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Transportation and Distribution Management of Haier

   

Added on  2020-04-21

11 Pages2735 Words276 Views
Running head: TRANSPORTATION AND DISTRIBUTION MANAGEMENT OF HAIERTransportation and Distribution Management of HaierName of the StudentName of the UniversityAuthor’s Note

1TRANSPORTATION AND DISTRIBUTION MANAGEMENT OF HAIERIntroductionHaier is a Chinese electronics manufacturing company established in the year 1984. Theheadquarters of Haier is located in Qingdao. The company manufactures some of the electronicdevices that are television, refrigerators, washing machine, microwaves, computers, mobilephones and air-conditions. They distribute these products almost every corner of the globe. Theirmajor international markets of the company are USA, Russia, India, Pakistan, France, Malaysia,UK and many more. They started their international journey in 1990 in an effort to tap into theoverseas markets (Haier.net, 2017). They face considerable competition in their internationalmarket from Philips, whirlpool, godrej and other similar products. The reason behind thecompany is lasting in their international markets for this long competing with these mentionedcompetitors is their core value and goal. The company follows a win-win mode of individualgoal that provides sustainability to the company. It is because they are concerned to look afterthe interest of their customers unlike other Chinese companies that seeks for short-term profit(Haier.net, 2017). Their values prioritize the customers’ opinion, consider them right, and seekfor the development their products to satisfy their needs. They also believe in theentrepreneurship and innovation. It helps the company to retain their value. Haire have revisedtheir strategy over time to maintain these core values. The Company currently followsnetworking strategy to hold the market share and brand loyalty in their overseas markets. The purpose of the essay is to understand the incoterms and the process of selectingproper incoterm for the company. The considerations are discussed in relation to the selectedorganization and recommendation is made in for gaining competitive advantage in the market. Itfurther focuses on the criterions considered for carrier selection and carrier relationship

2TRANSPORTATION AND DISTRIBUTION MANAGEMENT OF HAIERmanagement relating the factors with Haier. It also discusses how it can bring profit for thecompany.Incoterms Selection ConsiderationThe company has invested a considerable amount of money in their first half fordeveloping their logistics for operating in the Chinese market. This is due to the need of dealingwith the increased outsourced logistics requirements of their products. They bought sixty percent of the Shanghai Boyol New Brothers Supply Chain management in the Chinese market andcompletely bought the complete Boyol Logistics in the international market. This helped them inincreasing their profit by 19 per cent in the first half. Later, the company made alliance with theleading e-commerce business Alibaba with a goal of creating industry-leading standards for thelogistics. Later, Haier integrated with other logistics business like Gooday mart Logistics todeliver efficient service to their customers (Greg Knowler, 2017). These steps taken by thecompany has considerably increased their profit and efficiency. However, this is limited to theirChinese market only. They considered foreign direct investment in expanding their business tothe overseas market. This eliminates their need of supplying the products overseas as they nowmanufacture their products in their target markets. However, this increases the risk for the company, as they are liable for the goods they arefor the product being delivered. This means that the company is chargeable for the damage incourse of transportation. In other word, the company is responsible for securely delivering theproducts to the doorsteps of their customers (Stapleton, Pande & O'Brien, 2014). Recommended IncotermDAP

3TRANSPORTATION AND DISTRIBUTION MANAGEMENT OF HAIERDAP refers to delivered at place, which means the manufacturer is liable to pack anddeliver the product to the shipment. The responsibility of the goods there after, moves to thebuyers and the buyers are then liable to take responsibilities for the goods. Any kind of damagethat might occur after the products have been handed over to the shipment falls under the buyers’responsibility. Figure 1Delivered atPlaceMoreover,the costingoftransportation is also divided accordingly. The buyer needs to carry out the charges andresponsibilities for customs clearance in the importing country, and the risk including all thecustoms duty. The carriage expenses along with the terminal expenses are to be paid by the sellerin this case up to the agreed destination point. The buyer bears the costing from the finaldestination starting from unloading cost under the terms mentioned in DAP (Bergami, 2013).Adopting this third party logistics term will help the company reduce their costing of transport.Moreover, the company will be liable for the security of the product until packaging.Responsibility thereafter will move to the buyer and reduce the risk for the Haier. CPTCPT otherwise known as carriage paid to named destination can considerably reduce thecost and risk factors for Haier. Liability of the manufacturer according to this term is to deliverthe products to the named destination for pick up by the first carrier. The costing andresponsibility thereafter lies with the buyer.

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