Please prepare the case “Renault’s Logan Car: Managing Customs Duties for a Global
Product” to be discussed in the next class. The case report is due at the beginning of the next class. Please keep separate copies for purpose of participating in class discussion.
(1) What are the complexities involved in factoring out the effect of customs and duties in designing the supply network of Logan (i.e., where to build the CKD parts and CBU, and what markets to serve from what sites)?
(2) In general, what are the quantifiable and non-quantifiable factors that one should consider in designing a supply network?
(3) For Logan, what new opportunities were created by Romania entering the European Union in 2007?
…show more content…
The cost would be a major factor especially when entering new or emerging markets. c. Exchange Rate is one of the factors that determines the favorable condition especially for bilateral trade and can actually have a major impact on the profit margins. d. Traditionally strong and weak markets: Automobile manufacturers would always consider their traditionally strong markets and their core strengths before entering a new market and start selling their vehicles in the markets. e. Transportation/Shipping costs: Transportation or shipping costs would be a major concern for trade when there does not exist a supporting supply network or existing partnerships with local suppliers. f. Achieving a balance between importing parts (CKD’s) versus percentage of local parts used to get duty exemptions based on local parts used or country of origin criteria would be a tricky factor to be considered. g. Inflation trends would be worth keeping an eye upon. Though uncontrollable by the company, keeping a close view on the inflation would help structure the future and long term plans. Note: This is under the assumption that there are no major swings in the inflation/deflation rates of a country. h. Lead time, would be a major factor if the demand rises to new heights and the production levels are not catching up as per the increase in demand. i. Quality and Durability are