FACTORS AFFECTING INTERNATIONAL PRODUCT DESIGN

In this paper we examine the impact of changes of such factors as tari ffs/import cost, exchange rate, and unit savings derived from economie s of scale, on the product design of four international strategies whi ch are characterised by two dimensions. The first dimension describes whether the company offers a standardised or a customised product. The second indicates whether the company centralises its production to a single facility in one country or decentralises its production to faci lities located in-each country. To address the above issue, we present a model that has elements from marketing and manufacturing. For the c ase where the product has one attribute, we show that when tariffs/imp ort cost decrease, an international enterprise should respond by enhan cing the features of its products. Similarly, the product features sho uld be enhanced when the exchange rate increases or the unit savings d erived from economies of scale increases. Numerical examples indicate that an international enterprise should change its production configur ation from decentralised to centralised, in environments of high tarif fs/import cost. Furthermore, an international enterprise should change its product policies from customised to standardised when the savings derived from economies of scale are high, and the exchange rate incre ases.