Ch08 Kotabe

Chapter Overview 1. Information Technology and Global Competition 2. Global Strategy 3. Global Marketing Strategy 4. R&D, Operations, Marketing Interfaces 5. Regionalization of Global Marketing Strategy 6. Competitive Analysis Chapter 8 Copyright (c) 2009 John Wiley & Sons, Inc. 2

Introduction On a political map, country borders are clear as ever. But on a competitive map, financial, trading, and industrial activities across national boundaries have rendered those political borders increasingly irrelevant. Not only firms that compete internationally but also those whose primary market is considered domestic will be affected by competition from around the world. Chapter 8 Copyright (c) 2009 John Wiley & Sons, Inc. 3

Information Technology and Global Competition Today, we are observing the emergence of a gross information product, and it dwarfs the gross domestic product. Electronic Commerce (e-Commerce) e-Company Faster Product Diffusion Global Citizenship Chapter 8 Copyright (c) 2009 John Wiley & Sons, Inc. 4

2. Global Strategy Global strategy consists of five conceptualizations: 1. Global industry 2. Competitive industry 3. Competitive advantage 4. Hypercompetition 5. Interdependency Chapter 8 Copyright (c) 2009 John Wiley & Sons, Inc. 5

2. Global Strategy Global Industry: Those industries where a firm’s competitive position in one country is affected by its position in other countries. The first question that faces managers is the extent of globalization of their industry. Every industry has global or potentially global aspects. Chapter 8 Copyright (c) 2009 John Wiley & Sons, Inc. 6

2. Global Strategy Industry Globalization Forces(Exhibit 8-1): Four forces interact to determine the potential of industry globalization. 1. Market forces 2. Cost forces 3. Government forces 4. Competition forces Chapter 8 Copyright (c) 2009 John Wiley & Sons, Inc. 7

2. Global Strategy Market Forces 1. Per capita income convergence 2. Rich consumers in emerging markets 3. Revolution in communication technology 4. Organizations behaving as global customers 5. Growth of global and regional channels 6. Establishment of world brands 7. Spread of global and regional media Chapter 8 Copyright (c) 2009 John Wiley & Sons, Inc. 9

2. Global Strategy Cost Forces 1. Global economies of scale and scope 2. Steep experience curve 3. Global sourcing efficiencies 4. Favorable logistics 5. Difference in country costs 6. High product development costs 7. Fast-changing technology 8. Shorter product life cycles Chapter 8 Copyright (c) 2009 John Wiley & Sons, Inc. 10

2. Global Strategy Government Forces 1. Favorable trade policies 2. Compatible technical standards 3. World Trading Regulations 4. High growth/low labor cost developing countries 5. Deregulation/privatization of industries Competitive Forces 1. High exports and imports 2. Competitors from different continents and countries 3. Interdependent countries 4. Globalized competitors Chapter 8 Copyright (c) 2009 John Wiley & Sons, Inc. 11

2. Global Strategy Competitive Structure Cost leadership Product differentiation Niche strategy Nature of Competitive Industry Structure (Exhibit 8-2): »Industry competitors »Potential entrants »Bargaining power of suppliers »Bargaining power of buyers »Threats of substitute products or services Chapter 8 Copyright (c) 2009 John Wiley & Sons, Inc. 12

2. Global Strategy Gaining Competitive Advantage Creative destruction First-mover advantage versus first-mover disadvantage Competitor-focused approach Customer-focused approach Chapter 8 Copyright (c) 2009 John Wiley & Sons, Inc. 14

2. Global Strategy Interdependency: Interdependency of modern companies Example: Global computer industry Governments also play a larger role, affecting parts of the firm’s strategy. Chapter 8 Copyright (c) 2009 John Wiley & Sons, Inc. 15

3. Global Marketing Strategy Benefits of Global Marketing: Cost Reduction Improved Products and Program Effectiveness Enhanced Customer Preference Increased Competitive Advantage Limits to Global Marketing: Standardization vs. adaptation issues Globalization vs. localization Global integration vs. local responsiveness Scale vs. sensitivity Chapter 8 Copyright (c) 2009 John Wiley & Sons, Inc. 16

Chapter 8 Copyright (c) 2007 John Wiley & Sons, Inc. 17 3. Global Marketing Strategy Not every element need be standardized to the same degree (Exhibit 8-3) Degree of product standardization varies widely based on many factors (Exhibit 8-4)

4. R&D, Operations and Marketing Interfaces R&D/Operations Interface Operations/Marketing Interface Core Components Standardization Product Design Families Universal Products with all Features Universal Product with Different Positioning Marketing/R&D Interface Chapter 8 Copyright (c) 2009 John Wiley & Sons, Inc. 20

5. Regionalization of Global Marketing Strategy Regional strategies are the cross-subsidization of market share battles in pursuit of regional production, branding, and distribution advantages. Issues in regionalization of global marketing strategy: Cross-Subsidization of Markets Identification of Weak Market Segments Use of “Lead Market” Concept Marketing Strategies for Emerging Markets Chapter 8 Copyright (c) 2009 John Wiley & Sons, Inc. 22

6. Competitive Analysis SWOT (Strengths, Weaknesses, Opportunities, and Threats) Analysis(See Exhibit 8-6.) A SWOT analysis divides the information into two main categories: internal and external factors. Based on SWOT analysis, marketing executives can construct alternative strategies. The aim of any SWOT analysis should be to isolate the key issues that will be important to the future of the firm and that will be addressed by subsequent marketing strategy. Chapter 8 Copyright (c) 2009 John Wiley & Sons, Inc. 23

Ch08 Kotabe

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