Success in International MarketsBBB4M

Competition in a Free Market

• A free market means that business can make a profit. • This means that business people are allowed to keep some of

the money they make.

• The excess that the business people keep is called profit. • Profit is what drives most business’ in today’s society.• Profit is usually re-invested in order to purchase new

technology, provide growth opportunities, pay off debt, etc.

Competition Market Structures

• Competition is a defining characteristic of the structure of the market.

1. Perfect competition• many small companies that offer similar

products/services• no one company can gain market control.• government regulation exists to prevent market

dominance• Ex. Agriculture , Farming

Market Structures

2) Monopolistic competition • Large number of companies, each with an

opportunity for some degree of market control. • Offering similar products that are slightly

altered.• Claim to have superior products/services

because of brand name, packaging.• Ex. Old Navy, Kelsey’s, American Eagle

Market Structures

3. Oligopoly • a market with a small number of large companies.• each has a substantial amount of market share.• Ex. Cable/Phone companies, Pepsi/Coca-Cola

4. Monopoly• Market where a single company has 100% of

market control.• Ex. Bell Canada as an ISP for years before other

companies had the ability to provide internet.

Benefits of Competition

• Wide selection of goods/services offered.

• Better service is provided.

• Products are of better quality (pressure from competitors).

• Affordable prices.

• Improved customer service.

• Continuous improvements in R & D, advancement in technology.

Direct vs. Indirect Competition

• Products/services that are very similar are in direct competition with one another.• This means that the consumer determines which

is the better option.

• Products/services that are not similar in nature and usually compete for an individuals discretionary income are considered to be in indirect competition with one another.

Developing Examples

• Identify 3 examples of direct competition

• Identify 3 examples of indirect competition

Competing in International Markets

• Businesses Use the Same Methods when competing in International Markets, but to be successful, businesses need to tailor their competitive efforts to foreign markets.

• Market Research is the most important strategy when competing in International Markets.

Factors and Challenges

• We will look at Marketing Factors in more detail in the next Unit, but will briefly describe a few in this Unit.

• 1) Promotion: Domestic promotions may not translate in foreign markets.

• 2) Distribution & Logistics: the placement of the product/service can be very difficult. Oftentimes,companies use a Distribution company to sell their products internationally. How will the product get there? What shipping methods are best and what are the costs?

• 3) Quality: Ensuring the quality is the same internationally and that there will be means of achieving this.

Factors Continued

• 4) Pricing: Pricing foreign products competitively requires specialized knowledge. Company must know the Tariffs, interest rates, standard of living, taxes, etc. In that market in order to price the product where they can earn a profit.

• 5) Design: Some international markets have very different packaging and design regulations and this needs to be considered.

6) Laws: Every country has different laws and this will affect how the Business operates Internationally.

Competitive Advantages

• For companies to be successful, they should strive to gain a Competitive Advantage

• Competitive Advantage• Developing the ability to outperform rivals• Cost and quality• Knowledge and speed• Barriers to entry • Financial resources

• Sustainable Competitive Advantage • Developing the ability to outperform rivals for an extended period of time –

long term• Too difficult or costly for others to mimic

Think About These Companies

• Identify a competitive advantage the each of the following companies/organizations has over its rivals:• Walmart • Nike• Apple• Toms• IKEA• Kraft foods• Google