Competitive Strategy in Global Industries

Question 1

What is a Global Industry?

Answer 1

An Industry where Firms’ strategic positions in national and regional markets are fundamentally affected by their global strategic positions.

Porter, Competitive Strategy —P. 335.

Accordingly, industry and competitive analysis must jointly consider various separate markets.

Question 2

What are the Main Methods of Global Competition?

Answer 2

In ascending order of commitment:
* Licensing.
* Exporting.
* Foreign Direct Investment (“FDI”).

Porter, Competitive Strategy —P. 338.

Any given tactic or strategy will fall within one of these categories.

Question 3

What are the Sources of Global Competitive Advantage?

Answer 3

• Global Experience: Lower costs through faster learning and more proprietary experience.
• Production Mobility: Sharing production costs across several markets to leverage cost advantages and overcome Entry Barriers.
• Proprietary Product Technology: Applying proprietary technology across several markets to increase market share and accelerate advancement.
• Comparative Advantage: Inherent attributes nations have that commercially advantage Firms, e.g. production, logistics, marketing, purchasing, differentiation, etc.

Porter, Competitive Strategy —P. 338-341.

Question 4

What are the Impediments to of Global Competition?

Answer 4

• High fixed costs.
• High sensitivity to lead times.
• High segmentation within markets.
• High rate of technological advancement.
• High government impediments, e.g. tax, quotas, etc.
• High divergence in marketing needs across markets.
• High divergence in compliance requirements across markets.
• High divergence in product needs across markets and high cost of altering products to fit such needs.
• Lack of global demand.
• Lack of an established and accessible supply chain in each market.
• Lack of local presence, particularly if the market strongly rewards local sales, repairs, and services.

Porter, Competitive Strategy —P. 341-347.

Question 5

What are the Strategic Triggers to Globalisation?

Answer 5

• Rising Scale Economies.
• Production deintegration.
• Falling cost of product alteration.
• Falling government impediments.
• Falling transportation and storage costs.
• Establishment of accessible supply chains.
• Rising divergences in factor costs across markets.
• Homogenising product, marketing, and compliance needs.
• Identification and exploitation of new or neglected market segments.
• Commercially advantageous product redefinition, usually yielding superior marketability or supply chain compatability.

Porter, Competitive Strategy —P. 349-351.

Question 6

What are the Major Strategic Issues for a Firm competing in a Global Industry, as distinct from a National Industry?

Answer 6

• All Firms’ global strategic positions and ambitions.
• All Firms’ relationships to, political capital with, and bargaining power against Host Governments.
• Host Governments’ political, geopolitical, and macroeconomic objectives and their strategic implications for competition and industrial policy.

Porter, Competitive Strategy —P. 351-.