Globalcast SCM strategy can be described as reactive. Because it has lost its positions starting from the late 1990s when its major clients have changed the rules of the game. There were three key market changes to which Globalcast had to adjust.
- Main customers of the company (HP, Dell, General Motors, Ford etc.) began building new factories, exploiting the benefits of low wage and overheads. Globalcast had to follow its key clients and build supply factories in the same regions. The risks concerned the reliability of the partnership agreement. The customers could simply prefer other suppliers, yet, according to the agreements, Globalcast was promised to have the benefits of sole-supplier status to the factories in remote areas.
- Beginning of the standardized designs trend. From now on the customers could buy components for their numerous factories all over the world. So they could set a limit for suppliers and demand a single lower price. Why was it a problem for the Globalcast? Because its costs varied significantly depending on the location (commercial conditions, overheads, and labor costs). The details were never known by the customers. But now they could choose the lowest Globalcast price among its agencies and factories around the world. In their turn. General managers of Globalcast local agencies tried to defend their business. They bought the components from the ‘cheaper’ sites of the company and resold. It could be unnoticed by the large customers.
- Customers started requiring more mounting work (assembly). Assembly work required lots of additional investments (labor resources, testing equipment, a building of assembly lines, systems of logistic support etc). And Globalcast accepted these new requirements and conditions, adjusting to it in order to fight for global clients.
As we see, Globalcast was not a trend-maker but rather a trend-follower. That is why its strategy is reactive. To learn more about it, read the case study report on its business activities.