Competitive Final

8/12/2019 Competitive Final

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STUDENTS NAMES Roll No.

NARENDRA GAYAKVAD. 08RUSHALI RAUT. 11

VIPULA MHATRE. 12

SAMIKSHA MANE. 13

CLASS : S.Y.B.M.S.

SUBJECT:Internatina! Mar"etin#.

Topic: $%&etiti'e A('anta#e T)er*.

SUBMITTED TO:Pr+. Rit, B)ar#a'.


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Internatina! Mar"etin#.

M,!tinatina! $r&ratin.

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Internatina! Mar"etin#

The study of international marketing will not be completed unlesswe have an understanding of what marketing is and how does it operatein an international context. There has been large number of definitions ofmarketing which are currently in use. But most of these definitions areconvergent because all these define marketing in almost the same way.

According to Phillip Kotlar marketing is analying! organiing!

planning and controlling of the firm"s customers# impinging resources!policies! activities with a view to satisfying the needs and wants of achosen customer group at a profit$.%n other words! marketing is an act or operation or service by whichoriginal product and final consumer are linked together.&e are concerned here with international marketing which meansmarketing activity carried on across the national boundaries. Thus!international marketing includes activities that direct the flow of goodsfrom one country to the users of another country. A definition adopted

by the American 'arketing Association (A'A) is more appropriate todefine international marketing. According to A'A! internationalmarketing is the multinational process of planning and executing theconception! pricing! promotion! and distribution of ideal goods andservices to create exchanges that satisfy the individual and organiationalob*ectives. %n this definition! the word multinational has been added tothe definition of marketing given by other experts. That word impliesthat marketing activities that marketing activities undertaken in severalcountries and that such activities should somehow be coordinated across

the nations.

The definition recognies that it is improper for a firm to create aproduct first and then for a place to sell it. &hereas the needs and thewants of the consumers should first be ascertained through marketresearch and then produce the new product accordingly. +uuki#'aruti


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has understood the needs of the %ndian consumers for a small car, henceit has become the leader in the car industry through other carmanufacturers are also following the similar international marketingstrategy.

-inally! the multinational process implies that the internationalmarketing process is not a mere repetition of using identical strategiesabroad. The p"s of marketing (product! place! promotion and price)must be integrated and coordinated across countries in order to bringabout the most effective marketing mix. %n some cases these mix have to

be ad*usted for a particular market for a better impact. -or example! thewhirlpool corporation has been able to use more standardies models ofwashing machines and refrigerators to break conventional traditions.

/oca# cola and Pepsi cola %nc have created new slogans formarketing in %ndia and new cola that differs both in taste and texturefrom the American version of there drinks.

M,!tinatina! $r&ratin

The term multinational is used to describe an organiation that

produces in! markets in! and obtain the components of production fromone or more countries for the purpose of increasing benefits to theoverall enterprise. The multinationality of the company is the function ofthe number of countries in which it operates. The more countries inwhich firm operates! the more multinational it is. The essential feature ofmultinational company is that it controls production facilities in multiplecountries which means a firm participating in international business

purely by exporting or by licensing technology! irrespective of their siecannot be consider as multinational corporations. The company should

follow following five criteria to 0ualify to be an '1/2

%t operates in many countries at different levels of economic

development. 1ationals manage its local subsidiaries.


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%t maintains complete industrial organiations! including 345 andmanufacturing facilities in several countries. %t has a multinational central management. %t has multinational stock ownership.

According to 6ames Baker! a multinational corporation has adirect investment base in several countries! earns between twenty to fifty

percent or more of its net profits from foreign operations and itsmanagement makes policy decisions based on the options availableanywhere in the world.$

Internatina! 6%&etitin an(natina! 6%&etiti'e a('anta#e7

As international marketing activity expands! competition also hots#up internationally. +uccess is affected by international competition. %nsome industries! the international market space is occupied by a few tothe exclusion of others. -or instance! in the detergent industry! 7companies /olgate! 8nilever and proctor 4 gamble dominate the

detergent market internationally. %nternational brand name and marketingskill have become the sources of international competitive advantage andthey prevail over local competition world wide. The automobile industryhas also become very competitive internationally. 9ne of the reasons forthe initial success of foreign automakers in the 8nited +tates was theinability of 8+ manufacturer to design and manufacture high#0ualitycheap small cars. The resistance and the inability of 8+ automakers was

based on the economies of car production i.e.! the bigger the car! thehigher the price and therefore higher unit profits. The 8+ automakers

therefore resisted the growing preference of 8+ customers for customersfor smaller cars. According to &arren Keegan! this was a classic case ofethnocentrism and marketing myopia. The product lines of :uropean and6apanese manufacturers always included cars smaller than those made in8+. %n :urope and 6apan! market conditions were different than in the8+. ;olkswagen! 1issan and Toyato found a growing demand for their


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cars in the 8+ market. 'any significant innovations and technicaladvances such as radial tyres! antilock breaks! and fuel in*ection camefrom :urope and 6apan. The impact of international competition has

been very beneficial to customers all over the world. %n /entral America!

detergent prices have fallen and 0uality has risen. %n the 8+! foreigncompanies have provided consumers with the automobile product!

performance and price characteristics they wanted. &hat is true forautomobiles in the 8+ is true for al product around the world.%nternational competition expands the range of products and increasesthe possibilities that consumers will gets what they want.

%nternational competition! however! has its negative impact ondomestic producers of goods and services. &hen a firm offers better

products to consumers in other countries at a lower price! it takes away

customers from domestic suppliers. %f the domestic producers can notcreate new values and find new customers! the *obs and livelihoods ofdomestic producer employees will be threatened. The socialconse0uences of these influences may assume the firm of politicalreaction that may destabilie the business environment.


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/ompetitive advantage is closely linked to strategy development.%n fact! competitive advantage is the fit between an organiation and thestrategy it decides to employ. The two have to go hand in hand. Andwithout a tangible competitive advantage! a company cannot put any

worthwhile strategy into position. Basically! competitive advantage is aposition of superiority in relation to competitive of superiority in relationto competition. The superiority can be in any of the functions performed

by the firm and the extent of the superiority will decide the extent ofcompetitive edge the firm can en*oy in the market. A firm can gaincompetitive advantage in many different ways using its superiority indifferent functions. +ome may be strong in production! they may haveflexible production systems and the benefit of variety, some may bestrong in introducing new products, big firms can have benefit of sie

and small firms can have benefit of flexibility and speed of functioning.+uperiority can also be derived by a firm from the distinctive way inwhich it performs the functions concerned. The very fact that the samefunction can be performed in different ways! offers scope for distinctive

performance and conse0uent distinctive advantage. +o! in developing acompetitive advantage! a firm is basically trying to see how uni0uely andhow advantageously it can perform a particular function or a group offunctions compared to competition.

$%&etiti'e a('anta#e an(

trate#i6 %(e!

+trategy is integrated action in pursuit of competitive advantage.+uccessful strategy re0uires an understanding of the uni0ue value thatwill be the source of the firm"s competitive advantage. -irms succeed

because of their ability to carry out activities better than their rivals.Activities enable the firm to create value for their customers. Thecreation of uni0ue value is central to achieving and sustainingcompetitive advantage. The uni0ueness and magnitude of the customervalue created by a firm"s strategy is finally determined by customer

perception. The greater the perceived consumer value! the stronger the


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competitive advantage and the better the strategy. ;alue! is like beauty =it is in the eye of the beholder. /ompetitive advantage is achieved bycreating more value than the competition and value is defined byconsumer perception.

There are two different models of competitive advantage. 9neoffers generic strategies which are four alternative positions thatorganiations can seek in order to offer superior value and ac0uirecompetitive advantage. According to the other model! generic strategiesalone do not explain the great successes of many 6apanese companies inthe recent years. A more recent model is based on the concept ofstrategic intent. %t prepares four different sources of competitiveadvantage.

Generic Strategies for Creating Competitive Advantage:- The generic business strategies developed by 'ichael Porter are

based on two sources of competitive advantage! namely2>ow cost and differentiation. The combination of these two sources withthe scope of the target market served (narrow or broad) or product mixwidth (narrow or broad) gives four generic strategies! namely2 costleadership. Product differentiation focused differentiation and cost focus.


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COMPETITIVE ADVANTAGE

COMPETITIVE

SCOPE

>ower /ost 5ifferentiation

Broad

Target

1arrow

Target

?. /ost >eadership . 5ifferentiation

7A. /ost -ocus 7B. 5ifferentiation

-ocus

o! is competitive advantage created"

At the most fundamental level! firms create competitive advantageby perceiving or discovering new and better ways to compete in anindustry and bringing them to market! which is ultimately an act ofinnovation. %nnovations shift competitive advantage when rivals either

fail to perceive the new way of competing or are unwilling or unable torespond. There can be significant advantages to early moversresponding to innovations! particularly in industries with significanteconomies of scale or when customers are more concerned aboutswitching suppliers. The most typical causes of innovations that shiftcompetitive advantage are the following2

new technologies

new or shifting buyer needs

the emergence of a new industry segment shifting input costs or availability

changes in government regulations

o! is competitive advantage imp#emented"


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But besides watching industry trends! what can the firm doC At thelevel of strategy implementation! competitive advantage grows out of theway firms perform discrete activities # conceiving new ways to conductactivities! employing new procedures! new technologies! or different

inputs. The DfitD of different strategic activities is also vital to lock outimitators. Porters D;alue /hainD and DActivity 'appingD concepts helpus think about how activities build competitive advantage.

The value chain is a systematic way of examining all the activitiesa firm performs and how they interact. %t scrutinies each of theactivities of the firm (e.g. development! marketing! sales! operations!etc.) as a potential source of advantage. The value chain maps a firminto its strategically relevant activities in order to understand the

behavior of costs and the existing and potential sources ofdifferentiation. 5ifferentiation results! fundamentally! from the way afirmEs product! associated services! and other activities affect its buyerEsactivities. All the activities in the value chain contribute to buyer value!and the cumulative costs in the chain will determine the difference

between the buyer value and producer cost.

A firm gains competitive advantage by performing thesestrategically important activities more cheaply or better than itscompetitors. 9ne of the reasons the value chain framework is helpful is

because it emphasies that competitive advantage can come not *ust fromgreat products or services! but from anywhere along the value chain. %tEsalso important to understand how a firm fits into the overall valuesystem! which includes the value chains of its suppliers! channels! and

buyers.

&ith the idea of activity mapping! Porter (?FF) builds on his ideasof generic strategy and the value chain to describe strategyimplementation in more detail. /ompetitive advantage re0uires that the

firmEs value chain be managed as a system rather than a collection ofseparate parts. Positioning choices determine not only which activities acompany will perform and how it will configure individual activities! butalso how they relate to one another. This is crucial! since the essence ofimplementing strategy is in the activities # choosing to perform activitiesdifferently or to perform different activities than rivals. A firm is more


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than the sum of its activities. A firmEs value chain is an interdependentsystem or network of activities! connected by linkages. >inkages occurwhen the way in which one activity is performed affects the cost oreffectiveness of other activities. >inkages create tradeoffs re0uiring

optimiation and coordination.

Porter describes three choices of strategic position that influencethe configuration of a firmEs activities2

Variet$-%ased positioning # based on producing a subset of anindustryEs products or services, involves choice of product or servicevarieties rather than customer segments. 'akes economic sense when acompany can produce particular products or services using distinctivesets of activities. (i.e. 6iffy >ube for auto lubricants only)

Needs-%ased positioning# similar to traditional targeting of customersegments. Arises when there are groups of customers with differingneeds! and when a tailored set of activities can serve those needs best.(i.e. %kea to meet all the home furnishing needs of a certain segment ofcustomers)

Access-%ased positioning # segmenting by customers who have thesame needs! but the best configuration of activities to reach them isdifferent. (i.e. /armike /inemas for theaters in small towns)

PorterEs ma*or contribution with Dactivity mappingD is to helpexplain how different strategies! or positions! can be implemented in

practice. The key to successful implementation of strategy! he says! is incombining activities into a consistent fit with each other. A companyEsstrategic position! then! is contained within a set of tailored activitiesdesigned to deliver it. The activities are tightly linked to each other! asshown by a relevance diagram of sorts. -it locks out competitors bycreating a Dchain that is as strong as its strongest link.D %f competitive

advantage grows out of the entire system of activities! then competitorsmust match each activity to get the benefit of the whole system.

Porter defines three types of fit2

simp#e consistenc$ # first order fit between each activity and theoverall strategy


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&einforcing # second order fit in which distinct activities reinforce eachother

Optimi'ation of effort# coordination and information exchange acrossactivities to eliminate redundancy and wasted effort.

o! is competitive advantage s(stained"

Porter (?FF@) outlines three conditions for the sustainability ofcompetitive advantage2

ierarc)$ of so(rce *d(ra%i#it$ and #imita%i#it$+ # lower#orderadvantages such as low labor cost may be easily imitated! while higherorder advantages like proprietary technology! brand reputation! orcustomer relationships re0uire sustained and cumulative investment and

are more difficult to imitate.

N(m%er of distinct so(rces# many are harder to imitate than few./onstant improvement and upgrading # a firm must be Drunningscared!D creating new advantages at least as fast as competitorsreplicate old ones.

Bar( %ar"et trate#ie7

Cost #eaders)ip advantage:-

A cost leadership advantage occurs when the uni0ue valuedelivered by a firm is bested on its position as the industry"s low#cost

producers in broadly defined markets or across a wide mix of products.9n account of the popularity of the experience curve concept! cost#leadership strategy has also become popular. The low#cost firm mustconstruct the most efficient facilities in terms of scale or technology andobtain the largest share of the market so that its unit cost is the lowest inthe industry. These advantages give the producer substantial lead in term


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of experience with building the product. :xperience gained in turn leadsto finer refinements of the entire production process! delivery andservice# ultimately leading to further cost reductions. /ost#leadershipadvantage helps to lower prices and give more value to customers in the

late more competitive stages of product life cycle. 6apanese industriessuch as 7G mm cameras! consumer electronics and entertainmente0uipment! motor cycles and automobile have achieved cost leadershipon a world#wide basis. However! cost#leadership can be a source ofsustainable competitive advantage only if entry barriers exist to preventthe competitors from achieving the same low costs. %n an age of processre#engineering and continuous technological improvements inmanufacturing! manufacturers constantly leap frog over one another in

pursuit of lower costs. -or example! %B' en*oyed the low#cost

advantage in the production of computer printers at one time. >ater! the6apanese took technology and after reducing costs and improving

product reliability! gained the low cost advantage. %B' fought back onlyto eventually exit the market.

Differentiation:-&hen a firm"s product delivers uni0ue value because of an actual

or perceived uni0ueness in a broad market! it is said to have adifferentiation advantage. 5ifferentiation can be an effective strategy for

defending market position and obtaining above#average financial returnsbecause uni0ue products generally come with a premium. 1ike inathletic shoes is an example of successful differentiation.

Narro! Target Strategies:-+trategies to achieve narrow#focus advantage target a narrowly

defined market or customer. 1arrow#focus advantage is based on anability to create more customer values for a narrowly targeted segmentand results from a better understanding of customer needs and wants.This strategy can be combined with either cost or differentiationadvantage strategies. &hile cost focus offers low prices to a narrowtarget market! a firm pursuing focused differentiation will offer a narrowtarget market the perception of product uni0ueness at a premium price.

,oc(ssed Differentiation:-


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/ompanies have been successful in pursuing focusseddifferentiation strategies backed by a strong export effort. Premiumaudio#e0uipment is a good example of focused differentiation. 'anycompanies in the 8+ and other parts of the world make speakers and

amplifiers and related hi#fi gear that cost thousands of dollars percomponent. Audio#components are a I ? billion market worldwide.However! yearly sales in the premium segment are only I ? billion with a@ percent share going to 6apan alone.

Cost ,oc(s:-

&hen a firm"s lower#cost position enables it to offer a narrowtarget market lower prices! it is called a cost#focus strategy. %n the ship

building industry! Polish and /hinese shipyards offer simple! standardvessel types at low prices that reflect low production costs.

r6e in+!,en6in# 6%&etiti'e

a('anta#e7

/hange and government are the two other forces which need to be

considered in the evaluation of national competitive advantage. 1on#market forces are also a part of the environment which influencescompetitive advantage of nations.

C)ance:

/hance events play a role in shaping the competitive environment.These events are beyond the control of the firms! industries and evengovernments. -or instance! wars and their conse0uences! ma*or

technological breakthroughs! sudden dramatic shifts in input cost!dramatic swings in exchange rates etc. are all chance events.

/hance events create ma*or discontinuities in technologies thatallow nation and firms to leap programmes over old competitors and

become competitive! some times leaders in the changed industry. -orinstance! the development of micro#electronics allowed many 6apanese


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firms to overtake American and


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national or geographic markets that are free from these limitation andcosts have a competitive edge over their rivals.

T)e s$stem of determinants:

The determinants of national competitive advantage is aninteractive system in which activity in any one of the four points of thediamond impacts on all others and vice#versa.

Sing#e or Do(%#e Diamond:

'ichael Porter"s thesis that a firm"s home base country is the mainsource of core competencies and innovation has been challenged byother researchers. Prof.Alan 3ugman of the 8niversity of Toronto arguesthat the success of companies based in small economies such as /anadaand 1ew Jealand cab be attributed to diamonds found in a particularhost country or countries. -or instance! a company based in a :uropean8nion nation may depend on the national diamond of one of the fourteenother :.8. members. %n the same way! one impact of 1A-TA on/anadian firms is to make the use of diamond relevant to competencycreation. According to 3ugman! in such cases! the distinction betweenthe home nation and host nation becomes blurred. Prof. 3ugmansuggests that /anadian managers must look at the double diamond

shown figure and assess the attributes of both /anada and the 8+ whileformulating corporate strategy.


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Working on the project of CompetitiveAdvantage Theory was a great experience.By preparing this project we got lot of

knowledge we also !nderstood theimportance of planning designing aproject.

"aking of this project was very m!chenjoya#le moment in st!dying s!#ject. Wealso get experience to how to interact with

people$ how to do s!rvey for gettinginformation$ how to analy%e the s!rvey how to come to the concl!sion on giventopic. &t was really very interesting topic tost!dy also very !sef!l in c!rrent sit!ation.

Thank yo! "A" for giving this wonderf!l

and very interesting project.


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Competitive Final