International Marketing Strategy

Global Strategy

The acid test of a well-managed company is being able to conceive, develop, and implement an effective global strategy. A global strategy is to array the competitive advantages arising from location, world-scale economies, or global brand distribution, namely, by building a global presence, defending domestic dominance, and overcoming country-by-country fragmentation.

Because of its inherent difficulties, global strategy development presents one of the stiffest challenges for managers today. Companies that operate on a global scale need to integrate their worldwide strategy, in contrast to the earlier multinational or multi-domestic approach. The earlier strategies would be categorized more truly as multi-domestic strategies rather than as global strategies.

In the following sections, we approach the issue of global strategy through five conceptualizations: (1) global industry, (2) competitive industry structure, (3) competitive advantage, (4) hyper-competition, and (5) interdependency.

Global Industry

The first conceptualization is that of a global industry. Global industries are defined as those where a firm’s competitive position in one country is affected by its position in other countries, and vice versa. Therefore, we are talking about not just a collection of domestic industries but also a series of inter-linked domestic industries in which rivals compete against one another on a truly worldwide basis.

For instance, 30 years after Honda began making cars in the first Japanese transplant in Marysville, Ohio, the automaker is increasingly relying on the U.S. market. It has boosted its North American produc- tion capacity 40% by 2014. Therefore, the first question that faces managers is the extent of globalization of their industry. Assuming that the firm’s activities are indeed global or, alternatively, that the firm wishes to grow toward global operations and markets, managers must design and implement a global strategy.

Four major forces determining the globalization potential of industry are:

• Market forces
• Government forces
• Cost forces
• Competitive forces

The implications of a distinction between multi-domestic and global strategy are quite profound. In a multi-domestic strategy, a firm manages its international activities like a portfolio. Its subsidiaries around the world each control all the important activities necessary to maximize their returns in their area of operation independent of the activities of other subsidiaries in the firm. The subsidiaries enjoy a large degree of autonomy, and the firm’s activities in each of its national markets are determined by the competitive conditions in that national market.

In contrast, a global strategy integrates the activities of a firm on a worldwide basis to capture the linkages among countries and to treat the entire world as a single, borderless market. This requires more than the transferring of intangible assets between countries. In effect, the firm that truly operationalises a global strategy is a geocentrically oriented firm.

It considers the whole world as its arena of operation, and its managers maintain equidistance from all markets and develop a system with which to satisfy its needs for both global integration for economies of scale and scope and responsiveness to different market needs and conditions in various parts of the world.

This is in contrast to an ethnocentric orientation, where managers operate under the dominant influence of home country practices, or a polycentric orientation, where managers of individual subsidiaries operate independently of each other—the polycentric manager in practice leads to a multi-domestic orientation, which prevents integration and optimization on a global basis. Until the early 1980s, the global operations of Unilever were a good example of a multi-domestic approach.

Unilever’s various country operations were largely independent of each other, with headquarters restricting itself to data collection and helping out subsidiaries when required. Unilever started adding some geocentric dimensions to its global strategy when the CEO, Patrick Cescau, kicked off an ambitious restructuring program in 2005.

Under his direction, the “One Unilever” plan was implemented in which unnecessary complexity was removed. One formulation, one packaging design, and one marketing strategy replaced the fragmented approach.

Competitive Industry Structure

Competitive industry structure is the second conceptualization that is use- ful in understanding the nature of global strategy. A conceptual framework that portrays the multidimensional nature of competitive industry structure is presented in Exhibit 2.

It identifies the key structural factors that determine the strength of competitive forces within an industry and conse- quently industry profitability. Competition is not limited to the firms in the same industry. If firms in an industry collectively have insufficient capacity to fulfill demand, the incentive is high for new market entrants.

However, such entrants need to consider the time and investment it takes to develop new or additional capacity, the likelihood of such capacity being developed by existing competitors, and the possibility of changes in customer demand over time. Indirect competition also comes from suppliers and customers, as well as substitute products or services.

1. Industry competitors determine the rivalry among existing firms.
   
   
   
2. Potential entrants may change the rules of competition but can be deterred by entry barriers. For example, Shanghai Jahwa Co., Ltd., its predecessor founded in 1898, became the largest cosmetics and personal care products company in China by 1990.25 Shanghai Jahwa owns such successful brands as Maxam, Liushen, Ruby, and GLF, among others, and is making gradual inroads into markets outside China.
   
   
   Although not yet known to the Western world, its brands may someday pose a major competitive threat to Clinique, Estée Lauder, Lancôme, Max Factor, SK-II, and other well-known brands and may change the nature of competition in the cosmetics and personal care products industry.
   
   
   
3. The bargaining power of suppliers can change the structure of indus- tries. Intel has become a dominant producer of microprocessors for personal computers. Its enormous bargaining power has caused many PC manufacturers to operate on wafer-thin profit margins, making the PC industry extremely competitive.
   
   
   
4. The bargaining power of buyers may affect the firm’s profitability. It is particularly the case when governments try to get price and delivery concessions from foreign firms.
   
   Similarly, Nestlé, whose subsidiaries used to make independent decisions on cocoa purchases, has centralized its procurement decision at its headquarters to take advantage of its consolidated bargaining power over cocoa producers around the world.
   
   
   
5. The threat of substitute products or services can restructure the entire industry above and beyond the existing competitive structure. For example, the rising consumer interest in car sharing services has reshaped the industry of “vehicle ownerships.” Car sharing has become an attractive alternative to owning a vehicle.
   
   
   Pioneered in Switzerland and Germany, the growth of car sharing is springing up in cities in North America and Europe for general hassle, car cost, and gasoline price surge reasons, with Zipcar the biggest North American operator.

Competitive Advantage

Competitive advantage is a third conceptualization that is of use in developing and understanding a strategy on a global scale. Companies may adopt different strategies for different competitive advantage. The firm has a com- petitive advantage when it is able to deliver the same benefits as competitors but at a lower cost, or deliver benefits that exceed those of competing prod- ucts. Thus, a competitive advantage enables the firm to create superior value for its customers and superior profits for itself.

The firm that builds its competitive advantage on economies of scale is known as one using a cost leadership strategy. The theory is that the greater the economies of scale, the greater the benefits to those firms with a larger market share. As a result, many firms try to jockey for larger market shares than their competitors.

Economies of scale come about because larger plants are more efficient to run, and their per-unit cost of production is less as over-head costs are allocated across large volumes of production. Further economies of scale also result from learning effects: the firm learns more efficient methods of production with increasing cumulative experience in production over time. All of these effects tend to intensify competition.

Once a high level of economies of scale is achieved, it provides the firm strong barriers against new entrants to the market. In the 1970s and early 1980s, many Japanese companies became cost leaders in such industries as automobiles and consumer electronics. However, there is no guarantee that cost leadership will last. In addition, the cost leadership strategy does not necessarily apply to all markets.

According to a recent study, implementation of a cost leadership strategy by developed-country MNCs actually is rarely effective in emerging markets. In order to achieve high performance, therefore, MNCs that benefit from cost leadership strategy may try using different strategies in different markets instead of a single generic strategy globally.

Until flexible manufacturing and customized production becomes fully operational, cost leaders may be vulnerable to firms that use a product differentiation strategy to better serve the exact needs of customers. Although one could argue that lower cost will attract customers away from other market segments, some customers are willing to pay a premium price for unique product features that they desire.

Despite the Japanese juggernaut in the automobile industry (primarily in the North American and Asian markets) in the 1970s and the 1980s, BMW of Germany and Volvo of Sweden (currently owned by Chi- na’s Geely Automobile), for example, managed to maintain their competitive strengths in the high-end segments of the automobile market.

Smaller companies may pursue a limited differentiation strategy by keeping a niche in the market. Firms using a niche strategy focus exclusively on a highly specialized segment of the market and try to achieve a dominant posi- tion in that segment. However, particularly in an era of global competition, niche players may be vulnerable to large-scale operators due to sheer econ- omies of scale needed to compete on a global scale.

First-mover Advantage Versus First-mover Disadvantage

A firm uses its technological leadership for rapid innovation and introduction of new products. The timing of such introductions in the global marketplace is an integral part of the firm’s strategy. The firm needs to move on to its next source of temporary advantage to remain ahead. In the process, firms that are able to continue creating a series of temporary advantages are the ones that survive and thrive. Technology, marketing skills, and other assets that a firm possesses become its weapons to gain advantages in time over its competitors.

The firm now attempts to be among the pioneers, or first-movers, in the market for the product categories that it operates in. Apple offers an excellent example of a company in constant pursuit of first-mover advantage with iPod (2001), iPhone (2007), iPad (2010), Apple Watch (2015) although not all of its products, such as Apple Phone, have succeeded in the market.

Indeed, there could even be some first-mover disadvantages. In China, Bei- jing-based startup, Xiaomi smartphone maker was doing well in 2014. Valued then at $45 billion, the high-flying smartphone maker is now stumbling. This was one of China’s most exciting startup stories of the past few years. Xiaomi has struggled partly because competitors Huawei, Lenovo, Oppo, and Vivo quickly copied Xiaomi’s business model with ultrathin devices, glossy websites, and lower prices that allowed consumers to switch to the hippest new phones.

It is therefore important for the firm to clearly assess the key success factors and the resulting likelihood of success for achieving the ultimate targeted position in the highly competitive global business environment.

1. Advantage is temporary. In other words, firms need to have a strong focus on continuously generating new sources of advantages.
   
   
2. Strategy is diverse, emergent, and complicated. It is crucial to rely on diverse strategic moves.
   
   
3. Reinvention is the goal. It is how firms keep pace with a rapidly changing marketplace.
   
   
4. Live in the present, stretch out the past, and reach into the future. Successful firms launch more experimental products and services than others, while they exploit previous experiences and try to extend them to new opportunities.
   
   
5. Grow the strategy and drive strategy from the business level. It is important for managers to pay attention to the timing and order in which strategy is grown and agile moves at the business level.
   
   
6. To maintain sustainable power in fast-paced, competitive, and unpredictable environments, senior management needs to recognize patterns in firms’ development and articulate a semi-coherent strategic direction. With these strategic flexibilities in mind, we could think of three primary approaches to gaining competitive advantage.
   
   
   First, the technology-driven approaches involve not only development of technologies and innovations but also constant search for their applications that cut across industries in pursuit of growth opportunities and profitability.
   
   
   Second, the competitor-focused approaches involve comparison with the competitor on costs, prices, technology, market share, profitability, and other related activities.
   
   
   Third, the customer-driven approaches to gaining competitive advantage emanate from an analysis of customer benefits to be delivered.

Technology-driven Approach

Amazon is an e-commerce and cloud computing company based in Seattle, Washington. It is the largest internet-based retailer in the United States. Although Walmart annual sales of $496 billion are three times more than Amazon’s $156 billion sales in 2018, Amazon has surpassed Walmart since 2015 as the most valuable retailer by market capitalization in the United States.

Amazon started as a Web-based bookseller, and then learned how to develop online retail interfaces that are distinctive and easy to use. Amazon combined this with world-class IT and supply chain capabilities and its own approach to customer recommendations on the basis of sales and preference data. This enabled Amazon to expand across multiple product categories.

Clearly, investors see that Amazon has a much higher growth potential than Walmart.

Competitor-driven Approach

Stanley Black & Decker, a U.S.-based manufacturer of hand tools, switched to a global strategy using its strengths in the arenas of cost and quality and timing and know-how. Then, responding to the increased competitive pressure, Stanley Black & Decker moved decisively towards globalization.

It embarked on a program to coordinate new product development world- wide in order to develop core standardized products that could be marketed globally with minimum modification. The streamlining of R&D also offered scale economies and less duplication of effort—and new products could be introduced faster. It consolidated its advertising into two agencies worldwide in an attempt to give a more consistent image worldwide.

Stanley Black & Decker also strengthened the functional organization by giving the func- tional manager a larger role in coordinating with the country management. The global strategy initially faced scepticism and resistance from country managers at Stanley Black & Decker. The chief executive officer took a vis- ible leadership role and made some management changes to start moving the company toward globalization.

These changes in strategy helped Stanley Black & Decker increase revenues and profits by as much as 50% in the 1990s. In order to meet further cost competition, Stanley Black & Decker’s new global restructuring project plans to reduce manufacturing costs by transferring additional power tool production from the United States and England to low-cost facilities in Mexico, China, and a new leased facility in the Czech Republic and by sourcing more manufactured items from third parties where cost advantages are available and quality can be assured.

Its global restructuring plan resulted in global sales increase from $5.4 billion in 2005 to $14.0 billion by 2018. Now, Stanley Black & Decker sees more than half of its global revenue from emerging markets.

Customer-focused Approach

Estée Lauder is one good corporate example that superbly used cost and quality, timing and know-how, strongholds, and financial resources to its advantage. Estée Lauder has grown from a small, woman-owned cosmetics business to become one of the world’s leading manufacturers and marketers of quality skin care, makeup, fragrance, and hair care products. Its brands include Estée Lauder, Aramis, Clinique, Prescriptives, Origins, M · A · C, La Mer, Bobbi Brown, and Tommy Hilfiger, among others.

Since the beginning of its international operations, the company has always conducted in-depth research to determine the feasibility and compatibility of its products with each particular market, which has led to its high-quality image. Another reason for the company’s success lies in its focus on global expansion before its competitors. Estée Lauder’s international operations started in 1960.

Because of its strong visibility in Europe, it served as a springboard to other European markets. Shortly thereafter, the company made its foray with the Estée Lauder brand into new markets in the Americas, Europe, and Asia. In the late 1960s, the Aramis and Clinique brands were founded and

a manufacturing facility was established in Belgium. In the 1970s, Clinique was introduced overseas and Estée Lauder began to explore new opportunities in the former Soviet Union. During the 1980s, the company made considerable progress in reaching markets that were still out of reach for many American companies. For example, in 1989, Estée Lauder was the first American cosmetic company to enter the former Soviet Union when it opened a perfumery in Moscow. The same year, it established its first free-standing beauty boutique in Budapest, Hungary.

In the 1990s, the firm moved further into untapped markets such as China. Recently, Clinique established a presence in Vietnam. The company is focusing further on China and the rest of Asia. In addition, there are still many opportunities in Europe. The com- pany will continue to look to Latin America for expansion but with caution, due to economic circumstances and political instability.

One more reason for the company’s success is its use of financial resources to further strengthen brand value. Since 1989, the firm has opened some of its free-standing stores overseas because it could not find the right channels of distribution to main- tain the brand’s standards. Estée Lauder has built strong brand equity all over the world with each brand having a single, global image. The company’s philosophy of never compromising brand equity has guided it in its selection of the appropriate channels of distribution overseas.

At the same time, Estée Lauder has successfully responded to the needs of different markets. In Asia, for example, a system of products was developed to whiten the skin. This ability to adapt and create products to specific market needs has contributed greatly to the company’s ability to enter new markets.

Estée Lauder’s global strategies have paid off. In 2018, the total global net sales were $13.7 billion, of which 37% came from the Americas (as compared to 61% in 2001), 41% from Europe, the Middle East, and Africa (as compared to 26% in 2001), and 22% from Asia Pacific (as compared to 13% in 2001).

Hyper-competition

Hyper-competition, a fourth conceptualization, refers to the fact that all firms are faced with a form of aggressive competition that is tougher than oligopolistic or monopolistic competition, but is not perfect competition where the firm is atomistic and cannot influence the market at all. Hyper-competi- tion is pervasive not just in fast-moving high-technology industries like computers and deregulated industries like airlines, but also in industries that have traditionally been considered more sedate, like processed foods.

However, the earlier arguments represent the description of a situation without any temporal dimension; there is no indication as to how a firm should act to change the situation to its advantage.

For instance, it is not clear how tomorrow’s competitor can differ from today’s. A new competitor can emerge from a completely different industry given the convergence of industries. Ricoh, once a low-cost facsimile and copier maker, has now come up with a product that record moving images digitally, which is what a camcorder and a movie camera do using different technologies.

This development potentially pits Ricoh as a direct competitor to camcorder and movie camera makers, emphasizing differentiation by providing unique technical features—something not possible 10 or 20 years ago.

Such a shift in competition is referred to as creative destruction. This view of competition assumes continuous change, where the firm’s focus is on disrupting the market. In a hypercompetitive environment, a firm competes on the basis of price, quality, timing, and know-how, creating strongholds in the markets it operates in (this is akin to entry barriers) and financial resources to outlast one’s competitors.

Interdependency

A fifth aspect of global strategy is interdependency of modern companies. Recent research has shown that the number of technologies used in a variety of products in numerous industries is rising. Because access to resources limit how many distinctive competencies a firm can gain, firms must draw on outside technologies to be able to build a state-of-the-art product.

Since most firms operating globally are limited by a lack of all required technologies, it follows that for firms to make optimal use of outside technologies, a degree of components standardization is required. Such standardization would enable different firms to develop different end products, using, in a large measure, the same components. Research findings do indicate that technology intensity—that is, the degree of R&D expenditure a firm incurs as a proportion of sales—is a primary determinant of cross-border firm integration.

The smartphone industry is a good instance of a case where firms use com- ponents from various sources. Apple’s iPhones operating on Apple’s iOS and Samsung’s Galaxy smartphones operating on Google’s Android operating system have been the two major competing brands in the smartphone industry.

In 2018, Samsung enjoyed a global market share of 22% and Apple, 11%, although Huawei was fast catching up with 11%. Behind the scene, Samsung also benefited greatly from the increased iPhone sales that Apple enjoyed. Samsung is not only a smartphone brand but a really huge conglomerate that does business in various fields as electronic component manufacturing and smartphones as well as life insurance and chemicals. It builds a lot of tiny equipment and parts including processors, RAM, and flash storages that are used in assembling smartphones, tablet computers, and laptops.

Apple, which designs its own processors but does not manufacture them, relies on Samsung and other companies including Sony for most of the components used by Foxconn, a Taiwanese company, assembling latest Apple devices such as iPhone X, iPad, Apple Watch, and Macbook Air.

In the international context, governments also tend to play a larger role and may, directly or indirectly, affect parts of the firm’s strategy. Tariffs and non-tariff barriers such as voluntary export restraints and restrictive customs procedures could change cost structures so that a firm could need to change its production and sourcing decisions.

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Global Marketing Strategy

MNCs increasingly use global marketing and have been highly successful— for example, Nestlé with its common brand name applied to many products in all countries, Coca-Cola with its global advertising themes, Xerox with its global leasing policies, and Dell Computer’s “sell-direct” strategy.

But global marketing is not about standardizing the marketing process on a global basis. Although every element of the marketing process—product design, product and brand positioning, brand name, packaging, pricing, advertising strategy and execution, promotion, and distribution—may be a candidate for standardization, standardization is only one part of a global marketing strategy, and it may or may not be used by a company, depending on the mix of the product-market conditions, stage of market development, and the inclinations of the multinational firm’s management.

For instance, a marketing element can be global without being 100% uniform in content or coverage. Exhibit 3 illustrates a possible pattern. Thus, a global marketing strategy requires more intimate linkages with a firm’s other functions, such as research and development, manufacturing, and finance. In other words, a global marketing strategy is but one component of a global strategy.

For an analogy, you may think of a just-in-time inventory and manufacturing system that works for a single manufacturing facility to optimize production One implication is that without a global strategy for R&D, manufacturing, and finance that meshes with the various requirements of its global marketing strategy, a firm cannot best implement that global marketing strategy.

Benefits of Global Marketing

Global marketing strategy can achieve one or more of four major categories of potential globalization benefits: cost reduction, improved quality of products and programs, enhanced customer preference, and increased competitive advantage. General Motors and Ford approach global marketing somewhat differently; such a strategic difference suggests that the two U.S. automakers are in search of different benefits of global marketing.

Cost Reduction

When multiple national marketing functions are consolidated, personnel outlets are reduced through avoidance of duplicating activities. Costs are also saved in producing global advertisements and commercials and producing promotional materials and packaging. Savings from standardized packaging include reduction in inventory costs. With typical inventory carrying costs at 20% of sales, any reduction in inventory can significantly affect profitability.

With the availability of a global span of coverage by various forms of modern communication media, multicounty campaigns capitalizing on countries’ common features would also reduce advertising costs considerably. Exxon-Mobil’s “Put a Tiger in Your Tank” campaign and the Tiger in many other forms offer a good example of a campaign that used the same theme across much of the world, taking advantage of the fact that the tiger is almost universally associated with power and grace.

Owning a website on the internet and marketing to consumers is another way to reduce costs of conducting global marketing. It benefits both consumers, who can order to their own specifications everything from cars to swimsuits, and manufacturers in helping avoid inventory build-ups. It also allows companies to have direct contact with consumers from different parts of the world, giving them deeper insight into market trends at a fraction of the cost incurred in traditional marketing.

Cost savings can also translate into increased program effectiveness by allowing more money and resources into a smaller num- ber of more focused programs. In fact, the world’s largest advertiser Proctor & Gamble wants to spend less on marketing and is preparing to make deep cuts in the number of its advertising agencies. Proctor & Gamble has had success with a video called “Always Like a Girl” (https://www.youtube.com/ watch?v=VhB3l1gCz2E), which has won an Emmy award and been viewed around the world by 85 million people either online or on mobile devices.

Improved Products and Program Effectiveness

This may often be the greatest advantage of a global marketing strategy. Good ideas are relatively scarce in the business arena. So a globalization program that overcomes local objections to allow the spread of a good marketing idea can often raise the effectiveness of the program when measured on a worldwide basis.

Procter & Gamble has solved this problem by setting up major R&D facilities in each of its major markets in the Triad—North America, Japan, and Western Europe—and by putting together the pertinent findings from each of the laboratories. As in the saying, “Necessity is the mother of invention,” different needs in different parts of the world may lead to different inventions.

For example, Procter & Gamble’s Liquid Tide laundry detergent was an innovative product developed in an innovative way by taking advantage of both the company’s technical abilities and various market requirements in the key markets around the world. Germans had been extremely concerned about polluting rivers with phosphate, a key whitening ingredient in the traditional detergent. To meet the German customer demand, Procter & Gamble in Germany had developed fatty acid to replace phosphate in the detergent.

Similarly, If Procter & Gamble Japan had developed surfactant to get off grease effectively in tepid water that Japanese use in washing their clothes. In the United States, Procter & Gamble in Cincinnati, Ohio, had independently developed “builder” to keep dirt from settling on clothes. Putting all these three innovations together, the company introduced Liquid Tide and its sis- ter products (e.g., Ariel) around the world.

Enhanced Customer Preference

Awareness and recognition of a product on a worldwide basis increase its value. A global marketing strategy helps build recognition that can enhance customer preferences through reinforcement. With the rise in the availability of information from a variety of sources across the world and the rise in travel across national borders, more and more people are being exposed to messages in different countries.

So a uniform marketing message whether communicated through a brand name, packaging, or advertisement reinforces the awareness, knowledge, and attitudes of people toward the product or service. Pepsi has a consistent theme in its marketing communication across the world—that of youthfulness and fun as a part of the experience of drinking Pepsi anywhere in the world.

Increased Competitive Advantage

By focusing resources into a smaller number of programs, global strategies magnify the competitive power of the programs. Although larger competitors might have the resources to develop different high-quality programs for each country, smaller firms might not. Using a focused global marketing strategy could allow the smaller firm to compete with a larger competitor in a more effective manner.

However, the most important benefit of a global strategy may be that the entire organization gets behind a single idea, thus increasing the chances of the success of the idea., A by-product is that the organization as a whole becomes much better informed about itself and about the activities of its competitors in markets across the world.

For example, Nike has been able to evolve its global presence through careful selection of international sponsorships such as its partnership with Manchester United. This type of partnership helps capture the attention of a global audience. Nike’s NikeID is a co-creation platform that serves as another strategy that Nike is using to appeal to international customers. NikeID puts the power of design into consumer’s hands. Nike can then deliver customized products that align with different cultural preferences and styles.

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Strategic Tools for Global Marketing

Competitive Benchmarking

Competitive Benchmarking, as the name indicates, is a tool to evaluate the relative marketplace performance of a company as compared to its competitors. A number of organizations have used competitive benchmarking in recent years to understand their market position. The concept is similar to Porter’s operational effectiveness (OE) theory.

However, the benchmarking idea is capable of extending beyond simply comparing technology and cost effectiveness. It believes that as the battle in the marketplace is for ‘Share of Mind’, customers’ perceptions must be measured. Value chain functions (or criteria) such as the use of new technology, consumer understanding, scheduled delivery, flexibility, accessibility for enquiries, environmental consciousness, etc. may be considered for competitive benchmarking, and may vary from one firm to another.

In order to have a competitive benchmarking profile, a firm should first analyse the situation and identify its competence gaps. Based on this, several market scenarios (present and future) should be developed, which will act as a foundation to set realistic objectives for the organization. Finally, a strategy should be prepared and implemented, considering the organization’s existing competence level.

Select Framework

Competitive advantage forms the basis for better performance of an organization and understanding the anatomy of competitive advantage is crucial for modern day managers. Ma’s SELECT framework may help companies to make the final choice regarding matching resource commitment with changing opportunities for gaining and sustaining competitive advantages.

As described by Ma (1999), SELECT stands for Substance, Expression, Locale, Effect, Cause, and Time Span of competitive advantage. It is a framework which helps an organization chooses the right configuration of its competitive advantage. Analysing the causes of competitive advantage enables a firm to create and gain advantage.

While substance, expression, locale, and effect allow a firm to utilize advantage in a better manner, time span helps a company to fully exploit advantage according to its potential and sustainability.

12 CS Framework

Another useful tool for analysing international markets is the 12Cs framework. This includes 12 factors: Country (C1), Concentration (C2), Culture (C3), Choices (C4), Consumption (C5), Contractual Obligations (C6), Commitment (C7), Channels (C8), Communication (C9), Capacity to Pay (C10), Currency (C11), and Caveats (C12). Table 11.1 illustrates various sub-items of the 12cs Framework.

Competitive Analysis

As we have discussed so far, a firm needs to broaden the sources of competitive advantage relentlessly over time. However, careful assessment of a firm’s current competitive position is also required.

One particularly useful technique in analyzing a firm’s competitive position relative to its competitors is referred to as SWOT (strengths, weaknesses, opportunities, and threats) analysis. A SWOT analysis divides the information into two main categories (internal factors and external factors) and then further into positive aspects (strengths and opportunities) and negative aspects (weaknesses and threats).

The framework for a SWOT analysis is illustrated in Exhibit 5. The internal factors that may be viewed as strengths or weaknesses depend on their impact on the firm’s positions; that is, they may represent a strength for one firm but a weakness, in relative terms, for another. They include all of the marketing mix (product, price, promotion, and distribution strategy), as well as personnel and finance.

The external factors, which again may be threats to one firm and opportunities to another, include technological changes, legislation, sociocultural changes, and changes in the marketplace or competitive position Thus, a SWOT analysis helps marketing executives identify a wide range of alternative strategies to think about.

You should note, however, that SWOT is just one aid to categorization; it is not the only technique. One drawback of SWOT is that it tends to persuade companies to compile lists rather than think about what is really important to their business. It also presents the resulting lists uncritically, without clear prioritization, so that, for example, weak opportunities may appear to balance strong threats.

Furthermore, using the company’s strengths against its competitors’ weaknesses may work once or twice but not over several dynamic strategic interactions, as its approach becomes predictable and competitors begin to learn and outsmart it.