Case Solution: Reanult's Logan Car Essay

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Case Solution Renault’s Logan Car: Managing Customs and Duties for a Global Production: Amanda Silverman, Prof. Hau Lee (Case: GS-62 Date: 04/29/08) Stanford Graduate School of Business) Topics: International Value Chain, Foreign Trade Related Risks & Trade Barriers Internationalised Value Chain of Renault Logan Pitesti ROMANIA €489 Million Investment in Production site for Renault Logan CKD Parts CKD-parts Decree 166: 0% duty rate for ~90% of parts Moscow, Russia investment of €230 for assembly plant Duty Free CBUs 0% duty rate resulting from free trade agreements By 2006 20,000 Logans exported Ukraine (free trade agreement) Export Morocco 54% stake in Assembly Plant SOMACA: €30 million invested, CAPACITY: 30, 000…show more content…
This allowed the assembly to be centralized in Romania. However this method was not always an advantage for some target markets such as India where duties could be up to 100% of sale price. In order to save cost another option could be used. CKDs (completely knocked down units) could be shipped to another country for final assembly. Hence, 1 Renault seeks to order CKD-parts from various suppliers, acquire them at a competitive price and in enhanced quality; therefore CKDs were not only ordered form the mother site in Romania but also from local plants. Domestic vendors or other regional sites were also taken into consideration. Sourcing parts from the mother site in Romania could come with a 0% duty however outbound logistics could eat into theses saving. Purchasing parts from local suppliers than using CKD parts would also depends on the competiveness of the supplier in each country. A volume increase correlated to the increases in competiveness of local suppliers. Cost reduction in operations came about due to Renault’s usage of segments of the B-platform, which was also used for the Nissan Micra and Renault Modus. Depending on the end market, Renault would use either its own name or the brand name Dacia. Foreign Trade Related Risks Inflation and foreign exchange related risks are very dominating risk factors which are closely watched and analysed. Here the inflation rate of the local currency and also the exchange
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