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  • UNIVERSIDAD DE LAS AMERICAS, PUEBLA

    MASTERS THESIS

    COMPARISON OF PRODUCT LOCALIZATION STRATEGIES IN THE MEXICAN AND GERMAN AUTOMOBILE INDUSTRY AND THEIR

    IMPACT ON PRODUCTION PROCESSES

    AUTHOR: MARTIN BODEWIG

    PRELIMINARY VERSION FOR

    PROF. CARLOS ACOSTA

    (Chair of Mechanical Engineering; cacosta@mail.udlap.mx)

    PROF. JUAN JOSE ROJAS VILLEGAS (Chair of Industrial Engineering; jjrojas@mail.udlap.mx)

    PROF. DARIO PARRA ORTEGA

    (Professor Industrial Engineering; dario_parra@hotmail.com)

    UNIVERSIDAD DE LAS AMERICAS, PUEBLA

    ONLY FOR DISCUSSION; CITATION, DUPLICATION AND ANY FORM OF PUBLISHING

    PROHIBITED

  • UNIVERSIDAD DE LAS AMRICAS, PUEBLA

    Escuela de Ingenera

    Departamento de Ingenera Mcanica

    Masters Thesis

    COMPARISON OF PRODUCT LOCALIZATION STRATEGIES IN THE MEXICAN AND GERMAN AUTOMOBILE INDUSTRY

    AND THEIR IMPACT ON PRODUCTION PROCESSES

    Director: Prof. MC. Carlos Acosta Meja

    Chairman of the Department of Mechanical Engineering Universidad de las Amricas, Santa Catarina Mrtir, Cholula, Mexico

    Author: Martin Bodewig

    Universidad de las Amricas, Santa Catarina Mrtir, Cholula, Mexico Universitt Karlsruhe (TH), Karlsruhe, Germany

  • 1 Introduction page 2

    Martin Bodewig 09/04

    Acknowledgement This thesis was developed at the Department of Mechanical Engineering of the

    Universidad de las Amricas in San Andrs Cholula, Mexico.

    My special gratitude I like to express to Professor MC. Carlos Acosta, Chair of the

    Department of Mechanical Engineering of the Universidad de las Amricas, who,

    at every time, was guiding my investigation and giving me important inspiration in

    countless discussions. His business contacts in the Mexican automobile industry

    were of great help to this thesis. He is accountable to a great amount for the

    successfully completion of this investigation.

    I like to thank as well Prof. Juan Jos Rojas Villegas, Chair of the Department

    of Industrial Engineering and Prof. MSc. Dario Parra Ortega, both of the

    Universidad de las Amricas and members of this thesis committee, for their

    valuable suggestions and kindly support.

    Furthermore, I like to express my appreciation to the companies Volkswagen de

    Mxico and LuK Puebla., both situated in Puebla, Mexico, that have participated in

    this investigation. In sharing their practical experience in many interviews, experts

    of these two companies have given important insights and essential suggestions

    for this thesis.

    San Andrs Cholula, January of 2004

    Martin Bodewig

  • 1 Introduction page 3

    Martin Bodewig 09/04

    Contents

    1 Introduction 8

    1.1 Statement of the Problem ......................................................................9

    1.2 Objectives of the Study........................................................................10

    1.3 Limitations ............................................................................................12

    1.4 Structure of Thesis...............................................................................13

    2 The Mexican and German Automobile Industry 14

    2.1 History of Automobile Production ......................................................14 2.1.1 Early Automobile Concepts..........................................................14 2.1.2 Beginning of Mass Production .....................................................16 2.1.3 Lean Manufacturing .....................................................................19 2.1.4 Internationalization.......................................................................19 2.1.5 Consolidation ...............................................................................21

    2.2 The Automobile Industry in Mexico ....................................................24 2.2.1 Local Car Manufacturing ..............................................................24 2.2.2 The National Car Market ..............................................................28

    2.3 The Automobile Industry in Germany.................................................31 2.3.1 Local Car Manufacturing ..............................................................31 2.3.2 National Car Market .....................................................................33

    2.4 Upcoming Strategic Challenges..........................................................34 2.4.1 Customer Requirements and Individualization.............................35 2.4.2 Environmental Standards.............................................................35 2.4.3 Technological changes ................................................................35

    3 Globalization and Localization in the Automobile Industry 39

    3.1 Globalization.........................................................................................39 3.1.1 The Globalization of Markets .......................................................40 3.1.2 The Globalization of Production ...................................................40

    3.2 Localization...........................................................................................40 3.2.1 The Localization of Products........................................................41 3.2.2 The Localization of Production.....................................................42

    3.3 Glocalization .........................................................................................42

    3.4 Homologation .......................................................................................43

  • 1 Introduction page 4

    Martin Bodewig 09/04

    4 Localization Influence Factors 44

    4.1 Geographical Influence Factors ..........................................................44 4.1.1 Climate.........................................................................................46 4.1.2 Topography..................................................................................49 4.1.3 Infrastructure................................................................................51 4.1.4 Traffic Conditions .........................................................................55

    4.2 Legal Influence Factors........................................................................58 4.2.1 Environmental Protection Laws....................................................59 4.2.2 Safety Standards .........................................................................68

    4.3 Technological Influence Factors.........................................................70 4.3.1 Gasoline Quality...........................................................................70 4.3.2 Frequency Ranges and Multimedia Devices................................74 4.3.3 Material Regulations and Availability............................................75

    4.4 Economical Influence Factors.............................................................76 4.4.1 Average Income...........................................................................78 4.4.2 Currency risks ..............................................................................79 4.4.3 Labour Costs and Productivity .....................................................81 4.4.4 Automobile Running Costs...........................................................82

    4.5 Socio-Political Influence Factors ........................................................85 4.5.1 Demography ................................................................................85 4.5.2 Education .....................................................................................87 4.5.3 Personal Safety Issues ................................................................91

    4.6 Cultural Influence Factors ...................................................................92 4.6.1 Language .....................................................................................93 4.6.2 Religion ........................................................................................94 4.6.3 Corporate Culture ........................................................................96

    4.7 Summary of Localization Influence Factors.....................................103

    5 Localization of Products 106

    5.1 Localization Types .............................................................................106 5.1.1 Obligatory Localization...............................................................107 5.1.2 Discretionary Localization ..........................................................107

    5.2 Economic Impacts of Localization....................................................106 5.2.1 Localization Advantages ............................................................106 5.2.2 Localization Disadvantages .......................................................107

    5.3 Localization of Premium and Economic Cars..................................108

    5.4 Localization in the Product Development Process .........................111 5.4.1 Product Development Process in the Automobile Industry ........111 5.4.2 Cultural Neutral Products ...........................................................112

  • 1 Introduction page 5

    Martin Bodewig 09/04

    6 Localization Impact on Production Processes 113

    6.1 Mass-Customization and Build-to-Order..........................................113 6.1.1 Build-to-Order ............................................................................113 6.1.2 Mass Customization...................................................................114 6.1.3 Differentiation of Localization and Customization ..............