Specifically, the class discussed the pros and cons of pursuing expansion in Latin America and in Africa. Most of this discussion revolved around geographic expansion. Finally, we discussed revamping the company’s human resources strategy. Next, we discussed investing more in research and development. First, we discussed potential geographic expansion. We identified three different areas for Marcopolo to find growth. As pressure to maintain growth increases, Marcopolo needs to decide whether to focus its efforts on the domestic market or continue its global expansion despite the political and socio-economic instability and increased threat of competition. Concurrently, they faced turbulent macroeconomic factors caused by weaker institutions, such as poor government regulations and currency swings. First, they faced major internal issues, such as lack of control and delays in production. Though this new strategy allowed Marcopolo to continue its expansion into other markets, two factors limited the strategy’s effectiveness. From producing in-house, exporting components, and doing final assembly in the destination country, Marcopolo decided to capitalize on joint ventures with local partners to both manufacture and assemble parts abroad. However, in 2006, fierce local market competition, higher cost of raw materials and inputs, and increased export cost due to currency fluctuations of the Real led Marcopolo to make strategic changes in its export processes. Until 2005, this strategy proved successful in international markets, reinforcing the company’s position as a formidable global player. Finally, Marcopolo took pride in its customization capabilities which addressed production needs and budget constraints of customers from different cultures and regions. Additionally, the company forged partnerships with global manufacturers, allowing buses to be produced on demand in other markets and reducing storage costs. Second, Marcopolo was able to manage flexible production lines to meet varied requirements of customers without compromising quality. First, Marcopolo’s production followed a verticalization model where approximately 80% of parts needed to produce a bus body were manufactured internally and only as needed, i.e. Marcopolo can attribute its early success to a three-pronged internationalization strategy. Marcopolo’s core competencies in production and customization have been critical to its growth in Brazil and have allowed the company to expand its presence in neighboring countries. Since its inception in 1949, the company has seen consistent domestic growth, establishing a strong foothold and competitive advantage in its country of origin with a 46% market share. Marcopolo is a leading Brazilian bus body manufacturer. By focusing on South America, they can retain flexibility in their production process as well as focus on a more culturally familiar market. Brazilian bus and coach manufacturer, Marcopolo, should build on existing strengths through the continuation of international expansion initiative, focused specifically on joint ventures in South America.
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