Market influences Flashcards
IR framework, axis:
Global integration pressures (related to cost maxiization) vs local responsiveness pressures (product adaption)
What are 3 forces/pressures firm are facing in a global context
- Buyer-related: global awareness/customer has product information, standardization
- Supplier-realted: rivalry, competition local and global, market commonality
- general forces: scale economies, factor cost differentials (macro), government intervention, importance of transportation costs
IR framework: level
Add. to the framework - it makes sense to consider levels: Industry level (Phone), firm level (Apple), function/task (manufacturing vs marketing) level (product specification, plug on charger).
The firm and industry somewhat same pressures.
What are limitations of the IR framework
simple, lacks boundaries, hard to test (doesn’t consider grey areas), no realted strategies. Had to be extended because firms view industry differently, it was important to consider org vs context match
Integration-responsiveness grid - extension of IR
multifocal in the center considers both local and global pressures -> flexibility.
requires: complex innovation, marketing differentiation, conservative cost control (strict budget/control), ensure breadth. General customer focus
Market characteristics - two types of competition considerations
Multicountry (multidomestic): each country competition is self-contained, differing customer preferences, for the MNC each market competition is independent from the other
second, Global competition: prices and competitive position is interliked across markets, same actors, advantage of WW operations
Known the definition: Global competition vs global business
Global competition: global branding, distribution channels, battle global competitors in different markets.
Global business: global investments are made to achieve scale and cost efficiency not available at home.
Objectives to operate in different markets (global business)
low cost sourcing, maintain minimum scale, fight competitors, benchmark products
what are 2 strategies of global competition using IR considerations:
- Profit growth strategy: choices of product in different locations: Local responsiveness (customer needs, culture) vs global integration (scale/scope, standardization, homogeneity)
- profitability strategy (competitive+innovation): analyze competitive advantage and locate VC with best opportunities to enhance competitive position. Local responsiveness: access to innovation/R&D, cheap/bulky vs small/expensive. Global integration: overcome fragmentation, efficiency curve, cross-country arbitrage
What creates competition and rivalry
Equally strong players, low/no growth in market, excess production capacity, few opportunities for differentation, exit barriers
Porter’s industry assessment (competition among existing competitors)
4 considerations: Threat of new entrants, Bargaining power of buyers, threat of substitute products, bargaining power of suppliers
What 2 parameters do we consider in competitive analysis, to predict rivalry
Market commonality: how close are the markets they cater to (geo, customer, brand)
Resource similarity: firms with similar resource bundles have strategic capabilities as well as competitive vulnerabilities, dissimilar (…) = diverse (…)
Why do high market commonality and high resource similarity a) reduce likelihood of an attack and b) increase the likelihood of a response?
High market commonality makes competitors aware and motivated to respond. High resource similarity makes them able/capable to respond. You will be at great risk if you decide to attack.
Explain in short what competitive asymmetry is (identify competitors)
If A is B’s primary competitor, B may not be A’s primary competitor. Likelihood that B want to attack A is not as high as the other way around. Think Coke and Harboe
Explain the AMC framework
Awareness: the extent to which competitors recognize interdependence
Motivation: an incentive to take action, determined by gains/losses
Capability: The nature and flexibility of resources
Global cross-border (Subsidiary) factors playing into AMC framework - awareness
Globalization strategy: the world in an arena.
International experience: market knowledge.
corporate ownership: WOS increase awareness and motivation vs outsourcing (idc)
information flow: better coordination enable awareness
Cultural distance: less cultural distance enable awareness. Differing perception of “attack”.
cultural distance w competitor: perception of “attack”
First-mover vs. follower: perception of attacker and attacked
size of organization
Global cross-border (Subsidiary) factors playing into AMC framework - response time/speed
Geographical distance: a)MNE HQ-Sub distance (closer=faster)
b)MNE home country - attackers location (closer=faster), awareness, strategic importance of home
Government constraints: Rules and regulations makes it harder to respond, on the other hand institutions might also protect you.
market-related factors: Within-country response is faster. Multimarkets comes with more rivalry situations
What is coopetition
Simultaneous competition and cooperation between global rivals
(Cooperative relationships: global rivals work together to collectively enhance performance by sharing resources and committing to common goals in certain domains (e.g., product-market or value-chain activities)
Why would MNEs want to engage in coopetition?
- Interdependence between MNEs - resource asymmetry encourage cooperation
- reduces cost, risk, uncertainty of innocation
- collective power in dealing with external stakeholders
- strengthen market position
- strategic flexibility
- important for battles over technical standards
Cooperation is favorable when x increase
more external threat, increasingly sophisticated consumers, increasing pressure of GVC integration, Hazards from institutional environments
What 4 levels of intensity to coopetiton with a global rival are there:
We measure competiton vs cooperation:
strong:weak = contending sitch
strong:strong = adapting sitch
weak:weak = isolating sitch
weak: strong = partnering sitch
What 4 levels of diversity of coopetition with multiple global rivals
We measure number of markets vs number of participants:
large:small = dispersing sitch
large:large = networking sitch
small:small = concentrating sitch
small:large = connecting sitch
