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Competing in Global Markets

Competing in Global Markets. Group 3 Vijay Madanu – 17 Ankur Rathi – 37 Vishal Roge – 38 Sachin Shah – 42 Deepak Singh – 47 Nikhil Thadani - 52. Structure. Globalization Factors - Overview Global Strategic Models – Porter & Yip Blue Ocean and Red Ocean Strategy Case Analysis.

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Competing in Global Markets

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  1. Competing in Global Markets Group 3 Vijay Madanu – 17 Ankur Rathi – 37 VishalRoge – 38 Sachin Shah – 42 Deepak Singh – 47 Nikhil Thadani - 52

  2. Structure • Globalization Factors - Overview • Global Strategic Models – Porter & Yip • Blue Ocean and Red Ocean Strategy • Case Analysis

  3. Forces driving global integration • Globalization of Economies – Emerging markets • Fierce local competition • Syndication of Technology – Manufacturing Efficiency • Trade pacts and bilateral ties between economies • Conducive business / monetary policies promoting international trade • Growing literacy rate • Rise in Per capita income

  4. Industry Globalization Drivers Market Drivers Common Customer Needs Global Customers & Channels Marketing Mix Cost Drivers Global Economies of Scale & Scope Steep Learning & Experience Curve Effects Favorable Logistics Shortening PLC, Rising R&D & Development Costs Fast Changing Technology

  5. Industry Globalization Drivers Government Drivers Favorable Trade Policies Compatible Technical Standards Common Marketing Regulations Government as a Customer Competitive Drivers Presence of Global Competitors Presence of Strong Local Competitors

  6. Issues Faced… • Government intervention • Infrastructure bottlenecks • Legal environment • Financial Regulations • Civil Disturbances • Environmental Issues

  7. Advantages of going Global • Scalability – production, sourcing, R&D • Learning from different markets • Marketing and Distribution • Investor / Consumer Confidence

  8. Challenge • Converting global advantage in to local advantage • Enriching experience from local markets to global scale

  9. Essentials of competing in global markets • Effectively managing change and transition • Cultural diversity • Design flexible organizational structures • Compliances – Environment, Safety

  10. Key Elements for International Competition • Competitive Advantage • The set of unique features of a company and its products that are perceived by the target market as significant and superior to the competition. • Sustainable Competitive Advantage • An advantage that cannot be copied by the competition

  11. International Strategy • An International Strategy is a strategy through which the firm sells its goods or services outside its domestic market. • Reasons for implementing an international strategy • International markets yield potential new opportunities • To extend a product life cycle • To secure needed resources

  12. Opportunities and Outcomes of International Strategy Identify International Opportunities Explore Resources & Capabilities Use of Core Competence Strategic Competitiveness Outcomes Modes of Entry Increased Market Size Return on Investment Economies of Scale and Learning Advantage in Location International Business –level Strategy Multi-domestic Strategy Global Strategy Transnational Strategy Exporting Licensing Strategic Alliances Acquisitions Establishment of a new subsidary Management Problems and Risk Better Performance Innovation Management Problems and Risk

  13. International Strategies • International Business-Level Strategy • Global cost leadership • Global differentiation • Global segmentation • International Corporate-Level Strategy • Global strategy • Multi-domestic strategy • Transnational strategy

  14. International Business-Level Strategy • Global cost leadership • focuses on being the lowest cost producer of a product globally • Takes advantage of global economies of scale & high volume sales world-wide • Eg: Walmart • Global differentiation • Create a superior product or change customer perception of the product in order to raise price on a global scale • Often the basis of this strategy is a strong brand name • Eg: Apple • Global segmentation • Global version of a focused strategy • Can be either be global cost leadership or global differentiation • Targets a single segment on a worldwide basis • Eg. Zara

  15. Global Strategy Transnational Strategy HIGH Need for Global integration Multi domestic Strategy LOW LOW HIGH Need for Local Responsiveness

  16. International Corporate-Level Strategy • Global strategy • Firm offers standardized products across country markets, with competitive strategy being dictated by the head office • Emphasizes economies of scale • Less responsive to local markets • EgCoke, Pepsi • Multi-domestic strategy • Strategic and operating decisions are decentralized to the strategic business unit in each country • Maximizes local responsiveness • Eg. Unilever, P&G • Transnational strategy • Firm seeks to achieve both global efficiency and local responsiveness • Eg. Dell

  17. Modes of Entry

  18. Strategic Competitiveness Outcomes • International Diversification and returns • Greater economies of scale and learning along with greater innovation, help produce above-average returns. • International Diversification and innovation • Provides larger market to gain more and faster returns from investments in innovation • May generate resources necessary to sustain a large-scale R&D program

  19. Risks in International Environment • Political risk • Domestic instability • Foreign conflict • Protectionism: Tariff, Quota, Subsidy, Cartel • Corruption: Bribery, Extortion, Grease payments • Economic risk

  20. Porter and Multidomesticity According to Porter, a company is: Multidomestic if competition in each nation is independent Global if the competition is global

  21. Basis of Global Strategies: 2 Models Porter’s Yip’s

  22. Porter’s Global Generic Strategies Protected markets National responsiveness Global cost leadership Global differentiation Global segmentation

  23. Protected Markets Focusing on competing in countries where that particular government protects or favors the business

  24. National Responsiveness Focuses on adapting strategy to each local market

  25. Red and Blue Ocean Strategy

  26. Four Action Framework

  27. 6 principles of Blue Ocean Strategy

  28. Case Analysis MTV v/s Channel V

  29. Case Overview • Entered in India via STAR’s satellite feed in 1991 • Rupert Murdoch acquired STAR in 1993 and MTV parted ways over some commercial disagreements. • This led to launch of Channel V • MTV launched again in 1995 – focused on youth and common brand image • Stiff competition on distribution figures • While MTV had a upper hand in attracting advertisers and revenue, Channel V was better off recovering cost by low and smart investment

  30. Launch Approach • MTV wasn’t adopting product to local tastes and requirements – Global approach • Channel V on other hand went for localization with artists and programming • VJ’s • Local Artists

  31. Strategic Approach • MTV – Multidomestic • Localized content but certain common values that projected the brand in a certain form for consumers ‘MTV Generation’ • Positioning – Music Channel • Global Network • Channel V - National Responsiveness Strategy • Total localization, positioned themselves differently in each market • Changed Positioning in 1999 – Positioned as a youth channel • Regional network

  32. India • MTV • Focused on roadshows and Dance parties • Music entertainment • Mass base • Channel V • Operational liberty (National Responsive Strategy) • International Content and music • Focused on classes • Coke V Live Concert, Music awards with local, national and international artists • 10 concerts in two years (97-98) • Long term advertising deals

  33. China • MTV • Televised Award ceremonies were very important • MTV announced Music Honours in association with CCTV – days before Channel V planned event • Lack of procedural clearances delayed the project by 3 months • Channel V • Successful music awards even that got 500 million viewers across Asia / 3 million votes across 20 categories

  34. Strategy – reach and distribution • MTV • Concentrated on Syndication / Fixed slot and claimed more reach amongst the TG • Channel V • Focused on 24 hour relay of channel through satellite and cable • Illegal satellite and cable made it difficult for ad sales

  35. Going beyond • With advertising and reach being limited it was necessary for both the channels to move out and compete beyond television audiences • Syndication • Licensing • Merchandising • Royalties

  36. Licensing and Merchandising • MTV - Global • Globally recognized brand and logo helped in creating tailor made music eg. Unplugged series, MTV Alternate Nation etc • Branded Merchandise like clothing, books, backpacks etc • MTV branded Pagers • Different pricing for different markets – eg. Philippines and Singapore • Scores heavily on brand perception over Channel V • Channel V – India • Albums & T-shirts – more for promotion • Kazakhstan – Deal with ALMA TV for beaming it to 50000 homes • Poor logo • Lack of brand equity as compared to MTV

  37. Others • Better operations to reduce over head costs – Channel V overhauled their system to Digital and increased efficiency • MTV launched website with Tricast Ltd • Allowing video, audio downloads and news updates • Chinese Version • Plans to monetize inventory • Sell merchandise • Collect more TG data for sales support • 4 times the traffic of Channel V • Live Webcast – Billboard Asian Music conference

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