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Competing with
        GIANTS
Survival Strategies for Local Companies in Emerging
                       Markets



                 By Suraj Baliga
Introduction

• Barrier’s Fall - Opportunity grows
• Consumer Point - More Choices
• Local Companies - Death Sentence
Dominant
Foreign Rivals
• Financial Resources
• Advance Technology
• Superior Products
• Powerful Brands
• Seasoned Marketing and Marketing Skills
                  Survival At Stake!!
3 - Ways out

• Government
• Partner
• Sell and Leave
Other Ways Exist
• Vist in Russia             Vs          • Compaq
• Shanghai Jahwa in China                •Unilever


                       Others

              Jollibee Foods - Phillipines
                      Cemex - Mexico
Aligning Assets with
Industry Characteristics
1980’s

• Bajaj                   •Honda
                        Technology
Independent               Quality
   Minded               Brand appeal

Did not want             Success in
                        Thailand and
                          Malaysia
What Could Bajaj Do?
Closer Look

• Honda’s Advantage
• Honda’s Customer Base
• Scooter Industry
 • Mature
 • Stable Industry
What Customers
            Wanted
   Honda                            Bajaj

                                  •Cheap
•Sleek design   • Low Cost        •Rugged
                • Durable         •Service
 •Outlets in      Machines       Network
Major Cities                    •Distribution
                • Maintenance     System
What Did Bajaj Do?

• No to Partnership
• fortify existing competitive assets
• beefed up distribution
• R&D
• Braced for Impact
And So They Came..

•Honda with local producer
• 11% of Indian Scooter Market
•Stabilizes
Impact

•Bajaj - 77%
•But!!
•Honda pulled out in 1998 from Scooter
 Manufacturing equity joint venture
What Bajaj Taught Us

• Every Manager Must ask
 • How strong pressure to globalize your
    industry
 • How internally transferable are your
    company’s assets
What It Gives


• Strength of your Multinational Rivals
• Assess assets effectiveness gives insight
Pressure Of
           Globalization
  • Spectrum 1 : BIG
                       Fixed Costs for development

Sales in                    Capital Equipment
Multiple
Markets                        Marketing

                              Distribution
Spectrum 2

                   • Demand of Local Consumers
   Success         • Relationship With Customer
                   • Consumer Preferences
Multinationals     • Standardized Products
                   • Transportation Costs
Spectrum 3 : Middle
       Spectrum

• International Sales
• Local Preferences
Managers Thinking On
     Spectrum

• Strength & Weakness
• Similar Industries Different Spectrum
Next Step

•Spectrum Analysis - DONE
•Evaluation of Competing assets
•(Strength in home market)
Competitive Asset Of
             Bajaj

• Local Distribution Network
• Government Relationship      Defensive
• Products with localization
How can it be
     advantages to us
• Low Cost Raw Material
• Expertise
• More Attention
 • More Common
 • Transferable assets
 • Market Condition
 • More Success
Strategic Thinking


• Transferable Assets
• Globalization Pressure
• IF
 • Globalization Pressure Weak
 • Non Transferable Assets
• Then
 • Defensive Against Multinational

COMPANY                          DEFENDER
• IF
  • Globalization Pressure Weak
  • Transferable Assets
 • THEN
  • May Succeed in other limited Markets

COMPANY                           EXTENDER
• IF
  • Globalization pressure strong
  • Only home assets
 • THEN
  • Bigger Challenges
  • Depend’s on ability to restructure Value
     Chain


COMPANY                            DOGER
• IF
    • Transferable Assets
   • THEN
    • Can Compete at global level


COMPANY                             CONTENDER
Thank You

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Competing with Giants

  • 1. Competing with GIANTS Survival Strategies for Local Companies in Emerging Markets By Suraj Baliga
  • 2. Introduction • Barrier’s Fall - Opportunity grows • Consumer Point - More Choices • Local Companies - Death Sentence
  • 4. Foreign Rivals • Financial Resources • Advance Technology • Superior Products • Powerful Brands • Seasoned Marketing and Marketing Skills Survival At Stake!!
  • 5. 3 - Ways out • Government • Partner • Sell and Leave
  • 6. Other Ways Exist • Vist in Russia Vs • Compaq • Shanghai Jahwa in China •Unilever Others Jollibee Foods - Phillipines Cemex - Mexico
  • 8. 1980’s • Bajaj •Honda Technology Independent Quality Minded Brand appeal Did not want Success in Thailand and Malaysia
  • 10. Closer Look • Honda’s Advantage • Honda’s Customer Base • Scooter Industry • Mature • Stable Industry
  • 11. What Customers Wanted Honda Bajaj •Cheap •Sleek design • Low Cost •Rugged • Durable •Service •Outlets in Machines Network Major Cities •Distribution • Maintenance System
  • 12. What Did Bajaj Do? • No to Partnership • fortify existing competitive assets • beefed up distribution • R&D • Braced for Impact
  • 13. And So They Came.. •Honda with local producer • 11% of Indian Scooter Market •Stabilizes
  • 14. Impact •Bajaj - 77% •But!! •Honda pulled out in 1998 from Scooter Manufacturing equity joint venture
  • 15. What Bajaj Taught Us • Every Manager Must ask • How strong pressure to globalize your industry • How internally transferable are your company’s assets
  • 16. What It Gives • Strength of your Multinational Rivals • Assess assets effectiveness gives insight
  • 17. Pressure Of Globalization • Spectrum 1 : BIG Fixed Costs for development Sales in Capital Equipment Multiple Markets Marketing Distribution
  • 18. Spectrum 2 • Demand of Local Consumers Success • Relationship With Customer • Consumer Preferences Multinationals • Standardized Products • Transportation Costs
  • 19. Spectrum 3 : Middle Spectrum • International Sales • Local Preferences
  • 20. Managers Thinking On Spectrum • Strength & Weakness • Similar Industries Different Spectrum
  • 21. Next Step •Spectrum Analysis - DONE •Evaluation of Competing assets •(Strength in home market)
  • 22. Competitive Asset Of Bajaj • Local Distribution Network • Government Relationship Defensive • Products with localization
  • 23. How can it be advantages to us • Low Cost Raw Material • Expertise • More Attention • More Common • Transferable assets • Market Condition • More Success
  • 24. Strategic Thinking • Transferable Assets • Globalization Pressure
  • 25. • IF • Globalization Pressure Weak • Non Transferable Assets • Then • Defensive Against Multinational COMPANY DEFENDER
  • 26. • IF • Globalization Pressure Weak • Transferable Assets • THEN • May Succeed in other limited Markets COMPANY EXTENDER
  • 27. • IF • Globalization pressure strong • Only home assets • THEN • Bigger Challenges • Depend’s on ability to restructure Value Chain COMPANY DOGER
  • 28. • IF • Transferable Assets • THEN • Can Compete at global level COMPANY CONTENDER
  • 29.