This article talks about some of the way that smaller companies keep larger multinational companies at
bay in developing c...
Bhattacharyaand Michael identify a blend of six strategies domestic winners use to succeedin
emerging markets.
Create Cust...
Shanda has avoidedthe software piracy problemplaguing global video-game leaders in China by
developinghighly popular multi...
China's largest outdoor advertisingfirm, Focus Media, has installed LCD screens in 130,000
locationsin 90 cities. Instead ...
Russia's Wimm-Bill-Dann Foods, founded by five entrepreneurswith borrowedfunds, changed its
management structure when mult...
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This article talks about some of the way that smaller companies keep larger multinational companies at bay in developing countries

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This article talks about some of the way that smaller companies keep larger multinational companies at bay in developing countries

  1. 1. This article talks about some of the way that smaller companies keep larger multinational companies at bay in developing countries. The first argument is that the larger companies and they are so used to being able to charge a premium for their product. This makes it difficult because the smaller more local companies can charge less for the same product and from there it is simple economics. Consumers will choose the lowest priced item. The second reason is the larger companies rely on different properties that developed countries have such as consistent telephone communication and internet access. Without these elements the bases of the larger companies begin to crumble and lose its efficiency, which allows the smaller companies to compete. Lastly, the larger companies have a tendency to be rigid and remain in the strategies that worked for developed countries when they need to realize that developing countries wants and need are very different. It is because of this that the larger companies lose touch with their consumer base and offer them what they think they should want. The smaller companies however are very close to the consumer and aren’t hindered by rules and preconceived notion; therefore, they can provide the consumer with exactly what they want. he Idea in Brief If you're setting out to compete in rapidly developingeconomies, beware: Smart domestic enterprisesare staving off the challenge from global market leaders. And they're seizing new opportunitiesbefore multinationals can. Consider: In China, search engine Baidu is used seventimes more than Google China every day. In India, Bharti Airtelhas trumped Vodafone as the market leader in cellular telephony. And in Mexico, Grupo Elektrahas beaten Wal-Mart as the country'stopretailer. Domestic dynamoslike these dominate foreignrivalsby applying six strategies. For example, they use their deep understanding of consumersin their countriesto create highly customizedofferings. They leverage cutting-edge technology to keepoperatingcosts down. And they tap into pools of cheap locallabor instead of relyingon expensive automation. To prevailover localwinners on their turf, set aside your tried-and-true strategies, advise Bhattacharyaand Michael. Instead, understand--and emulate--domestic players'tactics. The Idea in Practice
  2. 2. Bhattacharyaand Michael identify a blend of six strategies domestic winners use to succeedin emerging markets. Create Customized Offerings Simple customization techniques, based on intimate knowledge of localconsumers, have sparked major successfor homegrown champions. India's CavinKare packages shampoo in single-use sachets, making the product affordable for Indians who can't affordbig bottles and regard shampoo as a luxury. CavinKare is the largest local player in India's $500 million shampoo industry. Develop Business Models to Overcome Obstacles Smart local companiesidentify key challenges posed by domestic markets, then design business models to overcome them.
  3. 3. Shanda has avoidedthe software piracy problemplaguing global video-game leaders in China by developinghighly popular multiplayer online role-playinggames. These are impossible to pirate, because they're live experiencescreatedby many playersover the Internet. Deploy Cutting-Edge Technologies Local winners use new technology to controloperatingcostsand deliver quality offerings. Brazil's Gol Linhas AereasInteligentes (Gol), SouthAmerica's first low-cost airline, uses the latest model Boeing 737 in its single-model fleet. The youngfleet requires less maintenance, so Gol manages quick turnarounds, which lowerscost per available seat. Gol's use of e-ticketsand unmanned check-in kioskshas further drivendown costs. Tap Low-Cost Labor Local champions leverage cheaplabor pools rather than relyingon automation.
  4. 4. China's largest outdoor advertisingfirm, Focus Media, has installed LCD screens in 130,000 locationsin 90 cities. Instead of linking the screens electronically throughexpensive technology, it uses employeeswho go from building to building on bicyclesto replace advertisement DVDs. This decreasesoperating costs, enabling the company to offer advertisersimmense flexibility cheaply. Build Scale Quickly Successfullocalcompanies fend off multinationals and other regional playersby rapidly expanding their reach. Focus Media initially facedmany rivalsacrossChina. To gain nationwide reach, it pursued an aggressive acquisition-led strategy. Itsnational coverage attractedadvertisers, diminished regional rivals'competitiveness, and vaultedit past two global leaders involvedinChina's outdoor advertising industry. Use Management Talent to Sustain Growth To avoidthe problems that can come with high growth, domestic dynamos put the right management talent in place.
  5. 5. Russia's Wimm-Bill-Dann Foods, founded by five entrepreneurswith borrowedfunds, changed its management structure when multinationals began encroaching on its localdairy and fruit-juice markets. The founders hired a new CEO with extensive industry experience andgave him free rein. They also brought in seasoned managers from multinational companies. WBD now has 34% of the Russian market for packageddairy products.

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