February 1, 2014 Chris Schrage, CGBP, Certified CGBP
Trainer
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Source: David Harvey, The Condition of Postmodernity (Oxford
and Cambridge, Mass.: Basil Blackwell, 1989), p. 241, plate
3.1.
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3
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Change in transportation technology Change in communication
technology
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Access to products not available at home Raw materials for
products Better quality of life Comparative Advantage
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6 Capital movements replaced trade levels Production uncoupled
from employment World economy dominate-country economies are
secondary End of the capitalism/socialism struggle E-commerce
changes all models Business and national
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Break up of Soviet Union Apartheid over- sanctions ended
Privatization of public companies in Brazil, France and England,
Special Economic Zones in China Democracy started in Latin
America
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March 7, 1957 Independence from Great Britain through peaceful
negotiations 1957 End of the Korean Conflict and devastation from
war
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1st British African colony to win independence (1957). Nkrumah
espoused pan African socialism. High tariffs. Anti-exporting
policy.
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Kept lowering tariffs on manufactured goods. Created incentives
to export. Reduced quotas. Reduced subsidies. 1950s: 77% of
employment in agriculture. Now 20%. Manufacturing GNP went from 10%
to over 30%.
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Ghana 1970 GNP/capita $250 1992 GNP/per capita $450 GNP
Growth/year 1.5% Shift from productive uses (cocoa) to unproductive
uses (subsistence agriculture). Korea 1970 GNP/per capita $260 1992
GNP/per capita $6790 GNP Growth/year 9% Shift from non-comparative
advantage uses (agriculture) to productive uses (labor- intensive
manufacturing).
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With a GDP per capita of $25,800 in 2010GDP per capita Eighth
largest exporter in the world In 2010 ranks 14 th out of 225
nations at 1243 billion US dollars
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GDP - per capita: purchasing power parity - $1,300 (2010) In
2010 ranks 100 at 30.14 billion US dollars
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Mature market at home Underutilized capacity Leverage
competitive advantage Compete in home market of others.
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Global companies understand the balance of standardization and
customization required in the worlds marketplace.
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Global Industry Competitive advantage gained by integrating and
leveraging operations on a global scale Five forces analysis can
assist a company in formulating the appropriate strategy to gain a
competitive advantage
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Industry Barriers to Entry Power of Buyers Power of Suppliers
Substitute Products Competitive Rivalry
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New entrants mean downward pressure on prices and reduced
profitability Barriers to entry determine the extent of threat of
new industry entrants
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Economies of scale Product differentiation Capital requirements
Switching costs Distribution channels Government policy Cost
advantages independent of scale economies Competitor response
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Substitute products limits prices High prices induce buyers to
switch to the substitute
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Buyers = manufacturers and retailers, not consumers Buyers seek
to pay the lowest possible price Buyers have leverage over
suppliers when They purchase in large quantities (enhances supplier
dependence on buyer) Suppliers products are commodities Product
represents significant portion of buyers costs Buyer is willing and
able to achieve backward integration
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When suppliers have leverage, Raise prices enough> affect
customer profits Leverage accrues when Suppliers are large and few
in number Suppliers products are critical inputs, are highly
differentiated, or carry switching costs Few substitutes Suppliers
are willing and able to sell product themselves
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Refers to all actions taken by firms in the industry to improve
their positions and gain advantage over one another Price
competition Advertising battles Product positioning
Differentiation
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Related and Supporting Industries Strategy, Structure, Rivalry
Activity in any one of the four points of the diamond impacts all
the others and vice versa Demand Conditions Factor Conditions
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Resources Physical Knowledge CapitalInfrastructure Human
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The advantage that a nation gains by being home to
internationally competitive industries in fields that are related
to, or in direct support of, other industries
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Market Penetration Strategy Product Development Strategy Market
Development Strategy Diversification Strategy
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Achieved when there is a match between a firms distinctive
competencies and the factors critical for success within its
industry Two ways to achieve competitive advantage Low-cost
strategy Product differentiation
Build a wide portfolio of advantages Develop portfolios by
establishing layers on top of one another Move along the value
chain to strengthen competitive advantage
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Search for opportunities in the defensive walls of competitors
whose attention is narrowly focused Focused on a market segment
Focused on a geographic area to the exclusion of others
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Refuse to play by the rules set by industry leaders Ex: Xerox
and Canon Xerox employed a huge direct sales force; Canon chose to
use product dealers Xerox built a wide range of copiers; Canon
standardized machines and components Xerox leased machines; Canon
sold machines
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Use the know-how developed by other companies Licensing
agreements, joint ventures, partnerships, or strategic
alliances
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Complementary skills Cooperative cultures Compatible goals
Commensurate levels of risk
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Product Attributes Communication Strategy Pricing Strategy
Product Attributes Efforts here are impacted by Differences
here
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In todays business environment, market stability is undermined
by Short product life cycles Short product design cycles New
technologies Globalization Escalation and acceleration of
competitive forces Difficult to achieve one sustainable advantage
Build a series of unsustainable but effective advantages Marketing
focus needs to be on innovation Learn to create new markets Must
forget thats the way we always have done it
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Innovative organizations spend neither time nor resources on
defending yesterday. Systematic abandonment of yesterday alone can
transfer the resources... for work on the new. Innovative
organizations spend neither time nor resources on defending
yesterday. Systematic abandonment of yesterday alone can transfer
the resources... for work on the new. Peter Drucker Peter
Drucker
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Global Advertising Strategy Contemporary Relevance SPEAKS TO
Consumers Heart Knows my language- relevant to my lifestyle Brand
Quality SPEAKS TO Consumers Head Value perception
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Brand Development Basics RightProduct RightImage RightProfit
RightDistribution Motivated People & Partners Promotion
Advertising Packaging Revenue & Cost Management New Brands
Quality Control
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Miller Time is the MILLER WAY Rooted in the urban cool mindset
Globalmiller.com website
Grease Payments U.S. Embargoes Sanctions Sanctions Against US
Against US Export Controls Antitrust Laws The Sherman Antitrust Act
Federal Trade Commission Act Product liability No contingency
payment programs Loser pays fees of both parties
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Low-Income Countries GNP < $825 Lower-middle-income
Countries GNP $826 $3,255 High-Income Countries GNP > $10,666
Upper-middle-income Countries GNP $3,256 $10,065 86% of the worlds
population
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The basic economics of the BOP market are based on small unit
packages, low margin per unit, high volume, high return on capital
employed. FORTUNE AT THE BOTTOM OF THE PYRAMID, Prahalad
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There is Money at the BOP Ease of access to BOP markets BOP
Markets are brand-conscious Extremely value conscious BOP Market is
connected BOP Customers accept advanced technology readily FORTUNE
AT THE BOTTOM OF THE PYRAMID, Prahalad
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50 Purchases aircraft from Boeing 10% down payment Rest upon
delivery (5 years later) Revenues of JAL in Yen Payments in USD In
1985- entered into 10 year forward exchange contract Value of Yen
surged against dollar from 240 to 99 in 1994 Misjudgment cost JAL
86 percent more per each aircraft. Admitted loss of USD 45 million
or 45 billion
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Column 1 GENERAL Duties for all products that do not qualify
for special tariff treatment. SPECIAL Duties levels for those
countries that fit into special tariff treatment programs- see
listing included (Example NAFTA) Column 2 Rate of duties for any
products imported directly or indirectly from specific countries-
currently: Cuba and North Korea
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International Convention for the Protection of Industrial
Property Paris Convention Honored by 100 countries Facilitates
multi-country patent registration, ensures that once a company
files, it has a right of priority in other countries for 1 year
from that date Patent Cooperation Treaty European Patent Convention
Madrid System Madrid System
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55 Sales to other markets Changing Domestic Conditions Lower
Cost Structures
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Exploit Global Presence Global Money Flows
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Enhance domestic competitiveness Increase sales and profits
Gain global market share Reduce dependence on existing markets
Especially during periods of recession Exploit corporate technology
and know-how Competitive advantage Extend the sales potential of
existing products Stabilize seasonal market fluctuations Enhance
potential for corporate expansion Sell excess production capacity
Gain information about foreign competition