GB580 Unit 7 Global Strategy Paper Example

Learning Inbound: A Unit 7 Global Strategy Paper on Licensing, Canada and a Mexico Plant Set Aside

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Purdue University Global

GB580: Strategic Management

Unit 7 Global Strategy Paper

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[Date]

Tollefson Body Works, the Dutch licensor, the Canadian dealer and every figure are composite and illustrative; the frameworks, policies and sources cited are real.

Is the Industry Global at All?

Yip (1989) sorted the pressures toward global strategy into market, cost, government and competitive drivers. Applied to refrigerated truck bodies, few of them push toward a single global product.

Market drivers are weak. Fleets on each continent buy bodies to fit their own chassis. North American Class 4 to 6 chassis differ from European ones in cab design, frame width and weight ratings, so a body designed for one does not fit the other without engineering changes.

Cost drivers are weak. A refrigerated body is bulky and expensive to ship. Scale economies exist within a plant, but they do not justify shipping bodies across an ocean.

Government drivers are mixed. Emissions and safety rules differ by country, which fragments the market. But one government driver matters for learning: many European cities, including about thirty in the Netherlands from 2025, have created zones where new delivery trucks must be zero-emission, which has pushed European builders to design light bodies for electric trucks years ahead of North America.

Competitive drivers are weak. The largest North American builders operate mainly in North America, and European builders rarely sell here.

The conclusion is that Tollefson does not need a global market strategy. It may need a global learning strategy, because the capability it lacks most, building light bodies for electric chassis, has been developed faster elsewhere. Ghemawat (2001) notes that cultural, administrative, geographic and economic distance shapes which international moves make sense, and for Tollefson the shortest distance is in knowledge, not in markets.

Three International Moves

An inbound licensing alliance with a Dutch builder. The composite partner, a family-owned builder near Utrecht with about 300 employees, has supplied light insulated bodies for electric delivery trucks in Dutch cities since 2021. Its standard body for a 7.5-tonne electric truck weighs about 18 percent less than comparable European bodies built a decade ago, through composite sandwich panels and bonded joints instead of riveted frames. Licensing its panel design and assembly methods would give Tollefson a tested starting point for the weight target set in Unit 5. Risks: dependence on a foreign partner, adaptation costs for North American chassis and the possibility that the partner later enters North America itself.

Exports to Ontario and Quebec. Grocery fleets in Ontario and Quebec buy the same North American chassis as Tollefson's U.S. customers, and De Pere is about a day's drive from Toronto. A Canadian truck dealer with branches in both provinces has offered to sell Tollefson bodies. Bodies meeting the trade agreement's origin rules would cross the border without duty. Risks: Canadian vehicle safety certification, currency swings and the dealer's limited experience with refrigerated bodies.

A plant in northern Mexico. Labor costs there are much lower, and several truck makers build chassis in Mexico. Risks: management distance for a family firm with one plant, freight back to Midwestern customers and the difficulty of moving the thermal quality that is one of Tollefson's key strengths.

Terms That Limit Dependence

The alliance is recommended, and its value depends on its terms. Hamel et al. (1989) warn that in alliances, the partner that learns faster gains the most, so the terms below are written to make Tollefson the learner while limiting what it gives away.

North American exclusivity. Tollefson would hold exclusive rights to the design in the United States, Canada and Mexico for ten years.

A royalty per body. Tollefson would pay about €400 per licensed body, roughly $430, rather than a large upfront fee, so cost follows volume.

An engineering exchange. Two Tollefson engineers would spend six months at the Dutch plant during the first year, and one Dutch engineer would spend three months in De Pere to support the pilot.

A field-of-use limit. The license would cover truck bodies only, so the partner cannot object if Tollefson later applies panel knowledge to cold-room panels, the venture deferred in Unit 6, under a separate agreement.

A grant-back clause. Improvements Tollefson makes to the design would be licensed back to the partner for use in Europe only, without royalty. This gives the partner a reason to keep sharing, while keeping North American rights with Tollefson.

Exit terms. Either side could end the agreement after five years with a year's notice, and Tollefson would keep the right to use improvements it developed.

The alliance is worth signing only if Tollefson leaves it knowing how to build the body without the partner.

What Tollefson Brings to the Partner

An alliance in which one side only takes is unlikely to last, so the terms must also give the Dutch builder something it values. Tollefson offers three things. The royalty is a new source of income from a design the partner has already paid to develop. The grant-back gives the partner access to whatever Tollefson learns about adapting light bodies to heavier North American chassis and harsher winters, knowledge that could help the partner in Scandinavian markets. And Tollefson's multi-temperature bulkhead design, one of its key strengths, could be offered to the partner under a separate license for Europe. Balancing the exchange this way makes the partner less likely to slow its cooperation once the first royalties arrive.

Canada First, by Truck

The Canadian move is recommended as a second step, starting about a year after the pilot. It requires little capital: Tollefson would build to Canadian safety standards, certify its bodies and ship them on the chassis they are mounted on. Ontario and Quebec grocery fleets face the same weight pressures as U.S. fleets, and Quebec has published targets to electrify its truck fleet. A dealer agreement would let Tollefson test demand before hiring its own Canadian sales staff.

Mexico, Set Aside

The Mexico plant is rejected for now. Its labor savings would be offset by freight to Midwestern customers, the cost of managing a second plant across a border and the risk of diluting thermal quality, which depends on experienced foam and panel workers. More important, the plant addresses cost, while the Unit 5 strategy competes on weight. A cost move would pull management attention away from the capability the firm is trying to build. The option should be reconsidered only if Tollefson's volume grows well beyond its De Pere plant's capacity.

References

Ghemawat, P. (2001). Distance still matters: The hard reality of global expansion. Harvard Business Review, 79(8), 137-147.

Hamel, G., Doz, Y. L., & Prahalad, C. K. (1989). Collaborate with your competitors and win. Harvard Business Review, 67(1), 133-139.

Yip, G. S. (1989). Global strategy... In a world of nations? Sloan Management Review, 31(1), 29-41.