Методическая записка
Учебное пособие подготовлено для студентов первого курса магистратуры и направлено на дальнейшее совершенствование навыков перевода текстов по специальности «Международный бизнес». В качестве исходного материала использованы аутентичные источники — статьи из журналов «The Economist)), «Business Week», «Fortune», «Time», «McKinsey Quaterly», «Marketing» и других изданий.
Пособие состоит из 4 глав-модулей, 16 основных уроков и 4 уроков на закрепление материала.
Пособие организовано по тематическому принципу, и его основные разделы отражают некоторые актуальные проблемы стратегического менеджмента, организации взаимодействия с партнерами и клиентами, продвижения продукта, проблемы брендинга, роли альянсов и слияний в достижении успеха компании, наиболее интересные аспекты управления персоналом, обеспечение достоверности бухгалтерской отчетности, особенности управления в банковской и страховой сфере.
В начале каждого раздела представлены один или два основных текста, снабженных лексическим или переводческим комментарием, списком активной лексики, лексическими упражнениями по переводу слов и словосочетаний с английского языка и с русского языка. Слова и словосочетания, представляющие специальный и общеязыковой интерес, выделены в отдельные разделы. Лексические упражнения предусматривают консолидацию лексики урока и самостоятельную работу со словарем. В пособии рассматриваются некоторые встретившиеся в текстовом материале переводческие трудности и приводятся упражнения на закрепление предлагаемых способов перевода.
Кроме основных текстов, каждый раздел включает дополнительные тексты, которые могут быть использованы в качестве тренировочного материала. По выбору преподавателя некоторые статьи могут быть использованы для реферативного изложения, служить основой для самостоятельного исследования того или иного вопроса. В некоторых уроках пособия предусматриваются задания творческого характера, требующие аналитического подхода и умения найти и представить информацию в виде письменного доклада или подготовить
устную презентацию.
В конце почти каждого урока приводятся отрывки из статей и интервью из российских экономических журналов для перевода с русского языка на английский, которые направлены на закрепление пройденного лексического материала и на совершенствование знаний в области грамматики и синтаксических структур английского языка. Данный вид работы для многих магистрантов представляет особые трудности, поэтому желательно, чтобы данные упражнения выполнялись в письменной форме с последующей проверкой преподавателем и/или с обсуждением вариантов перевода в аудитории.
Наряду с пособием рекомендуется использовать фрагменты экономических новостей Би-Би-Си из мультимедийной программы «Соmрапу News» (#1155/1157) и видео материал «Слияние не состоится», которые могут оказаться ценным дополнением урока.
Автор выражает благодарность коллегам доц. Хватовой Н.И., доц. Мальцевой A.M. и доц. Давыдовой Л.Н. за предложения и замечания, сделанные в ходе подготовки пособия.
Автор
Contents
Chapter 1. The Big Ideas. Management and Marketing
Unit 1. Text: The Big Ideas………………………………………………….7
Unit 2. Text: All Yours……………………………………………………...23
Unit 3. Text: Quality Isn't Just for Widgets 36
Unit 4. Text: Nokia's Next Act 58
Unit 5. Consolidation 67
Unit 6. Text: Halfway Down a Long Road 71
Unit 7. Text: The Case for Brands 83
Unit 8. Text: When Battles Commence 99
Unit 9. Consolidation 119
Chapter 2. Where Is the Stick? How to Motivate and Manage the Personnel and the Executives
Unit 10. Text: Where's the Stick? 132
Unit 11. Text: Under Water 143
Unit 12. Text: Going Sideways on the Corporate Ladder 149
Unit 13. Consolidation 166
Chapter 3. The Numbers Game. Creative Accounting. Insolvency and Bankruptcy
Unit 14. Text: Fuzzy Numbers 181
Unit 15. Text: I Swear 202
Unit 16. Text: Up From the Ashes 221
Chapter 4. Banking. Stronger Foundation
Unit 17. Text: The Coming Storm 230
Unit 18. Text: Stronger Foundations 239
Unit 19. Text: Conflicts, Conflicts Everywhere 253
Unit 20. Consolidation 270
CHAPTER 1. THE BIG IDEAS.
MANAGEMENT AND MARKETING
UNIT 1
• Text
THE BIG IDEAS
Scientific management. Frederick Winslow Taylor is the management thinker humanists still love to hate, although he's been dead since 1915. His system of scientific management, they say, dehumanizes workers and reduces management to a matter of measurements. But ever since Taylor's methods of "working smarter" first made him famous at the turn of the century, our appetite for greater productivity has been insatiable.
Taylor first got out his stopwatch in 1881 in the hope that science could end a tug of war over piece rates. As a young foreman at Midvale Steel in Philadelphia, he was expected to cut rates when production was high, but he knew that workers would react by holding down production when rates fell. Seeking a Platonic ideal of steelmaking, Taylor carefully isolated and timed each step in the process. Along the way, he saw ways to improve the system — by rearranging the shop, modifying a tool, or eliminating a movement. He supplied instruction cards so that the machinist didn't need to think: Taylor had done the thinking for him. Taylor spent the next 30 years refining his principles of scientific management. When in 1910 Louis Brandeis publicized Taylor's ideas to expose the wasteful habits of the railroads, the efficiency era was born. "In the past the man was first," Taylor wrote. "In the future the system must be first."
Assembly line. Henry Ford gets his due elsewhere in this magazine, so why mention him here? Two words: mass production. In 1909, Ford produced almost 14,000 cars; just five years later the moving assembly line had increased output to over 230,000. Ford's moving assembly line upped Taylor's ante: Taylor tested the maximum a man could produce; Ford's assembly line had its own speed, and the workers had to adapt to it.
Modern Corporation. Turning a random assemblage of car companies into what has been America's largest corporation for the better part of seven decades is impressive, but it didn't earn Alfred Sloan Jr. a place on this list. What did was his design for General Motors — multiple divisions controlled and supported by a central core. That set the standard for the modern decentralized corporation.
Leadership. The most ingenious corporate structure means nothing unless someone leads it well. One of the earliest and most original thinkers on leadership issues was Mary Parker Follett, a New England social worker trained in political science who became an adviser to business leaders in the 1920s and 1930s. Follett preferred constructive conflict to compromise. She believed employees should have a voice in how things are done, but only if they share in the responsibility. And half a century before the business schools got around to it, she spoke of managers who lead with shared vision and common purpose. No wonder Peter Drucker has called her the "prophet of management."
Brand management. It's tough out there in consumer-products land: so many products, so little supermarket shelf space. But those crowded shelves are a testament of sorts to the glory of brands. And all those brands, in their sometimes maddening variety, owe their vitality to an idea that surfaced at Procter & Gamble way back in 1931. The poor showing of Camay against the well-established Ivory soap led P&G manager (and future CEO) Neil McElroy to suggest that what Camay needed was an advocate. This "one man, one brand" system turned company men into entrepreneurs who went all out for their product, a system that left its mark on products the world over.
Management guru. If Peter Drucker's name comes up frequently in these pages, it might be because he has chronicled or anticipated almost every major management landmark, from GM at the close of the Sloan era (in Concept of the Corporation) to knowledge workers (a term he coined 40 years ago). The Practice of Management, first published in 1954, is still going strong. The original management guru (a word Drucker says people use only because "charlatan" is too long to fit in a headline), Drucker has done more to legitimize management as a profession than a business school full of theorists.
Labor rights. Not all big ideas about managing have come from managers. No one has fought harder in this century than labor unions to make work safer and more fair. And no one better personifies the nobler side of labor's struggles than Walter Reuther. He negotiated the 1955 merger of the Congress of Industrial Organizations (which he led) with the American Federation of Labor and broadened labor's influence. In 34 years with the United Auto Workers, he championed the rights of workers to medical coverage, pensions, and unemployment benefits. The boss was still the boss, but the workers had found a voice.
Managing by the numbers. Add, subtract. That pretty much sums up 30 years of finance-driven management. The '60s brought the conglomerate era, when companies like 111 branched out into rental cars, hotels, and Wonder Bread bakeries. It was no drawback to be ignorant about these new businesses, the gods of finance proclaimed — with good data, you could manage anything. Bigger was better, and being on top of the FORTUNE 500 was best. But the conglomerate strategy did not stand the test of time. Harold Geneen, the king of the conglomerators, managed to hold ГГТ together until he stepped down as CEO in 1977. Disassembly followed.
By the 1980s the momentum had reversed, so the equation 2 + 2 = 5 was now 5 - 2= 7. What fueled the frenzy of the Deal Decade were new fads in financing — leveraged buyouts and their new currency, junk bonds. By piling on debt, takeover artists aimed to force managers to eliminate waste and reawaken the entrepreneurial impulse in bloated businesses.
Although investors saw gains, often such deals left companies strapped for capital to invest in the future or sent once stable businesses into bankruptcy.
Quality. W. Edwards Deming hated American management style, and by the 1980s American managers came to love him for it. Deming, the traveling evangelist of quality, had been ignored by American corporations in the late 1940s when he tried to interest them in his statistical methods for process control. So in 1950 he took his tent show to Japan, where he railed against American evils like competition (cooperation was more constructive), production quotas (which sacrificed quality for quantity), and end-of-the-line inspections (which in effect plan for defects rather than design processes to prevent them). Having lost everything in the war, Japanese manufacturers proved receptive and soon were taking market share from American companies. When an American television program "discovered" Deming in 1980, business was finally ready to listen to it.
Reengineering. Michael Hammer and James Champy set the business world on fire in the early '90s, selling two million copies of their manifesto, Reengineering the Corporation and FORTUNE, we admit, helped to fan the flames. Now that reengineering is about as popular as Linda Tripp, it's fair to ask, what were we thinking? First, Hammer and Champy's vision was no mere cost-cutting tool but the first large-scale, systematic application of information technology to management. By re-imagining business processes, companies could put back together tasks that Taylor and Co. had pulled apart, building responsibility into jobs that used to pass the buck. Second, no one said reengineering would be easy. In fact, one critic has compared it to chemotherapy — a radical treatment that destroys a lot along the way. Half-hearted attempts pretty much guaranteed failure.
And there were plenty of failures, not to mention that companies used the idea to justify willy-nilly downsizing. As the authors later acknowledged, they hadn't paid enough attention to the people.
Knowledge management. If the Internet economy has taught us anything, it's that the physical world Frederick Taylor lived in determines less and less of what we value. A good idea, especially one that is well timed, has almost unprecedented worth. It follows, then, that the stuff between workers' ears, obviated by Taylor and barely tolerated by Ford, becomes treasure to today's managers. Now the challenge for managers is how to capture, harness, and develop that knowledge profitably.
Fortune
Notes
| | Congress of Industrial Organizations (CIO) | Конгресс производственных профсоюзов (КПП) |
|---|---|---|
| | American Federation of Labour (AFL) | Американская федерация труда (АФТ) |
| | United Auto Workers (UAW) [United Automobile, Aerospace and Agricultural Workers of America] | Объединенный профсоюз работников автомобильной промышленности (Объединенный профсоюз работников автомобильной, авиакосмической промышленности и сельскохозяйственного машиностроения) |
| | Linda Tripp | Monica Lewinsky's friend who recorded telephone conversations with Lewinsky in late 1977 which eventually led to the impeachment of President Clinton |
| | Vocabulary | |
| | to dehumanize workers | обезличивать работников |
| | piece rate | сдельная ставка (оплаты труда) |
| time rate | повременная ставка | |
| refine v | 1) очищать; рафинировать; перегонять нефть; 2) совершенствовать, улучшать | |
| to refine one's principles | оттачивать свои принципы | |
| refinery n | нефтеперерабатывающий завод | |
| efficiency n Ant. inefficiency | эффективность | |
| core n | ядро, сердцевина, основная, центральная часть | |
| core business Syn. core competence Ant. sideline business | 1) основное направление деятельности; профильная деятельность; 2) профильное предприятие | |
| leadership n | лидерство | |
| vision n | видение | |
| brand n | торговая марка, марка производителя, брэнд | |
| brand management | управление торговыми марками | |
| fad n | преходящее увлечение, (ново)модное направление | |
| management fad | новомодное направление в менеджменте | |
| leveraged a | с использованием заемных средств | |
| leveraged buyout | выкуп с привлечением заемных средств; поглощение (takeover) или выкуп компании с использованием заемных средств («финансового рычага» или «левериджа») | |
| national champion | лидер национальной индустрии; предприятие — предмет национальной гордости | |
| junk bond | высокодоходная, высокорискованная облигация | |
| loated а Syn. swollen, sprawling | раздутый, чрезмерный | |
| champion v Syn. advocate, vindicate, bear up, stand up (for), stick up (for), advance (smth), support, protect, light (for), evangelize | защищать, отстаивать; бороться (за что-либо) | |
| champion n Syn. advocate, proponent, vindicator, stickler, evangelist | 1) защитник, поборник (чего-либо); борец (за что-либо); 2) чемпион, призер | |
| coverage n | 1) охват; 2) репортаж, освещение события (в печати, по радио и т.п.); 3) страховое покрытие | |
| medical coverage | медицинское страхование | |
| quota n | квота, количественное ограничение | |
| production quota | производственное задание, квота на добычу (нефти и т.п.) | |
| dodge v | уклоняться, избегать (уплаты налога, контроля) | |
| end-of-the-line inspection Syn. end-item inspection | контроль (качества) на конечной стадии производства | |
| downsizing n | сокращение размеров компании, числа занятых | |
| reengineering n | реинжениринг, программа полной перестройки компании | |
Useful Words and Phrases
| tug of war | перетягивание каната, борьба с переменным успехом, решительная схватка |
| to get one's due | получить по заслугам, получить причитающуюся долю |
| to fan the flame | разжигать пламя, разжигать страсти |
| landmark n Syn. milestone, turning point, tipping point | веха, поворотный пункт |
Vocabulary Commentary
В английском языке существует несколько терминов для обозначения понятия «перестройка, реорганизация» — restructuring, downsizing, delayering, streamlining, reengineering. Restructuring представляет термин общего характера. Downsizing означает, что усилия руководства направлены на сокращение штата сотрудников и уменьшение размеров компании. Слово delayering подчеркивает, что в центре внимания — сокращение количества уровней управления. Слово streamlining включает в себя и значение «рационализация». Reengineering — это полная перестройка компании, в процессе которой пересматриваются не только все стороны ее деятельности, но и цель и концепция самого предприятия.
Кроме этих терминов, в экономической литературе встречаются и другие лексические единицы, описывающие процесс изменений в компаниях — некоторые из них изначально употреблялись метафорически, а затем в связи с частой повторяемостью потеряли свою необычность и красочность, и поэтому могут переводиться словами перестраиваться, проводить реорганизацию. К ним относятся такие глаголы, как overhaul, revamp, remake oneself, reinvent oneself, turn around.
Business Commentary
Leveraged Buyouts (LBO)
При выкупе компаний с привлечением заемных средств операция по приобретению компании-объекта осуществляется за счет внешнего финансирования.
В качестве обеспечения займов, взятых компанией-покупателем, часто служат ее активы, при этом задолженность погашается из денежных средств приобретенной компании. Менеджеры используют этот подход, чтобы сохранить контроль над компанией, превратить ее из открытой в частную.
Очень часто при выкупе с привлечением заемных средств акционеры открытой компании получают премию сверх текущей рыночной стоимости их акций.
JunkBonds
Высокорискованные облигации с кредитным рейтингом ВВ и ниже.
Термин «junk bonds», имеет негативный оттенок, и поэтому эмитенты и владельцы предпочитают, чтобы такие облигации назывались высокодоходными (high-yield bonds).
Такого рода облигации выпускаются компаниями, не имеющими длительной истории и хорошей деловой репутации или компаниями с сомнительной кредитоспособностью.
Они являются распространенным способом финансирования поглощения. «Отцом» рынка «бросовых», «мусорных» облигаций считается известный американский финансист Майкл Милкен (Michael Milken), который в 1987 году заработал 400 млн ф. ст. и в 1990 г. был приговорен к 10 годам заключения и штрафу в 366 млн ф. ст. Отбыв наказание, он продолжал финансовую деятельность, управляя фондами, но уже в сфере образования и научных исследований.
См. также Иван Боуски {IvanBoesky).
Exercise 1.
a) Define the adjectives shown in the chart and give possible combinations with the nouns in the box.
| diamond, politician, businessmen, appetite, mind, leather, population, ambition, attempt, toy, signature, person, solution, desire, tool, pleasure, companies, money, speech |
| Adjectives | Definition | Collocations with nouns |
| insatiable | | |
| ingenious | | |
| indigenous | | |
| genuine | | |
| half-hearted | | |
| hard-nosed | | |
b) Complete the chart. Use your dictionary if necessary. Study the following phrases based on the word "inspection".
| inspection | осмотр; проверка; инспектирование; досмотр (таможенный) |
| inspection during manufacture | |
| in-process inspection | |
| (un)scheduled inspection | |
| acceptance inspection | |
| quality-inspection cost(s) | |
| | заводской контроль |
| one-time inspection | |
| | контроль (груза) перед отправкой |
| | частичный контроль |
| purchase subject to inspection | |
Exercise 2. Give the Russian for the following.
a moving assembly line, to roll off the assembly line, to end a tug of war over smth; to expose wasteful habits and inefficiencies; leadership issues; the leader's vision; multiple divisions controlled from the central core; to get one's due; corporate structure; to dodge price controls; sprawling empires of HR departments; bloated businesses; bloated (swollen) budget; to branch out into hotels and bakeries; to impose import quotas; to dodge oil production quotas; to build responsibility into jobs; to downsize a company; delayering; to make one's business lean; to flatten the hierarchy of an organisation; a landmark deal; to lead with shared vision and common purpose
Exercise 3. Translate the following into English.
управление качеством; устанавливать обязательные для членов нефтяного картеля квоты на добычу; сосредоточить внимание на основных направлениях деятельности; устранить все дефекты в автомобиле на конечной стадии производства; подливать масла в огонь; обоснованное сокращение компании; переосмысление всего процесса; крупномасштабное сокращение издержек; разросшиеся компании; обсуждать показатели работы компании; использовать систему поставок «точно в срок»; оптимизировать бизнес; полностью перестроить работу в компании
Exercise 4. Translate the following sentences into Russian paying attention to their structure.
Propping up weaker companies hurts the strong ones, since they then have to cope with subsidized competitors.
Tapping into the knowledge base of GEis a negotiating tool or benefit of doing business, not an end in itself. Bringing customers to GE's research and development centers or famed training facilities in Crotonville, for example, is meant to improve productivity, not provide free field trips.
That the products which the business units select to sell globally, will continue to be tailored to local markets only adds to the complexity. Internal "disruption" is already affecting sales.
Whatever detailed rules the SEC agrees are almost certain to be challenged by the lawyers, who are not a group lacking in legal representation.
Gone are the days when Vivendi Universal's top executives hobnobbed with pop stars and gave interviews to Rolling Stone. What Jean-Marie Messier once trumpeted as the core of his ill-starred vision of a global media and communications empire has become a faint echo after his departure as chief executive and almost two years of aggressive restructuring that has rescued the French conglomerate from the brink of collapse.
As Microsoft focuses increasingly on developing an image as an innovator — the company is trying to fend off not only antitrust threats but also the competitive challenge to Windows from the rise of open-source software like Linux — it has adjusted its advertising strategy in recent years. While Microsoft in the past had predominantly used product-specific advertising, the company is now spending about one-quarter of its ad budget on a brand-building campaign that seeks to give Microsoft a more human face.
Exercise 5. Give the English for:
Кто бы мог подумать, что новая теория в области управления разожжет страсти в деловом мире и заставит многих переосмыслить все основы бизнеса.
Нельзя было ожидать, что новые веяния в менеджменте заставят управленцев заняться сокращением издержек и устранением потерь.
3 Вскоре после окончания войны президент Франции Шарль де Голль (Charles de Gaulles) распорядился о создании собственной компьютерной фирмы «Буль» (Bull), призванной стать гордостью национальной индустрии и бросить вызов доминирующему положению американской компании Ай-Би-Эм (ЮМ).
4. Многие конгломераты начинают избавляться от неприбыльных предприятий и уделять внимание основному виду деятельности, в которой компания добилась преимущества в конкурентоспособности на мировом рынке.
5. Использование заемных средств при выкупе компаний расширяет финансовые возможности компании в таких операциях и позволяет захватывать объекты поглощений, которые оказались бы ей не по зубам, если бы она опиралась на собственный капитал.
6. Что касается стратегии, то компания «Джи-И Кэпитал» (GE Capital) пошла в Европе тем же путем, который обеспечил ей успех в США: захват недостаточно хорошо работающих предприятий в области лизинга, страхования или потребительского кредита. В случае необходимости компания назначала новое руководство и внедряла более эффективную технологию и методы работы. Она объединяла компании одного профиля для достижения эффекта масштаба, ставя нелегкие задачи перед менеджерами этих компаний.
Exercise 6. Translate the text into Russian in writing.
Buy-Outs Get a Safer Image
The buy-out is back. Within the last month, the incredible split personality of the US stock market has spawned a shoal of deals in which managers of low-technology companies, disgruntled with their market valuation, have sought partners to take them private.
But there is bad news for those who relished the cut-and-thrust of the late 1980s, when colorful financiers such as T. Boone Pickens and Ivan Boesky took advantage of the gap between public and private market values to raid targets.
Analysts and buy-out specialists believe leveraged buy-outs of the early 21st century will be greyer, less extravagant — and safer.
The companies that have taken the leap so far are small — US Can, which makes plastic and steel containers, and Cameron Ashley
Building Products, both of which announced leveraged buy-outs last week, are hardly household names. But bigger and better-known companies are also examining their options, and the trend is embracing high-tech as well as "old economy" companies.
LBOs got a bad reputation in the late 1980s, as predators put pressure on companies to do deals on unreasonable terms, financing break-up bids with junk bonds issued by the likes of Michael Milken.
But LBOs did not die in the 1990s. The phenomenon has gathered pace as the gulf has widened between the valuation of high-tech stocks and the old-line manufacturers and service companies. Jack Malvey, chief global fixed income strategist at Lehman Brothers, points out that some companies are now trading at three times cash flow, when the raiders of the late 1980s would have snapped up a bargain at six or seven times cash.
But the rationale and structure of buy-outs have changed. "The prices are more reasonable and there seem to be more alliances with managements that have a good business reason to go private," says Brad Bloom, managing director of Berkshire Partners, the Boston-based investment firm backing the US Can buy-out. Managers' overriding desire is to realise value that they believe is being ignored by the markets.
Another factor preventing a greed-is-good explosion of LBOs is the weak state of the high-yield bond market. Most of the acquisitions of this bull market have been equity-financed, and it is getting more not less costly to issue high-yield bonds. The latest deals have a higher proportion of equity. "I would have to question how much financing is there for a gigantic LBO extravaganza over the next six months," says Mr Malvey. "But on the margin I wouldn't be surprised if you saw a few more of these transactions," he says.
The Financial Times
Exercise 7. Translate the text into Russian orally.
Creating Euro Giants
What is the French and German plan to create bi-national champions really about?
THE latest attempt by France and Germany to revive tired old industrial policies by jointly creating European business champions got off to an inauspicious start. Before the German chancellor, French prime minister and their respective economy and finance ministers could hold their summit in Berlin on June 1st to hammer out the details of the plan, on May 17th Nicolas Sarkozy, the French finance minister, and Mario Monti, the European Union's competition commissioner, agreed a rescue deal for Alstom, a troubled French engineering firm, that flies in the face of the new spirit of co-operation.
Siemens, a huge and prosperous German firm, has expressed a strong interest in buying Alstom's turbine business — on the face of it, a perfectopportunity to create a symbol for the new policy. Instead, under the deal between Messrs Sarkozy and Monti, Alstom will remain a French company, bailed out by the French state. This decision led several German officials to complain about France going italone. Siemens is considering a legal challenge, once the details of the rescue package are official.
In theory, at least, the French and Germans have in mind a different sort of national champion to the inefficient, protected monopoly, state-subsidised sort of which Alstom is a reminder. A classic example of the old-style champion, says Louis Schweitzer, chairman of Renault, is Fiat before the EU forced open the Italian car market.
The new sort of national champion, or Euro champion, would have a somewhat different objective, says Mr Schweitzer, to ensure that Europe, or a given European country, has firms able to hold their own in competitive global markets, particularly against America's mighty multinationals. This, he says, is the logic behind the recent controversial drug merger, pushed by the French government, of Sanofi-Synthelabo, a French company, with Aventis, a Franco-German firm.
France and Germany launched their new plan on May 13th, when they declared an intention "to formulate a joint industrial policy aimed at creating a framework for mergers and joint-ventures between major German and French corporations." Together Germany and France could create a number of industrial champions modelled on EADS, the European Aeronautic Defence and Space firm, formed in 2000, said Jacques Chirac, the French president.
Such a policy would have its downside even if it were being pursued in conjunction with general economic liberalisation. But there are reasons to think that the big talk about cross-border action may be mere cover for various politically driven national initiatives in France and Germany, many of them protectionist.
The Economist
UNIT 2
• Text
All YOURS
Manufacturing companies are increasingly using the Internet to give customers the impression of personal service. But true customisation needs new production techniques as well
"ANY colour you want so long as it's black," was Henry Ford's approach to customer choice. Click on the website of idtown.com, and yousee the next industrial evolution at work. This firm, in Hong Kong,will sell you any of an almost infinite variety of designs of watch, assembled from standard parts, at much the price of a Henry Ford-type watch.
Thanks to the Internet, all sorts of firms are using one-to-one marketing to elicit information about individual customers. Such information could once have been collected only through a direct sales force, and its high cost meant that it was used only for high-value customers. Now, the cost has fallen sharply. And mass customisation allows companies to use such information to produce individually tailored products at affordable prices. "As in so many areas," notes Ward Hanson, author of "Principles of Internet Marketing" and a professor at Stanford Business School, "the Internet allows the democratisation of goods and information."
Until now, these techniques have been applied chiefly to services. Banking, stockbroking, communications, on-line information: all increasingly appear on your computer with your name attached. "Anything that can be digitised can be customised," says Joseph Pine, who helped to found Strategic Horizons, a consultancy in Ohio, and also wrote a book on mass customisation. But now, products that cannot be digitised are increasingly receiving die all-yours treatment too. And as the revolution spreads to manufacturing, firms are finding they need to change their entire production process.
The first manufacturers to tailor products to particular customers have, not surprisingly, been selling to other businesses. Mass customisation is more prevalent in business-to-business, because the customer can attach a dollar value to it," says Mr Pine. The simplest approach is to design a product that buyers can customise themselves. However, too many choices, and too much flexibility, create problems for both customers and company.
But the change has not merely affected customers' costs and convenience. Gradually, it has affected the way that customers work too. The manufacturer that has done most to apply this approach in the consumer world is Dell Computer. To the customer, the company's most striking feature is a website that allows the buyer to design an individual computer and then track it through to delivery. But Dell also shows that when you get mass customisation to work, some remarkable things start to happen.
First, the need to hold stocks of parts, partially finished and finished goods falls sharply: inventories at Dell have fallen from 31 days of parts at the end of the financial year to only six days today, says Paul Bell, who runs Dell's operations in Europe. Much of Dell's production, up to the point of final assembly, is outsourced. That makes it essential for suppliers at every link in the chain to be plugged into good information about what customers want, and when. "If all our suppliers are guessing," says Mr Bell, "you end up with inventory, which is the physical embodiment of bad information." Mind you, this process can also bring an opposite problem: delays when Dell runs out of a particular part.
Speed and good communications are thus essential if mass customisation is to work. Get them right, and another prize is yours. In Henry Ford's day, Ford made the car and the customer paid for it. In Michael Dell's day, the customer pays for the computer and then Dell makes it. Thus, in the past quarter Dell has been sitting on 18 days' sales, and the figure is creeping up as the speed of production increases.
Car makers, lumbered with more than $100 billion of stocks in America, look on this with envy. "We've learnt a lot from studying Dell," admits Mark Ryhorski, manager for consumer-relationship marketing at Ford in America. "After all, they broke the paradigm that great consumer choice means huge amounts of inventory. The auto industry is a trillion-dollar industry, sitting on 60-100 days of finished goods. Think how much of this country's capital is tied up in that." Conventional car making pumps thousands of cars through each plant to keep costs down. But accumulating stock has to be financed and, as often as not, cleared using special deals, both of which eat into margins.
As a step away from this, Ford announced a partnership with Microsoft last year that will give potential customers a view, not just of their local dealer's lot, but of what regional dealers have, what is on order and what is being built. The trouble is that this is not that many steps away from Henry Ford. What Ford and Microsoft propose is merely a customisation of the stock pipeline. Customising the car itself will be harder: for instance, body colour is determined early on, when the newly bashed metalwork is sprayed. By contrast, the colour of a Smart Car, made by DaimlerChrysler, is decided almost at the last minute, when plastic panels are clipped on to the sides. Without changing their production process, traditional car makers will not really be able to customise their cars.
To succeed in mass customisation, firms must change more than just the order in which things are assembled. "One of the biggest changes is in the design and construction of products," says Frank Filler, an expert in mass customisation at the Technical University of Munich. Companies, he says, need to move to modular production processes, in which each group of steps can be separated or clipped together "like Lego blocks."
One example is in the garment business. Timothy Belton left Andersen Consulting in 1997 to set up Express Custom Tailors, producing tailored menswear to order. He offers "a custom garment in less time than you have to wait for the alterations, at a lower price than off-the-rack."
He put the garment-producing end of his business in Cleveland, Ohio, because the town's tailoring tradition gives it a ready supply of skilled workers. But the production process he uses is Lego-style, not old-style. Instead of making the sleeves of a jacket first and then the body, assembling the garment in a series of steps, his workers make sleeves and body simultaneously, working in parallel with others who are stitching other sections. By breaking the 100 or so operations into modules, a garment can be assembled in five hours. "Saville Row on steroids," is how Mr Belton describes it.
Some firms are developing the link between one-to-one marketing and mass customisation. Reflect was created by Procter & Gamble to develop online sales of beauty-care products. It takes information from its customers and offers them cosmetics, shampoos and so on, all made to their specification. It opened 12 weeks ago, and half its orders are already repeat business.
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