pp 10 competitive
TRANSCRIPT
Global Marketing Management
Warren J. Keegan
Chapter 10 Competitive Analysis and Strategy
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Overview
Industry Forces Influencing CompetitionNational Competitive AdvantagesCompetitive Advantage & Strategic ModelsStrategic PositionsCompetitive Innovation
Summary
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Learning Objectives
Understanding the importance of corporate strategies of a company
Appreciating the determinants for selecting, creating & pursuing a particular strategy
Knowing the levels of examining corporate strategy & the competitive position of a firm
Knowing why different companies pursue different strategies
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Industry Analysis
Threat of new entrantsThreat of substitute productsBargaining power of suppliersBargaining power of buyersRivalry among competitors
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Industry Analysis
Five Forces ModelThreat
ofNew Entrants
BargainingPower of
Suppliers
Rivalry AmongExisting
Competitors
BargainingPower of
Buyers
Threat of
Substitute Products
or Services
Source: Michael E. Porter, Competitive Strategy (New York: Free Press, 1980), p.4.
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Dimension of Global Competition
A company`s success in global markets is determined by its ability to establish competitive advantages
Forces influencing competition in an industry need to be examined
Analysis of a firm`s position within an industry is important
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National Competitive Advantage:Determinants of National Advantage
Firm Strategy,Structure, and
Rivalry
Related andSupportingIndustries
DemandConditions
FactorConditions
Source: Michael E. Porter, The Competitive Advantage of Nations (New York: Free Press, 1990),p.72
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National Competitive Advantage: Factor Conditions
Human Resources Physical ResourcesKnowledge ResourcesCapital Resources Infrastructure Resources
Alternative Categorisation of Factors
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Demand Conditions
Important home-market demand conditions: Composition of home demand The size and pattern of growth of home
demand Means by which home demand pulls the
products into foreign markets
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Related & Supporting Industries
Has advantage when it is home to internationally competitive industries that are related or in direct support
Internationally competitive suppliers provide inputs to downstream industries
Contact and coordination give access to foreign markets
Clusters are geographic concentrations of interconnected companies in a particular field
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Firm Strategy, Structure, and Rivalry
Differences in management styles, organisational skills & strategic perspectives create advantages & disadvantages
Domestic rivalry has a powerful influence on competitive advantage because it keeps an industry dynamic & creates pressure to improve & innovate
Intensity of competition & quality of competitors are important
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Other Forces Acting on the Diamond
Chance Occurrences that are beyond the control of firms
Government Buyer of products and services Policy maker of policies on labour, capital formation and
product standards
Other Non-market factors Interest groups, activists and the public
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Dimension of Global Competition
Firm Strategy,Structure, and
Rivalry
Related andSupportingIndustries
DemandConditions
FactorConditions
Chance
Government
Source: Michael E. Porter, The Competitive Advantage of Nations (New York: Free Press, 1990),p.127.
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Characteristics of Strategic Groups
Mobility Barriers Limit access to specific industry and switch between strategy
groups
Varying level of bargaining power with consumer and supplier
Threat of Substitutes Companies serving special needs are less vulnerable
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Competitive Advantage of Individual Companies (1)
Generic strategies for creating competitive advantages
CostLeadership
Differentiation
FocusedDifferentiation
Cost Focus
BroadTarget
NarrowTarget
DifferentiationLowerCost
Co
mp
etit
ive
Sco
pe
Competitive Advantage
Source: Michael E. Porter, The Competitive Advantage of Nations (New York: Free Press, 1990), p. 39.
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Competitive Advantage of Individual Companies (2)
Broad Market StrategiesCost-Leadership AdvantageDifferentiation
Narrow Target StrategiesFocused DifferentiationCost Focus
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3 Strategic Positions
Variety-based A limited number of activities related to
delivering a product
Needs-based A specific customer segment with a
comparatively broad set of needs
Access-basedUniquely or preferentially reach a specific market
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Strategic Perspectives
Layers of Advantage Less risks if wide portfolio of advantages exist
“Loose Bricks” left in the defensive walls of competitors who are focused on a market area
Changing the Rules Refuse to play by the rules set by industry leaders
Collaborating Using know-how developed by other companies
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Hypercompetition – D’Aveni
Porter`s models only provide snapshots of competition “Hypercompetition” describes a dynamic, competitive
world, in which no action or advantages can be sustained for long
The only advantage of a companies is to manage dynamic strategic interactions: Cost-quality, timing & know-how, entry barriers & deep pockets
Companies must seek unsustainable advantages
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ISO-9000
International Organization for Standardization
Criteria for product development & manufacturing policies
Registration and certification leads to competitive advantage
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ISO-9000
Provides: Competitive advantage over suppliers who are
not certified Focus on continuing improvement Media awareness Customer perception
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Summary
Various Factors are helping industries and countries to achieve competitive advantage
Porter`s five Forces ModelGroups of companies may follow similar strategic
dimensionsFocusing on the individual strategy of a company, an
understanding of the unique source of the firm`s competitive advantages is of great importance