Svend Hollensen

GLOBAL MARKETING
4th Edition

4 Development of the firms international competitiveness

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
Hollensen, Global Marketing 4e, Pearson Education 2008 4-2

The Three level competitiveness model

Macro 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 / value

chain model)

Hollensen, Global Marketing 4e, Pearson Education 2008

4-3

Macro Level
(Porter Diamond)

National competencies are critical Competitive advantage of nations Though firms compete yet home nation is critical Being a home based international is determinant of firms strengths and weaknesses relative to foreign rivals

Hollensen, Global Marketing 4e, Pearson Education 2008

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Diamond Model

Hollensen, Global Marketing 4e, Pearson Education 2008

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Factor Conditions
Climate Physical Infrastructure Natural Resources Educational System Human Resources Technological Infrastructure Capital
Hollensen, Global Marketing 4e, Pearson Education 2008

Least degree of mobility

Highest degree of mobility

4-6

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

Hollensen, Global Marketing 4e, Pearson Education 2008

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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

Hollensen, Global Marketing 4e, Pearson Education 2008

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Firm Strategy, Structure and Rivalry

local competition leads to ability of competing in global market weeds out inferior technologies, and poor management practices E.g. Denish competition in hearing aids
William demant (Oticon) Widex GN Resource/Danavox

Hollensen, Global Marketing 4e, Pearson Education 2008

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Chance
Creativity Entrepreneurial idea availing chance will enable you to yield scale and clustering effects

Hollensen, Global Marketing 4e, Pearson Education 2008

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Government
Critical role player in developing local industries
Finance Construct infrastructure roads, airports, education, health care and energy resources

Hollensen, Global Marketing 4e, Pearson Education 2008

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Five forces Models

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Five-forces Competitive strategies

Rivals

Five-sources Collaborative Strategies

Horizontal collaborations

Suppliers
Buyers Substitutes

Vertical collaborations
Partnering with customers; lead users Related Diversification alliances with producers of complements and substitutes

New Entrants

Diversification alliances with

Hollensen, Global Marketing 4e, Pearson Education 2008

4-13

Value Chain Analysis

The competitive triangle
Customer Satisfaction vs. Competitive image Perceived value vs. perceived sacrifice Firm related costs incurred in creating this value
Customer

Firm A
R&D
Produ ction Mrktg
Sales n Services

Firm B
R&D
Produ ction
Sales n Services

Mrktg

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Figure 4.4 The roots of performance and competitive advantage

Performance
Tangible Assets

Competitive advantage
P 110

Core competences

competences
Resources
Intangible Assets
Source: adapted from Jttner and Wehrli, 1994.

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Competitive Benchmarking
Key Terms Critical Success Factors:
P 112

Those Value Chain Functions where the customer 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
Hollensen, Global Marketing 4e, Pearson Education 2008 4-16

Competitive Benchmarking
Value Chain Functions (selected)
Importance to customers How do customers rate the performance of our firm? How do customers rate performance of key competitor?

Figure 4.6 page 113

Hollensen, Global Marketing 4e, Pearson Education 2008

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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

Hollensen, Global Marketing 4e, Pearson Education 2008

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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

Hollensen, Global Marketing 4e, Pearson Education 2008

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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

Hollensen, Global Marketing 4e, Pearson Education 2008

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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

Hollensen, Global Marketing 4e, Pearson Education 2008

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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 the features that customers value.
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