Question

11. Illustrating the basic marketplace tactics when the firms are pursuing in a standards battle

Answer 1

As protectionist barriers crumble in emerging markets around the world, multinational companies are rushing in to find new opportunities for growth. Their arrival is a boon to local consumers, who benefit from the wider choices now available. For local companies, however, the influx often appears to be a death sentence. Accustomed to dominant positions in protected markets, they suddenly face foreign rivals wielding a daunting array of advantages: substantial financial resources, advanced technology, superior products, powerful brands, and seasoned marketing and management skills. Often, the very survival of local companies in emerging markets is at stake.

• Strategists at multinational corporations can draw on a rich body of work to advise them on how to enter emerging markets, but managers of local companies in these markets have had little guidance.
• When India opened its automotive sector in the mid-1980s, the country’s largest maker of motor scooters, Bajaj Auto, confronted a predicament similar to what many “emerging-market” companies face. Honda, which sold its scooters, motorcycles, and cars worldwide on the strength of its superior technology, quality, and brand appeal, was planning to enter the Indian market.
• Despite the heated rhetoric surrounding globalization, industries actually vary a great deal in the pressures they put on companies to sell internationally. At one end of the spectrum are companies in such industries as aircraft engines, memory chips, and telecommunications switches, which face enormous fixed costs for product development, capital equipment, marketing, and distribution.
• At the other end of the spectrum are industries in which success turns on meeting the particular demands of local consumers. In beer and retail banking, for example, companies compete on the basis of well-established relationships with their customers.
• Most industries, of course, lie somewhere in the middle of the spectrum. International sales bring some advantages of scale, but adapting to local preferences is also important.
• Some competitive assets may also be the basis for expansion into other markets. A company can use its access to low-cost raw materials at home, for example, to undercut the price of goods sold in other countries. Or a company may use its expertise in building efficient factories to establish operations elsewhere.