| 
| 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.
|