Development of a Firm’s International Competitiveness
Global Marketing Franpis Trouillet The decision whether to internationalize Chap 4: Development of the firm’s international competitiveness Learning objectives (1) ??? Define the concept international competitiveness in a broader perspective from a macro level to a micro level ??? Discuss the factors influencing the firm’s ??? Present the Porter’s competitive-based five forces model Learning objectives (2) ??? Explore the idea behind the competitive triangle ??? Analyse the basic sources of competitive advantage ??? Explain the steps in competitive benchmarking ?? Explain how a company can create customer value by the use of Blue Ocean Strategy Development of a firm’s international competitiveness ??? Macro level: Analysis of national competitiveness ??? Meso level: Competition analysis in an industry ??? Micro level: Value chain analysis Porter’s diamond ??? The characteristics of the home base international competitiveness of the firm. ??? The explaining elements consist of several areas.
Analysis of national competitiveness (Porter diamond) Chance Firm strategy, structure, and rivalry Factor conditions Demand Related and supporting ndustries Government Factor conditions in Porter’s diamond Climate Physical infrastructure Natural resources Educational system Human resources Technological infrastructure Capital Demand conditions in Porter’s diamond Nature of home demand Size of home demand Economies of scale Transportation costs Buyer sophistication Competition analysis in an industry (Porter’s 5 forces model) New entrants Industry level Market Competitors Suppliers Market level Buyers Intensity of rivalry Substitutes Determinants of market competitiveness Concentration of industry Rate of market growth Structure of costs Degree of differentiation Switching costs Exit barriers Supply is dominated by a few companies Products are unique High switching costs Forward integration is possible Backward integration is unlikely Market is not an important customer to supplier group Bargaining power of buyers ??? Buyers are concentrated and/or purchase in large volumes ??? Products are standardized ??? Many suppliers exist ??? Buyers earn low profits ??? Industry product is unimportant to quality of buyer’s products, but price is important Threat of substitutes Buyer’s willingness to substitute
Relative price and performance of substitutes Costs of switching Factors affecting entry barriers Product differentiation and brand identity Capital requirements in production Access to distribution channels The consists of a customer, the firm, and a competitor. The winning of the customer’s favour depends upon the perceived value offered compared to the relative costs between the firm and the competitor. Competitive triangle Value chain analysis Customer Perceived value/ price A price B Relative cost Firm A Production Marketing Sales & services Firm B Performance Tangible Assets (flexible/short Term) Competitive advantage Core competences competences Resources Intangible Assets (“tacit know ledge / long term What is this? What term refers to a technique for assessing relative marketplace performance compared with main competitors?
Competitive benchmarking Competitive Benchmarking profile (example with only a few criteria) Critical success factors Model for development of core competencies What term refers to tough head-tohead competition in mature industries which often results in nothing but fghting over a shrinking profit pool? Red oceans What term refers to unserved markets, where competitors are not yet structured and the market is relatively unknown? Blue-ocean strategy ??? Red Oceans: Tough head-to-head competition in mature industries often results in bloody red oceans of rivals fighting over a shrinking profit pool ??? Blue Oceans: The unserved market, where competitors are not yet structured and market is relatively unknown. Here, it is about avoiding head-to-head competition Case study Global market for coffee machines (2008) Western European coffe machine market Questions