Global Markets Essay Research Paper Building a

Global Markets Essay, Research Paper

Building a sustainable competitive advantage is widely viewed as a key factor underlying an effective marketing strategy (Day 1990; Porter 1980). Yet despite the growing importance of international markets and the increasing number of firms expanding internationally, most discussion has been confined to the domestic market. In international markets, interest has primarily been focused on the extent to which domestic market conditions provide industries with an advantage in competing in international markets (Porter 1990), as well as on industry drivers of globalization (Yip 1995). Relatively little attention has been centered on how an individual firm can or should craft a sustainable competitive advantage in international markets. Typically, it is assumed that the firm can succeed by leveraging its domestic positioningfor example, through a cost leadership, differentiation, or niche strategy in international markets.

Although this assumption may be appropriate for firms initially entering international markets or targeting global market segments, it does not take into account the existence of differences among national markets or the spatial character of the global landscape. Often, customer characteristics and desired benefits, key competitors and their strategies, or the nature of the market infrastructure differ from one market to another, which requires the firm to modify substantially its competitive positioning to compete effectively. Yet at the same time, interdependencies between markets are growing as a result of the flow of goods, people, and information across national boundaries (Featherstone 1990). As a result, in assessing its overall competitive advantage in global markets, a firm needs to consider the strengths and weaknesses of its competitive positions in each country’s market and how these interact to influence deployment of resources worldwide. The following examples illustrate this issue.

EXAMPLES

Building Market Presence

In the United States, News Corporation’s Fox network typically ends up fourth in the rating wars with the three established networks, ABC, NBC, and CBS. However, outside the United States, the picture is quite different. In addition to establishing a fourth television network, Rupert Murdoch is building a strong configuration of satellite and cable companies around the world. The extensive geographic network of operations allows content developed for the Fox television network in the United States to be aired on News Corporation’s vast satellite network, which consists of BSkyB in the United Kingdom, Star TV in Asia, and ISkyB in India, as well as through satellite- and terrestrial-based networks in other countries where News Corporation has strategic alliances. This vast network gives News Corporation a strong configural advantage over the three U.S. television networks-one that is very costly and difficult to replicate.

Lack of Global Market Coverage

Kao’s Attack is the leading brand of laundry detergent in Japan. It is so strong that an independent survey of 170 leading brands found Attack to be the number one power brand in Japan. Attack is so popular that it is frequently given as a gift. However, outside Japan, Kao is a small player in the detergent market that is dominated by Procter & Gamble, Unilever, and Colgate-Palmolive. This largely reflects Kao’s relatively limited configuration of operations outside Japan for any of its five major product businesses. In 1999, only 29% of the company’s sales were outside Japan, and approximately half those were to nearby Asian countries. The limited geographic scope of this network does not provide a strong platform to expand its operations. This is further reinforced by its perception of its unique capabilities: ability to discover customer needs, superior research and development (R&D), a strong sales force, and effective profit management.

Strategic Flexibility Nestle provides an example of a company with a strong configural advantage in the marketing, distribution, and manufacture of food products. Nestle has developed an explicit international brand architecture that consists of 10 worldwide corporate brands, 45 worldwide strategic product brands, 25 regional corporate brands, 100 regional product brands, 700 local strategic brands, and approximately 7000 local brands (Parsons 1996). On the production side it has 522 factories in 81 countries that provide manufacturing capabilities in key markets. The broad geographic coverage enables NestI6 to realize sales from industrialized countries as well as the increasingly important emerging market countries and to transfer information and experience from one market or region to another.

Speed of Resource Deployment

Viacom has been able to establish a strong configural advantage with MTV, its Music Television network, which reaches 300 million households in 83 countries worldwide. The brand identity is extremely strong and appeals to teens throughout the world. Programs can be rapidly distributed through MTV Europe, MTV Latin America, MTV Brazil, MTV Asia, MTV India, MTV Mandarin, MTV Japan, MTV Australia, and MTV Russia. In addition, content can be modified to accommodate local music preferences. Viacom has also leveraged brand identity to MTV Books, MTV Films, and MTV On-Line, as well as to more than 50 international