Restricted National Market Scope (a) - national market development over time - sustainability of...
Transcript of Restricted National Market Scope (a) - national market development over time - sustainability of...
Restricted National Restricted National Market ScopeMarket Scope (a) (a)
- national market development over - national market development over timetime
- sustainability of national strategies - sustainability of national strategies
- measuring competitive advantage- measuring competitive advantage
- inter-market comparison- inter-market comparison
- benchmarking*- benchmarking*
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LowHigh
Market Share ObjectiveMarket Share Objective
Global
National
S c
o p
eS
c o
p e
Global High Share Strategy
Global Niche Strategy
National High National High Share StrategyShare Strategy
National National Niche StrategyNiche Strategy
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(2)
•the link the link between competitive advantage and
business performance
•what measurewhat measure
to use in assessing competitive advantage, in what market and over which competitors?
•the importancethe importance
of undertaking inter-market comparisons
•the role of benchmarkingthe role of benchmarking
in assessing and developing performance improvement*
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Restricted national Restricted national market scopemarket scope
•focused on a single national market
•do not seek to leverage competencies, interdependencies across different national markets
•critical: long term viability!
What are the conditions for developing and What are the conditions for developing and sustaining a competitive advantage?*sustaining a competitive advantage?*
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Worldwide
International regional
Int’l market entry & development
Restricted national Restricted national market scopemarket scope
Figure 5.1 The phase model of international business development
InternationalisationInternationalisation RetrenchmentRetrenchment
Phase 1
Phase 2
Phase 3
Phase 4
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•Int’l competitor: able to leverage greater Int’l competitor: able to leverage greater competencies =>competencies =>
national forced to become internationalnational forced to become international
•When is current national competitive When is current national competitive strategy is sustainable?strategy is sustainable?
Both external and internal contexts are Both external and internal contexts are supportive!supportive!
Unstable, if one of them is Unstable, if one of them is unsupportive: unsupportive: reorientatereorientate itself => itself => move*move*
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Nat’l focusNat’l focus Int’l focusInt’l focus
Nat’l focusNat’l focus Stable
Stable
Unstable
UnstableInt’l focusInt’l focus
External External context context seekingseeking
Figure 5.2 International business development matrix
Internal context seeking
Analyze current strategic posture as well as dynamics of competitive environment*
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Necessary conditions for nat’l Necessary conditions for nat’l strategy:strategy:–product-market demand: national tastes product-market demand: national tastes and preferencesand preferences
–competitive interdependencies: ability competitive interdependencies: ability to supply market competitivelyto supply market competitively
Sub-dividing nat’l strategy:Sub-dividing nat’l strategy:– local:local: highly localized, small local area highly localized, small local area–national regionnational regionalal:: number of local number of local marketsmarkets
–national:national: cover nat’l market cover nat’l market comprehensivelycomprehensively
– Size:Size: show marked variation by individual show marked variation by individual nations (UK, US, Hungary)*nations (UK, US, Hungary)*
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Local: family owned boulangerieLocal: family owned boulangerie
46,000 bread bakery in France (1-2 in a village)
1 bakery/1200 people, no change over the last century
So far: resisted to regional bakeries
Cultural differences:Cultural differences:
- bread brought twice a day
- Napoleon: regulated opening hours, purity, price
Position less secure when:Position less secure when:
new kinds of bread accepted
changes in cultural habits (promoted by larger retailers)
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National regional newspaperNational regional newspaper
Local newspaper: provide local news
Nordwest Zeitung: WW-IIStrategic recipe:Strategic recipe:
tailor common format to meet special needs of local marketsfront section exclusively devoted to local communityother three: the same in all edition
Further areal extensionFurther areal extension•local newspapers joined•NZ concentrates on nonlocal section, production, sales, advertisement •Partners: on local news, distribution (competed on quality of local content)
NZ: advertising brokerNZ: advertising broker: saving in overhead, direct costs
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The national company: The national company: South African Breweries LtdSouth African Breweries Ltd
Virtual monopolyVirtual monopoly:
98% lager beer, 10th largest in the world
Series of regional markets, served by a
regional breweryregional brewery
- centralization too expensive
- homogenous national brand is supplied
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National market National market development over timedevelopment over time
•Why Why do companies move from do companies move from being local to national over time?being local to national over time?
•WhatWhat are the implications for are the implications for key business functions and key business functions and processes?processes?
•HowHow do companies grow and do companies grow and develop over time?*develop over time?*
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External External context context seekingseeking
Internal context Internal context seekingseeking
LocalLocal National National regionalregional
NationalNational
LocalLocal Stable Unstable Unstable
National National regionalregional
Unstable Stable Unstable
NationalNational Unstable Unstable Stable
Figure 5.3 Local/national strategy matrix
FocusFocus
Why?Why?
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ExternalExternal– Product-market demand:Product-market demand: greater greater
homogenuity in tast, preferences => acceptance homogenuity in tast, preferences => acceptance of national brandsof national brands
– Competitive interdependenceCompetitive interdependence: supply local : supply local market more competitively becoming a national market more competitively becoming a national supplier (economies of scale)supplier (economies of scale)
InternalInternal– innovative vision of key managersinnovative vision of key managers: :
combined with succession events results in a combined with succession events results in a dramatic change to the strategic intentdramatic change to the strategic intent
– development of knowledge, competenciesdevelopment of knowledge, competencies: : able to exploit itable to exploit it
National regions: offer an intermediate National regions: offer an intermediate stage*stage*
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Current phase Next phaseDiscontinuity:Discontinuity:new strategic
thrust
External triggersExternal triggers
Internal triggersInternal triggers
Figure 5.4: Internal and external triggers to a discontinuity in business development
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ImplicationsImplications
Extending busExtending busiiness scope: ness scope: significant challengessignificant challenges• traditional ways: no longer be traditional ways: no longer be
appropriateappropriate
• managing important discontinuities managing important discontinuities in key functions, processesin key functions, processes
• managerial needs will changemanagerial needs will change
Specific needs will vary according to Specific needs will vary according to a number of factors*a number of factors*
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CharacteristicsCharacteristics LocalLocal NationalNational =================================================Market coverageMarket coverage local national
ProductsProducts local brand nat’l brand
MarketingMarketing unsophisticated highly dev.
Human resourcesHuman resources few employees increases
OperationsOperations very simple managerial needs
LogisticsLogistics uncomplicated complexity
FinanceFinance capital need low substantial
Nr. of competitorsNr. of competitors many, few, fragmented concentrated
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How?How?
How companies move from having local How companies move from having local strategy to a national?strategy to a national?
• Organic Organic (internal growth): in matured (internal growth): in matured market can be difficultmarket can be difficult
• AcquisitionAcquisition (external growth): (external growth): purchasing an established operation; purchasing an established operation; greater risk *greater risk *
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Internal growthInternal growthContextContext
industry is still growingfragmented, not dominated by larger companies
Resources requirementsResources requirementsdevelop its own resource basisdifficultneeds managerial and financial resources
Relative benefits and disadvantagesRelative benefits and disadvantagesincremental growth (“learn from doing”)risk: easier to managestrategy can be abandonslowinitially low level of market penetration (many years)
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External growthExternal growthContextContext
enter a mature markethighly concentratedsmall number of sellers
Resources requirementsResources requirementsmay be good managementmay require drastic actions make viablenecessary management and financial resources (?)
Relative benefits and disadvantagesRelative benefits and disadvantagesimmediate presence in the marketrisk: no guarantees of qualityafter entering not easily reversed (extra costs!)successful integration: management is crucial
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US microbreweriesUS microbreweries
Early 80’Early 80’: American beers dull, uninteresting
produced by major national producers
indistinguishable in taste
Early 90’Early 90’: 400 new small local breweries
uniquely flavored products
variety of local beers
market niche
market share in the region: 1%
Larger breweriesLarger breweries: start producing distinctive beers, too
Concentration new entries!!Concentration new entries!!