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today it is Gospel.
Three Conventional Ways through which the Lilliputs fought the Biggies...
By calling on the government to reinstate trade barriers or provide some other form of support. By becoming subordinate to the multinationals.
Goliath.
Compaq Unilever / P&G Mc. Donald Lafarge / France
WAR.Strategies..!!
Questions that the smaller players must ask..
How strong is the pressure to globalize in the specific industry ?
How internationally transferable are the companies competitive assets ?
How strong is the companys core competency vis a vis the MNCs ?
How diverse are the local customers with respect to the use of the product/ services ? Can the strength of the MNC be leveraged to convert it to its weakness? How agile is the competitor ?
Fat is divided by Greater autonomy Constraints by Wall street mood to mgr except in obligations crisis arising from the corporate network Aim for breakthrough Co. effort Aggressive High Incremental and processed based Mild Medium Diffusion
R&D
Aggressive Low
100%
90%
Usage
Creative Solution
Lead User
Routine Users
Early Adopters
Time
1890
1970
90
00
20
50
Henry Ford
GM/Ford
Retail Sector
Biggies
Increase expense in advertising to gain attention.
Lilliputs
No need in advertisement to grow attention. d V is constant
dC=dS-dV
.contd.
Retail Sector
.contd.
Shifting trends to private labels Fight for shelf space Increase in w.i.c/inventory More promotion
The factors that should be eliminated that the industry has taken for granted.
The factors that should be created that the industry never offered.
Pressure of Industrialization...
Hi Tech industry Consumer product (Chips, telecommunication,switches) (food , retailing) Enormous fixed cost for product development, capital equipment,marketing, distribution Covering the cost is possible only through sales in multiple markets Single set of rules govern the industry Consumers satisfied with the standard product
No single set of rules govern the industry MNCs cant sell standardized products and focus on local product or market
Competitive Assets!!
Long term relationship with government/market /local players Strategic supplier alliances. Local distribution network that would take years for an MNC to replicate.
The winner is the one WHO FIGHTS THE WAR WITH A BETTER STRATEGY.
Transferable abroad
Contender
Focuses on upgrading capabilities and resources to match multinationals globally, often by keeping to niche markets
Dodger
Focuses on a locally oriented link in the value chain, enters a joint venture or sells out to a multinational
Defender
Focuses on leveraging local assets in market segments where multinationals are weak Low
Extender
Focuses on expanding into markets similar to those of the home base, using competencies developed at home
Defender
Focus on the advantages they enjoy in the home market . Resist the temptation to reach all the customers or imitate the MNCs Focus on their customer base who favour the local touch Ignore those who favour global brands Astutely exploit its local orientation - familiarity with distinct tastes Position itself from a product specific company to a customer specific company.
Defender
Case Study: Shanghai Jahwa Chinas oldest cosmetic company. Familiarity with the distinct tastes of the Chinese consumers The Chinese have a distinct culture which also defines Beauty very differently as compared to what is generally perceived by the MNC's Strategy:
Pressure of Globalization is weak as the products of the MNC's appeal largely to the affluent city dwellers
Mass market brands developed around traditional ingredients and beliefs E.g. Liushen Gain in market share Formed strategic alliances with Japanese companies to expand its product line
Extender
They go beyond defending their local markets They have Transferable assets that can be used as a platform for success elsewhere Focus reaping added revenue and scale economies
Extender
Case Study
Jollibee Foods.a fast food company in the Philippines Developed customized menus to meet local tastes E.g. garlic seasoning in burgers to compete with Mc. Donalds Targeted the expatriate population in Hong Kong,middle east
Asian Paints
Their strategy is honed to serve a highly price sensitive market as compared to the MNC's that cater to the demands of affluent customers
Dodgers
There is strong pressure to globalize E.g. Skoda Alternatives like forming a JV with a MNC, selling out Focus on links in the value chain where local assets work well E.g..Vist Redefine their core business or even compliment a multinationals offerings or adapt them to the local market Re- Orientation by becoming suppliers of key components to the MNC's Focus on niches
Contenders
They have transferable assets selling at the global level
Sundaram Fasteners
Join a production consortium with GM Sole supplier to GMs NA div. Drove home the technology
4. Insufficient capital to cope with both the start-up costs and working capital, meaning that cash flow problems cause the company to fail, even though it may be financially viable.
Linear Relationship between Components of the Innovation Process Invention Innovation Design Diffusion
Invention
Tech Transfer
Design
Diffusion
Judo Strategy
At the heart of judo strategy is :
The premise that sheer size and raw strength are no match for balance, skill, and flexibility.
Wal-Mart, PalmPilot, CNET, Principles of judo into a winning business strategy:
Principle 1
Principle 1
Principle 2
Principle 2
Principle 3
Exploit leverage that uses the weight & strength of opponent against them
Dos:-
Principle 3
Exploit leverage that uses the weight & strength of opponent against them
Dont :Forget that the greater is your success, more is the chance that leverage can be used against you
Core Activity Economy Scope Type of Problem Timescale Evolution Planning Strategy
..contd.
Shift from advertising to Beta testing (biggies get a hole in their pocket)
Companies being proactive in market
Things to ponder
Just a thought: To steal ideas from one person is plagiarism; to steal from many is research.
The Challenges
In a forest there are a few large trees, a greater number of medium-sized trees, and a very large number of small trees. All vie for their share of the available resources. Some of the small trees are seedlings of large trees that will eventually grow to replace the current giants of the forest. Other small trees are in their mature stage and will never grow any larger. But even the giants of the forest do not last forever. The forest is continually evolving in a natural process of birth, growth, decay and death.
Bibliography
The Lexus and the olive tree-T.l. Friedman
..Thank you .