Looks at
Level of technology
Supporting industries
Demand assessment
Competitiveness
Supplier / buyer-related issues
Product-related issues

What now needs to be done is examine the state of our industry in that particular country, fine-tune what it exactly is that we will finally do here in terms of our joint venture or alliance, and bring us closer to who our actual partner will be.

Key Factors for Analysis in the Country of our Choice

  • Industry-related factors
  • Level of technology
    - Where does the country in question stand?
    - What is the comparative importance of R&D?
    - Are R&D investment levels substantial?
Technological Edge

Korea's focus on R&D enabled it to match the ability of its Japanese rivals to produce colour televisions and VCRs on a mass scale. Brazil similarly used R&D to develop design and technology comparable to what the Italians did in casual leather footwear.


Ericsson: Technology Engineering

Ericsson, a Swedish company, was searching the global arena for new markets. It believed in tapping local technologies, adapting them to local requirements and exporting them to the group's advantage.

Supporting Industries
- What are the related industries?
- What are the supporting industries? Ancillaries?
- Are they developed to some level of sophistication?

Ancillary Industries: Disparate Growth

In the late 1960s, firms producing colour television sets needed the supply of tubes. But the size of an efficient tube manufacturing unit was relatively larger than that of a television assembly plant. The result of installing a tube manufacturing unit was that the increase in demand of colour televisions was not rapid enough to absorb the tube capacity.

  • Industry Dispersal
    - How is our industry dispersed?
    - Are there concentrated pockets?
    - Are there gaps to be filled?

For instance, agricultural industries within a country may be located where the climatic and soil conditions are conducive. Even where such basic factors do not apply for various reasons of convenience, purchasing power, proximity to ports, etc., very few industries in any sector or in any country would be uniformly dispersed. Examples are Detroit for cars and Silicon Valley in California for micro chips.

  • Demand assessment
    - who are the major industry players?
    - What are their existing supply levels?
    - Is there spare capacity available?
    - What is their market share?
    - What are their plans for growth?
  • Competition levels
    - Who is our competition?
    - Are levels of competition high?
    - Are they so high as to erode potential profit margins?
Timex Watches: A Low-priced Competitive Strategy

Timex's strategy in entering the watch industry in the 1950s was to produce such a low-priced watch that it did not pay to have repaired. The Swiss watch industry, which was positioned as producers of high quality and high-priced watches, did not pose a threat to Timex, poised as it was to create primary demand. Consequently, Timex was able to gain a strong foothold in the lower end of the market.

  • New Entrants
    - Is someone already knocking on the door?
    - Will there be increased capacity?
    - Will there be new product features?
    - How will this affect market share?
    - What about margins?
Arrow Shirts: Entering Global India

When India recently opened its doors to foreign brands, the ready-made-garment industry was one of the first to see an influx of American and European players. America's Arrow brand of shirts collaborated with Arvind Mills to manufacture and market its executive formal wear in India.

Even as Arrow was setting its sights, European brands like Van Heusen, Louis Phillip and Allen Solly set up shop in India's metropolitan cities, under, similar collaborations with other manufacturers. The branded, premium ready-mades market being at a nascent stage, there was no threat to market shares as the market itself was growing at 25% per annum. Neither was the existing Indian brand of premium shirts, Park Avenue, losing markets to the new entrants. Yet Arrow positioned itself at the apex of the super-premium shirts market, pricing its shirts marginally higher than the new entrants. It developed a voice of authority via styles and fabric variants and aggressive advertising support.

  • Competitive advantage
    - Are there some areas of competitive dvantage we may have?
    - Do we offer lower costs?
    - Do we have a different product range?
    - Is it possible to maintain this advantage?
3M: From Competence to diversity

3M competencies in substrates, adhesives and coatings were combined to successfully enter diverse businesses like sticky tapes, "post-its, magnetic tapes, photographic film and coated abrasives.

  • Supplier network
    - Is the potential supplier network a good one?
    - Will we need to develop it further?
  • Competitive strengths of suppliers
    - How strong are these?
    - Will they sustain our original advantage?
    - Is the potential supplier network strong?
Automobile Manufacturing: Vertical Integration

Honda and Ford developed partnerships with vendors to improve the quality and lead time of subcontracted products, without having to go the route of expensive mergers and acquisitions.

  • Discerning level of buyers
    - What are the trends in our consumer sector?
    - What are the levels of sophistication?
    - What the levels of obsolescence?
    - How does this affect our product characteristics?
Designing for the Japanese market

Japan is susceptible to severe earthquakes due to its geological location, and daily tremors are common. This immediately calls for attention to safety in product design which is specified by the Japanese government. Take the case of space heaters. Japanese homes do not have central heating systems and hence rely on kerosene room heaters. These need to be designed to withstand tremors and retain their stability as the resultant fire hazards are enormous.

Japan found that the Swedish kerosene heaters complied with Japanese safety standards whereas the American domestic space heaters were not engineered to adapt to Japanese safety needs, and hence were not acceptable.

 

  • Substitute products
    - Are these a threat?
    - Could they become a threat?
    - Is there a large marginal market that may switch?
Home Automation: The Indian Example

In a highly labour-driven, low-cost market like India, domestic automation like washing machines and vacuum cleaners was slow to gain acceptance, as substitutes in the form of cheap domestic help was easily available. But with the increasing trend away from the joint family system, where two or three generations of a family were living together, and the growth of the double-income nuclear families, the need for time-saving, self-reliant aids like washing machines were seen as a viable substitute. This growing market is now offering valuable opportunities for foreign brands like Electrolux, Whirlpool, National and GE, LG, Samsung etc. to enter the Indian market.

A quick recap of our efforts so far will be useful. We started with clarifying our vision and defining our mission statement which led us to determining our corporate strategy. Then we drew up a detailed profile of our own company and analysed our strengths, weaknesses, opportunities and threats. This process helped us review our potential from a global perspective.

In an effort to locate the optimum opportunity and carve out a niche, we next conducted a global survey of our particular industrial sector and studied the geographical possibilities for global business open to us, analysing within this framework the chosen country's competitiveness and risk.