mktg 440 Flashcards
exam 2
industry
Firms produce substitutes and a swayed by rate of return
Trade policy that effects competition
Shifts resources to more productive use
Factors that affect competition (5)
- New entrants
-barriers for new entrants
-substitutes
-microfactors
-macrofactors
Barriers for new Entrants
- economies of scale
-Production differentiation
-Capital Requirements
-switching costs of changing suppliers
-access to distribution channels
-favorable access to raw materials
-government policy
-expected customer response
Core competencies
Understand the needs of the customer and meet them
-adapt to mkt development
Global vs. Global competition methods
- Cross-country subsidiarization
-counterparry
-globally coordinated move
-target global competitors
Cross country subsidiarization
using profit in one country to subsidize
counterparry
defend against competitive attack by counter attacking
Globally coordinated moves
The employing of simultaneous actions across countries to gain competitive advantage over global or local rivals
Global vs local competition methods
-defender
extender
contender
dodger
defender
plan and prepare to defend local market
Extender
extend business in overseas markets using ccs and practices learned in domestic market ex: south african breweries
contender
Contend in overseas market by first exploiting segments that global competitors do not have
dodger
not enough resources to compete, so cooperate (sell out, become local distributor for mnc)
Keiretsu
network of interlocking corporate affiliates -system or order
(SOE)
- State owned enterprise
companies majority ownership held by government
soe advantages
local market protection
cheaper financing
soe disadvantages
less international experience
general inneficiency
Family owned
strongest competitors to MNC of local business groups
ADV. local business groups
market knowledge
handling of government relations
disadv. local business groups
no global brand name
limited global presense
excessive diversification
How home countries influence competitiveness
- gov subs
-toleration to monopolies
-national champions
-toleration to intellectual property theft
effects of country origin on consumers
- dilution
-experts less affected
negative effects of country of origin
-work to make the name good
political forces
-instability
-pressure groups in host country (china vs MNC’s
Actions to interfere with foreign operations from host country
-jawboning
operational restrictions
transfer risk
ownership restrictions
takeovers
jawboning
informal gov
intervention w out legal basis
voluntary export quotas
operational restrictions
imports, local content rules, taxes, health, pricing
Transfer risk
capital or profits out of country
ownership restrictions
required part of ownership of foreign bus
types of takeovers (C.E.N.D)
-confiscation
-expropriation
-nationalization
-domestication
Confiscation
A governments taking of a privately owned business or personal property without a proper public purpose or an award of just compensation
Expropriation
business seized and given to locals, some compensation
Nationalization
government take over bus, some compensation
domestication
changing character of bus overtime, majority owned by locals (exprop) or nationalized bus given to private local sector
- why dont strategies of big corps work in developing countries
- emerging markets are so volatile that most mnc’s cannot apply the strategies they have developed.
6 part strategy the author’s research revealed among the 50 successful local companies
local companies not constrained by existing products or notions about consumer needs
customize products to meed customer needs
business models overcome roadblocks and yield C.A.
Turn globalization to adv.
innovative ways to benefit from low cost labor pools and over come work shortage
go national ASAP- keeps regional competitors away
management skills underestimated by MNC’S
How do MNC’s beat locals?
copy their strategies
develop new ones that cannot be easily copied
competitive advantages of kiranas compared to global giants
low cost structure (rent, wages, op ex)
personal relationship with customers that result in quick deliveries
convenience and satisfaction
steps to kiranas taking to stay competitive
accept cashless payments through e-wallets
communication through messaging rather than over the phone
and turning to e-comm sites to supply
steps walmart is taking to compete with aldi and lidl
hone store brand product selection
lower prices and get basics right
speeding up checkout lines
chief exec - doug mcmillon
how are consumer goods being affected by us grocers attempt to compete w aldi and lindl
many are worried that price competition among retailers could squeeze them as well since companies count on walmart for millions of dollatrs in annual sales.
aldi and lindl success in us?
yes, aldi around for 40 years and only 1% ms
Domains of pressure from home country groups (B.E.PP)
product strategoes
pricing
environmental issues
boycotts
Government actions on MNC from host country
- embargo
-sanction
steps to manage political risk (7)
-local partner
-minimize asset risk
-stimulate
-lockal economy
-behind the scense lobbying
-employ nationals
-civic minded
direct effects of terrorism
create terror
effect on education
tourism industry
indirect effect of terrorism
-increased gov regulation
-increased cost of secure supply chain
-increased security of corporate personnel
political risk insurance
-currency inconvertibility
-expropriation
-breach on contract
-war, revolution, insurrection
-nonhonoring of financial obligations
OPIC: overseas private investment corporation
-promotes econ devel in emerging markets through investment insurance and credit financing
-self sustaining receives no public funds- independent
advances us foreign policy and national security priority
MIGA: Multilateral investment Guarantee Agency
member of world bank group
promotes private investment in developing countries by ensuring political risk
FCIA- foreign credit insurance association
insures US exports against commercial and limited political risks
local vs foreing reg environments
-multiplicity of laws
- most regulated industries
-us has most strict laws for products
jurisdiction
disputes resolved in country business is located
alien tort claims act
foreign nationals can sue american companies for overseas crime
arbitration
quick
inexpensive
preserves business groups
Why do mnc prefer subsidiaries
-easy to recruit talent
-quick market access
-circumvent gov restriction
-tax adv.
-lim liability
-separate legal entitiy
intellectual property
works of authorship, inventions, trademarks, trade secrets
ip protection
copyright
patent
trademark
copyrigjht
document granting exclusive right to publish and sell literarty or musical or artistic work expression of own ideas
duration of copyright protection
70 years after artists life
95 years for corporations
patent
protects invention orfscientific/ technical nature
grant from the gov to an inventor in exchange for public disclosure giving the patent holders exclusive rights to functional and design inventions.
duration of patents
utility- 20 years
design- 15 years
trademark
any sign, or any combination of signs, distinguishing the goods or services of an enterprise
paris union
-priority rights
-national treatment
-independence of patents
priority rights
register patent in one member country hv one year to register it in other member countries
national treatment
for member nations’ applications
independence of patents
revocation or expiration in country of original filing has no effect on its validoty in other countries
Trade related aspects of trips
Patents available for any technological invention
traits necessarry for TRIPS
-new
-industrial application
-available for any invention
-no harm to humans, animals, plants, environ
-mere discoveries are patentable
-software
TRIPS compulsory license
allowed for life saving medicines for LDCS
-gov may grant w out grant of patent holder
-license for domestic use
-gove decides reasons for licensing
-negotiate in good faith
-patent holder keeps patent
-limited scope
counterfeiting
illegal copy of products
penatlites with fines up to 1 mil alnd 15 yr in prison
Difficulties controlling counterfeits
low risk and high profit
time consuming to get warrant
proof of fake needs to be seized
law agencies do not make extra efforts
how to protect against counterfiet
educate employees
keep up w best practices
do not tell employees everything
actions to stop ip theft
super 301 report
special 301 report
how to protect ip theft
same as cf
types of market
stand alone attractive
globally strategic
geographic
stand alone attractive markets
- market size
-growth rate
-competitive positon
-gov
globally strategic markets
must win markets
home market of global customers
home markets of global competitors
lead markets
geogrpahic markets
groups of countries
developed countries
errors in country selection
ignor countries with good potential and too much time spent on poor potential countries
reasons for market exit
tough competition
financial problems
operational difficulties
refocus on home market
market exit consequences
market is lost
emboldens competitors
credibility in other markets is lost
costly to close operations
export adv
minimal risk and a wat to enter foreign market
economies of scale
export disadv
not always optimal strategy
strategy is poor when currency is strong in home country
inderect exporting
use of intermediaries in home country
intermediaries
-brokers
-export agents
-export management
-group export activity
-trading company
adv. of indirect exporting
little to no investment
no in house personall needed knowlesfe
dis adv indirect export
lack of control in foreign markets
limited service
direct exporting
internet use to export directly
adv to company owned export department
more marketing control
intermediaries of direct exporting
agents
merchants
marketing subsidiary
licensing
assigns rights to a copyrigt, patent, trademark
adv to licensing
-increase in profit
-protects trademarks
-penetrates closed markets
-use when capital is scarce
-foreign country market potential is too small
franchising
comprehensive form of licensing
issues with franchinsing
-finding the right one
-complaints
-fraud
-incompetent franchisers
master franchise
aquires exclusive rights to city, country, or region
types of manufacturing
contract
assembly
full scale integrated production
contract manufacturing
viable strategy in low volume potential markets
in high tariff markets
key factors are randd or marketing production technology is standard
assembly manufacturing
locating portion of operations in foreign policy
less capital
more labor
only option to enter closed markets
full scale integrated production manufacturing
max commitment, risk, and control
viable strategy in large market
