| Abstract | This research addressed the localization strategies implementation by international automobile manufacturers in Thailand. An attractive industry environment driven by Thai government policies led to an in-pouring of international automobile manufacturers' investment. This resulted in high market competition, causing industry pressure. To cope with industry pressure, automobile manufacturers adopted localization strategies to enhance their competitive advantage. Based on a review of literature on industrial localization and a pilot study with Toyota, a conceptual framework was developed to show the relevance of environment, localization strategies, and market share. Additionally, 11 research questions were raised concerning what, how, and why localization strategies are implemented and how they lead to a competitive advantage. To answer the research questions, seven companies-Toyota, Hino, Honda, Isuzu, DaimlerChrysler, BMW, and Ford-were selected as case studies for research. In addition, six suppliers and dealers of these seven case companies were included in this study. Multiple methods-in-depth interviews, focus groups, and observation through plant visits-were carried with employees at various levels in the hierarchy. The study showed that localization strategies were implemented in five areas: 1) deployment of local managers and employees; 2) product adaptation; 3) developing, selecting, and working with suppliers; 4) adapting manufacturing processes; and 5) image in host country. Companies that integrated localization into the company's vision tended to have a high degree of localization implementation. Successful localization was indicated, in turn, by high market share. Expatriates played important roles in implementing localization through facilitating technology transfer and supplier development. Four roles-commander, conductor, coach, and networker-were found. Expatriate roles and training were related to local employees' ability. Automobile manufacturers benefit from local tacit knowledge obtaining by deploying local managers and employees. Product adaptation was found to range from minor changes required by laws and regulations to new product design based on Thai customer behavior. Through this area of localization, automobile manufacturers not only benefit from the ability to penetrate the local market and gain market share but also to benefit from exporting new local products to penetrate the global market. Automobile manufacturers adopted various relationship styles in developing, selecting, and working with suppliers, the majority of which are small and medium-sized firms. The type of relationship established was based on characteristics of the parts and components. By developing a local network of suppliers, automobile manufacturers benefited from using local materials and tailor made parts, which helped reduce costs. By adapting international manufacturing processes to suite the conditions of local human resources and facilities through the involvement of local employees, automobile manufacturers were able to reduce production costs while maintaining international quality. Through corporate social responsibility practices, international automobile manufacturers were able to create a positive image of their corporate entity, products, and services. The results of this research contribute host country governments' ability to use a "carrot and stick" approach to motivating international companies to increase the degree of localization. Parent companies' decentralized management helps increase the degree of localization at subsidiaries. International companies in the host country can successfully implement localization by establishing localization as part of their vision, leading to a long-term commitment. Trust formation is the key element of efficient cooperation between local suppliers and international companies in relationship building. |