the structural modeling method were applied in order to refine business strategies, functional strategies, financial, and marketing organizational scales. Findings – This research reveals that there are three significant business strategies of automobile manufacturers in Thailand which have a positive effect on the organization's financial and marketing performance: cost focus (the first priority), cost leadership (the second priority), and integrated cost an differentiation (the third priority). All the priorities of functional strategies that have a positive effect on the financial and marketing organization performance were subsequently analyzed as follows: manufacturing strategy (most significant), human resource management (the second most significant), marketing strategy (the third most significant), and the financial strategy (the least significant). Research limitations/implications – Future research should select different random samples to assess the perceptions of front line managers of automobile manufacturers, dealers and automobile part firms. Practical implications – The management of automobile manufacturers and automobile part firms should implement and improve their business strategies in terms of cost focus, cost leadership, and integrated cost leadership strategies achieve higher financial and marketing performance. Originality/value – This paper contributes to the existing literature by reexamining the impact of business strategies of automobile manufacturers on organizational performance

Developing Local Talent in International Subsidiaries: The Importance of Trust and Respect in Toyota

Purpose – To analyze the challenges and solutions in developing local employees for managing subsidiaries – the implementation of Thainization philosophy at Toyota Motor Thailand (TMT). Design/methodology/approach – In-depth interviews were conducted with Thai and Japanese employees, and Imai Hiroshi, one of the architects of Thainization philosophy. Findings – For successful implementataion of Thainization philosophy in TMT, the management had to demonstrate respect for local employees and build trust between Thai and Japanese employees. Once the employees related to each other on the basis of mutual respect and trust, it was relatively easy to collaborate and find solutions. Practical implications – CEOs of multi-national companies, particularly Asian subsidiaries, can learn how to cope with challenges in developing local employees, building their technical and managerial capabilities. Originality/value – Many international companies are struggling with the important issue of building capabilities of local employees for leveraging their global competitiveness. The successful implementation of Thainization philosophy of TMT offers a major breakthrough in this direction

Value-based Localization Strategies of Automobile Subsidiaries in Thailand

Purpose – To analyse the scope of localization strategies and corresponding benefits of these strategies to subsidiaries of international companies in the automobile industry in Thailand. Design/methodology/approach – The authors have adopted the case research method to investigate localization strategies of subsidiaries of seven companies (Toyota, Hino, Honda, Isuzu, DaimlerChrysler, BMW, and Auto Alliance) as well as 14 of their dealers and suppliers in Thailand. The information was gathered by conducting in-depth multiple interviews with 120 local and expatriate employees at various levels in the organizations; by referring to annual reports, policy documents and internal reports of these companies; and by observation during plant visits. Findings – Contrary to the belief that international companies implement localization strategies to simply match the local market environment, it was found that these companies implement a wide range of localization strategies to achieve multiple benefits. The paper identifies nine areas of localization: localization of strategic decision making; building and exploiting the local knowledge pool; deployment of local human resources; localization of R&D; localization of products; use of local supplier networks; adaptations to manufacturing processes; local deployment of subsidiary profits; and localization of corporate image. These localization strategies are not just based on the principle of “cost-based localization” but are based on “value-based localization.” These strategies work in tandem and create value through a system of multiple benefits, such as managements' ability to comprehend and deal with uncertainty in the operating environment; make informed decisions to respond to challenges in developing efficient local assembly and marketing systems; cost reduction; higher degree of commitments by local employees; product customization and acceptance; and greater brand equity and image as a good corporate citizen. Practical implications – Based on concrete illustrations of seven companies, this study identifies nine distinct areas for planning and implementing localization strategies and their corresponding benefits. The managers of subsidiaries can benefit by focusing their localization efforts in these areas to gain maximum advantage from host country context and then translate these advantages into a competitive international strategy. Originality/value – CEOs of subsidiaries in emerging markets can learn how to build and harness local advantages for global competitiveness by implementing a wide range of localization strategies