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

•Shanghai Jahwa in ChinaVs • Compaq

•Unilever

Others

Jollibee Foods - Phillipines Cemex - Mexico

Aligning Assets with Industry

Characteristics

1980’s

•Bajaj •HondaTechnolog

yQualityBrand appeal

Success in Thailand

and Malaysia

Independent Minded

Did not want

What Could Bajaj Do?

Closer Look

•Honda’s Advantage

•Honda’s Customer Base

•Scooter Industry

•Mature

•Stable Industry

What Customers Wanted

•Low Cost

•Durable Machines

•Maintenance

Bajaj

•Cheap•Rugged•Service Network

•Distribution System

Honda

•Sleek design

•Outlets in Major Cities

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

Capital Equipment

Marketing

Distribution

Sales in Multiple Markets

Spectrum 2

•Demand of Local Consumers

•Relationship With Customer

•Consumer Preferences

Success

• Standardized Products•Transportation Costs

Multinationals

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

•Products with localization

Defensive

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