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Svend Hollensen

GLOBAL MARKETING4th Edition

4 Development of the firms

international competitiveness

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Competitive advantages in

international markets

Interactive with the environment

firms must be able to adjust to customers,

competitors and public authorities

must have competitive bases consisting of

Competencies

Resources

international relationships

Value Innovation

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The Three level

competitiveness modelMacro level: Analysis of national competitiveness

(The Porter Diamond model)

Meso Level: Competition analysis in an industry(Porters five forces model)

Micro Level: value chain analysis (SWOT / valuechain model)

4-3

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Macro Level(Porter Diamond)

National competencies are critical

Competitive advantage of nations

Though firms compete yet home nation iscritical

Being a home based international is

determinant of firms strengths andweaknesses relative to foreign rivals

4-4

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Diamond Model

4-5

http://www.google.com.pk/url?sa=i&rct=j&q=&esrc=s&frm=1&source=images&cd=&cad=rja&docid=_-YhwUHuV8LJCM&tbnid=kEeiyKceS9XfRM:&ved=0CAUQjRw&url=http%3A%2F%2Fwww.netlab.tkk.fi%2Fopetus%2Fs38118%2Fs99%2Fhtyo%2F2%2Fmain.html&ei=qUwwUsWuIovKtAaO8oGgCw&bvm=bv.51773540,d.bGE&psig=AFQjCNEF3qBxkMuWgIORpojzGnCnno2VOA&ust=1378983239463134

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Factor Conditions

Climate

Physical Infrastructure

Natural ResourcesEducational System

Human Resources

Technological InfrastructureCapital

4-6

Least degree of

mobility

Highest degree

of mobility

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Demand Conditions

The nature and size of home demand Economies of Scale

Transportation Cost

large local demand

understanding of local market needs

Sophistication of buyer

Price inelasticity

4-7

http://www.google.com.pk/url?sa=i&rct=j&q=&esrc=s&frm=1&source=images&cd=&cad=rja&docid=oUyVsAX5nY6tiM&tbnid=ufiGzfWfRFSP_M:&ved=0CAUQjRw&url=http%3A%2F%2Fwww.motorcyclevalley.com%2F&ei=E1AwUvb9NcjGtQbhlICQAw&bvm=bv.51773540,d.bGE&psig=AFQjCNF-fp-qMvwNMG-GZkCVQtvnJpolnw&ust=1378984290955810http://www.google.com.pk/url?sa=i&rct=j&q=&esrc=s&frm=1&source=images&cd=&cad=rja&docid=oUyVsAX5nY6tiM&tbnid=ufiGzfWfRFSP_M:&ved=0CAUQjRw&url=http%3A%2F%2Fwww.motorcyclevalley.com%2F&ei=E1AwUvb9NcjGtQbhlICQAw&bvm=bv.51773540,d.bGE&psig=AFQjCNF-fp-qMvwNMG-GZkCVQtvnJpolnw&ust=1378984290955810

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Related and Supporting

Industries (Clustering)

low cost intermediate goods

Attraction of labor market

Coordination of technology

E.g. Japan is best place for semi conductors

for being clustered electronics hub

4-8

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Firm Strategy, Structure and

Rivalry

local competition leads to ability of

competing in global market

weeds out inferior technologies, and poormanagement practices

E.g. Denish competition in hearing aids

William demant (Oticon)Widex

GN Resource/Danavox

4-9

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Chance

Creativity

Entrepreneurial idea

availing chance will enable you to yieldscale and clustering effects

4-10

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Government

Critical role player in developing local

industries

Finance

Construct infrastructure

roads, airports, education, health care and

energy resources

4-11

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Five forces Models

http://www.google.com.pk/url?sa=i&rct=j&q=&esrc=s&frm=1&source=images&cd=&cad=rja&docid=3YIDMxPDrsNisM&tbnid=P4Ly6VH7Cg-XnM:&ved=0CAUQjRw&url=http%3A%2F%2Fwww.caneval.com%2Fvision%2Finnovation%2Finnovation2.html&ei=7EswUo_wGsXVswafsoDQDA&bvm=bv.51773540,d.bGE&psig=AFQjCNEF3qBxkMuWgIORpojzGnCnno2VOA&ust=1378983239463134

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Five-forces

Competitive strategies

Five-sources

Collaborative Strategies

Rivals Horizontal collaborations

Suppliers Vertical collaborations

Buyers Partnering with customers; lead users

Substitutes Related Diversification alliances with producers

of complements and substitutes

New Entrants Diversification alliances with

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Value Chain Analysis

The competitive triangleCustomer Satisfaction vs. Competitive image

Perceived value vs. perceived sacrifice

Firm related costs incurred in creating this value

4-14

R&DProdu

ctionMrktg

Sales n

Services R&DProdu

ctionMrktg

Sales n

Services

Customer

Firm A Firm B

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Figure 4.4 The roots of

performance and

competitive advantage

Resources

Core competences

competences

Competitive advantage

Performance

Intangible Assets

Tangible Assets

Source: adapted from Jttner and W ehrli, 1994.

P 110

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Competitive Benchmarking

Key Terms

Critical Success Factors:

Those Value Chain Functions where thecustomer demands/expects the supplier to

have a strong Competence

Core Competencies:

Those Value Chain Functions where we as a

firm has a strong competitive position

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Competitive Benchmarking

Value Chain Functions (selected)

Importance to customers

How do customers rate the performance of ourfirm?

How do customers rate performance of key

competitor?

Figure 4.6 page 113

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What is this?

What term refers to value chain

activities in which the firm is regarded

as better than its competitors?

Core competences

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What is this?

What term refers to a technique for

assessing relative marketplace

performance compared with main

competitors?

Competitive benchmarking

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Stage 1:

Analysis of situation

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What is this?

What term refers to tough head-to-head

competition in mature industries which

often results in nothing but fighting over

a shrinking profit pool?

Red oceans

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What is this?

What term refers to unserved markets,

where competitors are not yet

structured and the market is relatively

unknown?

Blue oceans

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Value Innovation

The logic of value innovation starts with an

ambition to dominate the market by offering

a tremendous leap in value.

Value innovation build on the

powerful commonalities in thefeatures that customers value.