Global Projects, 1995 - 1999

A compilation of the projects developed, staffed and managed by Kent Foster

CHINA

AlliedSignal-Honeywell Friction Materials (Guangzhou) Co., Ltd. (Braking Systems)

AlliedSignal Friction Materials (Guangzhou) Co. Ltd, is a wholly owned subsidiary of AlliedSignal Automotive, a division of AlliedSignal, Inc., a U.S. advanced technology and manufacturing company. At the time of a 1996 joint Davidson Institute/Tauber Manufacturing Institute project, AlliedSignal had an office site in Guangzhou, the capital of Guangdong province, and was planning to start construction of a friction materials manufacturing facility. The team investigated and outlined possible logistics plans for importing most of the raw materials from Europe and for selling the finished goods in China or exporting them back to Europe. It designed a comprehensive materials management system that recommended transportation routes and methods, logistics software applications inventory strategies, cost estimations, and organizational structure. AlliedSignal later implemented the team’s recommendations. In the words of the plant manager: "We are enjoying the results of the project, and we will continue to improve the logistics processes as practice comes with operation."

BellSouth (Telecommunications Service Provider)

A Beijing based 1998 project team analyzed the political and regulatory environment of China's telecommunications industry in lieu of recent government reforms. The team identified and described the relevant political actors, the mechanisms of policy change, the future prospects for regulation and created a stand-alone policy document used to lobby the government to open the telecommunications environment. It conducted extensive interviews to catalogue methods that multinational firms have employed to promote market opening and evaluated their success. The team also interviewed Chinese researchers, reporters, and government officials to obtain an accurate view of the Chinese impression of the reforms. Finally, the team categorized companies by level of activity and evaluated the costs and benefits of each approach. This created a systematic framework for BellSouth to evaluate its China strategy further.

Page 1 of 6 Caterpillar Xuzhou (Jiansu) Limited (Heavy Equipment Manufacturing)

Caterpillar Xuzhou Limited (CXL) built a Greenfield plant in Xuzhou, Jiangsu Province to manufacture hydraulic excavators in 1998. CXL entered into a joint venture with Xuzhou Heavy Machinery Work. CXL Steel Structure Branch (SSB) of Xuzhou Heavy Machinery Works is a supplier of cut and formed steel parts, seeking to develop into a world-class supplier. The 1999 project team made recommendations on how to develop manufacturing process and cost process models at SSB aimed at creating and sustaining the new joint venture.

Chengdu Bus Factory (Bus Manufacturing)

The Chengdu Bus Factory, one of the Sichuan Provincial Government's key State- Owned-Enterprises, hosted a 1998 project team working on a production management diagnostic system. The team presented a set of recommendations and implementation plans to improve the factory's process control, inventory control, organizational control, product quality, and profit margin upon implementation. The project introduced the factory to the concept of an integrated supply chain and process measurement system.

Agilent-China (formerly Hewlett-Packard Instrument Division) (Test Equipment)

China Hewlett-Packard (CHP) was formed in 1985 as a joint venture between Hewlett- Packard Company (HP) and China Electronics Import and Export Corp., China Great Wall Computer Group, and Beijing Computer Industry Company. CHP is responsible for overall sales and support for HP products in China. In 1996, a Davidson Institute team conducted a marketing study of low-end radio frequency (RF) testing products in China for the Test & Measurement Division of China Hewlett-Packard. After assessing various market entry criteria, the team recommended developing two test instruments. It also considered strategies for exporting these instruments to the international market. A California division of HP's test and measurement group went forward with a business plan to manufacture low-end RF instruments in China. The 1997 project team conducted a feasibility study that examined customer requirements, analyzed the market and the competition, and drafted product definition ideas for a set of instruments to be manufactured by CHP exclusively in China. The study focused on export-oriented consumer electronics and the low-end communications markets in Beijing/Tianjin, Shanghai/Nanjing, and Guangzhou/Shenzhen.

Shanghai-General Motors China (Automotive Parts)

Shanghai-GM (SGM) is a 50/50 joint venture with Shanghai Auto Industry Corporation (SAIC). SGM provides the dealer network with replacement parts and sub-assemblies for manufactured vehicles. The joint Davidson Institute/Tauber Manufacturing Institute project in 1997 developed and prepared the implementation of a Service Parts Plan. The team identified a complete process that addressed service parts needs including part order, scheduling, material flow through the appropriate manufacturing process, packaging and shipping/delivery, and determined the requirements for tooling, fixtures, and material racks.

Page 2 of 6 KitchenAid (Portable Appliances)

With the success of KitchenAid in a number of international markets, the company identified a set of target countries in the Asia-Pacific region as potential markets for entry. As a first step in considering these markets, KitchenAid wanted to know how it could profitably market its premium segment food preparation products and develop brand success similar to other global markets. The 1998 team developed a marketing entry strategy for KitchenAid portable appliances for China. The team focused on the three major regions of Beijing, Shanghai, and Guangzhou, and considered both the consumer and professional market segments. The study examined Chinese consumers' and professionals' food preparation habits including the equipment they currently use and equipment they may use in the future. Concurrently, the project evaluates the state of consumerism, business infrastructure, and category competition for small kitchen appliances. The main deliverable addresses critical issues for the Chinese market including import, distribution, and retailing strategies, as well as positioning, promotion, and market sizing.

Ministry of Machinery Industry (MMI) Auto Industry Survey

The Ministry of Machinery Industry was created in 1994 when the government of China issued the Automotive Industry Policy, which instituted reforms in the automotive industry and set guidelines concerning investments in the sector. The Automotive Industry Bureau (AIB) of the MMI governed China's automotive industry and was responsible for all enterprises that produce vehicles including trucks, buses, motorcycles, and cars. In 1996, the MMI invited a Davidson Institute team conduct a study with three deliverables:

1. Assess competencies and training needs among mid-level management in the automotive state-owned enterprises in China, 2. Identify and document present business and managerial challenges that this level of management faces 3. Design and propose a customized management training program to meet the training needs of these managers

Interviews of fifty-three managers were conducted at three representative sites: Tianjin Automobile Industry Corporation, First Automotive Works, and Shanghai Automotive Industry Sales Corporation. The conclusions of this project supported development of a training program for state owned auto enterprises.

Owens Corning Asia-Pacific (Fiberglass Manufacturing)

The 1999 project team developed a comprehensive industry and competitor analysis of the fiberglass building materials market in China that provides Owens Corning Asia- Pacific with a strategic plan that will help to identify candidates for acquisition, joint venture, and/or strategic alliances. The project examined the policies and diverging Chinese business culture that leads to the use of some construction products over others.

Page 3 of 6 Competitor analysis included an examination of the development of a demand function and consolidation/restructuring efforts within the state-owned enterprise system.

MEXICO

Johnson & Johnson (Baby Products)

Mexico's baby products market is worth over $70 million annually and J&J is the market leader with 33% share of revenues. The consumer population is broken into five economic segments labeled A, B, C, D, and E where A is the most affluent and E is the least. Approximately 2.9 million infants are born in Mexico each year, but 60% of these babies do not use any baby products such as shampoos, oils, or powders. J&J views this portion of the population as the market growth segment. The project examined the specific ways that J&J can expand the baby products market into the lower income segments. The final report provided recommendations for action and delivered a model that J&J can use in evaluating lower income segments of other emerging economies such as China.

TAIWAN

Whirlpool Corporation (Home Appliances)

This 1999 Whirlpool project assessed Taiwan's white goods market from channel, competitor, product and consumer standpoints to lead to the development of a turnaround strategy for the Great Teco-Whirlpool (GTW) joint venture. The project included an analysis of distributor/channel/trade partner segments including evaluations of their processes, relationships and market trends. The team investigated primary competitors' product mix and market trends; identified Whirlpool's brand position and image in Taiwan as defined by consumers and trade partners and identify consumer segment decision making process and product preferences.

THAILAND

Whirlpool Corporation (Home Appliances)

The Whirlpool Corporation established its Thailand marketing organization in 1989. While Sanyo in Thailand manufactures some products for Whirlpool, other products are imported from Whirlpool factories around the world. In addition to Thailand, the organization is responsible for distribution to Vietnam, Kampuchea, and Laos. Whirlpool maintains its commitment to Thailand, despite the country's recent currency and economic issues. The Davidson Institute team project addressed four issues of particular importance to Whirlpool Thailand: trade partner strategy, consumer satisfaction issues,

Page 4 of 6 brand management strategy, and relationship management between Whirlpool and its service and logistics subcontractors. The team also provided Whirlpool with an assessment of political, economic, infrastructure, competitive, and consumer environments using the Stages of Development Model. These analyses will be completed through interviews, questionnaires, and secondary research, and will be conducted in Bangkok and up to five other areas throughout Thailand.

VIETNAM

Citibank (Financial Services)

Citibank is the first western bank allowed to establish a branch in Vietnam. In February 1998 it expanded by opening a representative office in Ho Chi Minh City. The 1998 project team created a plan for a new banking product for the Vietnamese market called "micro-capital". The Micro-capital program for Vietnam will provide loans of $50 - 100K to entrepreneurs. The project team researched the feasibility of "micro-capital" in Vietnam, defining risk parameters for the loans, outlining loan application and approval processes, and recommending staff requirements. The 1999 project team provided forecasts on the education needed by Vietnam's bankers to support the evolution and development of the country's financial structure over the next five years as Vietnam moves toward a finance industry that supports capital markets, corporate finance, insurance, and pension funds. At this stage of development, financial sector institutions would be able to operate in full scale and better manage risks by using more advanced financial instruments.

National Economics University (Business Incubator)

The 1999 project team conducted a feasibility study for the creation of a business incubator at the National Economics University (NEU) in Hanoi. The research will include a survey of business incubators in emerging markets, the appropriateness of an incubator for Vietnam, and which sectors the incubator should target.

Vietnam Airlines (Air Travel)

Vietnam Airlines, with headquarters in Hanoi, is a growing state-owned, market-oriented airline with strategic international alliances and partnerships. In 1996, a Davidson Institute team project focused on the sales reporting and payment processes of domestic and international Vietnam Airlines sales agents in Vietnam and abroad. The team made recommendations on ways for Vietnam Airlines to streamline and shorten its collection process while improving its cash management.

Vinacoal (Coal Mining & Distribution)

Vietnam Coal Corporation (Vinacoal) was created in 1995 when the Vietnamese government merged all of the country's state-run coal companies into one corporation. It is headquartered in Ha Long City, Quang Ninh province. Vinacoal's main product is Hon

Page 5 of 6 Gai anthracite coal. In addition to coal production, Vinacoal operates certain formerly state-owned utility plants, cement factories, hotels, and beer breweries. In 1996, a team from the Davidson Institute conducted an assessment of Vinacoal's organizational structure and strategy. In addition, it provided an overview of organizational frameworks necessary for a multidivisional corporation to adapt to a free market economy. The 1996 team project was well received and had an impact on a number of decisions concerning the re-structuring of Vinacoal. Between 1996 and 1997, Vinacoal launched a major program to train 160 managers in western oriented management practices using a WDI faculty team teaching onsite at their training school in Hanoi. Based in Quang Ninh Province, the 1997 team project focused on the development of cost control models and cost reduction systems for Vinacoal's mines and processing plants. This project received financial and technical help from Caterpillar, Vinacoal's equipment supplier. The 1998 project continued work on a comprehensive activity based costing computer model for the Cao Son open pit coal mine in order to enable the mine to better control its costs and improve management decisions.

THAILAND, INDONESIA, SOUTH KOREA, & CHINA

Dow Chemical Corporation (Chemical Industry Manufacturer)

The Davidson Institute project team analyzed and measured the impact of the Asian economic crisis on specific countries, the chemical industry, and its related downstream industries. The team created a credit risk tool to assist Dow in managing its exposure in these countries and industries. This tool will enable Dow to assess the impact of macroeconomic events on the financial stability of its customers (i.e. bank credit, financial strength, and ability to pay). In analyzing the current and potential environment in Asia, the team also evaluated the strategic implications to Dow's business in Asia.

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