6Global Competitors

Learning Objectives

• Describe ways in which one global competitor can address another.

• List and explain four basic strategic options that local firms can employ in the face of competition from multinational firms. Explain how attitudes toward competition have evolved differently in different cultures, and cite examples from both developed and developing countries.

• Note examples of how home governments can still support the global competitiveness of their firms despite the trend toward trade liberalization.

• Discuss the major competitors from developing countries— state-owned enterprises and business groups— and explain how they differ from multinational companies.

• Describe how a firm’s country of origin can help or hurt it in the global marketplace.

Chapter Overview

• The Globalization of Competition

• Strategic Options for Local Firms

• Cultural Attitudes toward Competition

• Home Country Actions and Global Competitiveness

• Competitors from Emerging Markets• The Country-of-Origin Advantage

Global Competitors Face Off

• Cross-country subsidization

• Counter-parry/counter attack

• Globally coordinated moves

• Targeting of global competitors

Global Firm Buys Local Firm

• This can upset the local competitive environment – Heinz dominated soy sauce in Indonesia

with its ABC brand– Then Unilever bought rival Bango brand– Bango sales surged due to Unilever’s vast

distribution system in Indonesia

Cultural Attitudes Toward Competition

• Rules - written and unwritten - of the competitive game vary across countries

• Is competition good or bad? – U.S. antitrust laws traditionally encourage

competition but are focused on the good for the consumer

Competition in Emerging Markets

• Developing countries were traditionally wary of competition

• Foreign competitors often faced discrimination– Restrictions on imports– Restrictions on FDI

Government Barriers to Competition

• Tariffs and restrictions on imports

• Restrictions on foreign ownership and investment

• Government control of inputs such as land, power, or water

• Permits to start a business

Managing Country of Origin Perceptions

• Production may be moved to a country with a positive country-of-origin effect.

• Key parts can be sourced from such countries• A channel that distributes already accepted

complimentary products can be used• A communications campaign designed to

strengthen the association between product and country-of-origin can be developed

Country of Origin Issues – Beyond Quality

• Consumer Ethnocentrism– Buyers are

disinclined to purchase foreign products because they believe buying imported products results in job losses and hardship at home

• Consumer Animosity– Buyers harbor

political objections to purchasing products from a specific foreign country