The Determinants of Sustainable Competitive Advantage in International Marketing - Research Paper Example

The determinants of sustainable competitive advantage in International Marketing International marketing or cross cultural marketinghas more differences than similarities with domestic marketing. It is difficult to market even same products in different parts of world because of the cultural, economic, political, environmental and legal differences between countries. Some of the greatest companies struggled to identify proper business strategies for international markets even though they are huge success in their domestic market. For example, Parker Pen Company failed to market its products properly in international market because of the visionless strategies they implemented in international market. Same way many other prominent companies failed to develop properly in international market because of their misinterpretations and wrong perceptions about the sustainable competitive strategies in international market. Knowledge management, cost leadership or differentiating, innovation or development of new products, timing of introduction of new products, customization of the product and technology, superior technology, ability to adapt with local cultures, commitment to demonstrates corporate social responsibility, geographic dispersion of activities etc are some areas in which international companies should focus more to sustain their competitive advantage in international market. This paper analyses various determinants of sustainable competitive advantage in International Marketing. A company that operates in a small number of countries or within in a restricted business sector may believe that its competitive advantage comes from low cost manufacturing, design capability and distribution efficiency. However when exposed to global competition it may find that its own competitive advantages cannot be transported to new countries and discover, instead, that regional or global competitors have even greater competitive advantage in their own domestic markets as wells as in the target country market (Doole & Lowe, p.430). Knowledge management is one of the major determinants of competitive advantage in international market. As mentioned earlier, Parker Pen Company tried to sell its products in international market using same marketing strategies everywhere. Parker Pen was the market leader in the manufacturing of writing equipment once. But now same thing cannot be said about them because of the huge setbacks they received from international market during the initial period of globalization. “The idea of selling pens the same way everywhere did not sit well with many parker subsidiaries and distributors. Pens were indeed the same, but markets, were different” (Marketing across cultures, p.195). Parker thought that for the same product, same marketing strategy is enough everywhere. They failed to recognize the fact that the global market is different from domestic market and it needs customized marketing strategies for each market outside, United States. It should be noted that Tiger Woods could be a good brand Ambassador in American conditions whereas in Indian conditions, instead of Tiger Woods, Sachin Tendulkar or Shah Ruk Khan could be a better brand ambassador. In short, local knowledge is essential for international companies to formulate better business strategies for each global market in which they try to sell their products. “Traditional approaches to developing competitive advantage focus on developing a positional advantage relative to competition based either on cost leadership or differentiating the product /service offering” (Craig and Douglas). However, in international market, cost leadership or differentiation strategies alone may not help an organization much. For example, most of the Chinese products are believed to be the cheapest products available in the global market at present, compared to the products from competitors. China is focusing more on quantity rather than quality while producing goods. Cheaper price may help Chinese companies to sell their products in poor countries whereas in wealthy countries, consumers may give more emphasize to quality rather than price and therefore Chinese products may not move well. “The key to good organizing, planning and controlling in global marketing is to create a flexible structure or framework which enables organizations to respond to relevant differences in the markets in which they operate” (Organizing, Planning And Controlling Global Marketing Operations) “In order to develop and sustain a superior competitive position, a firm has to possess certain distinctive assets and capabilities that distinguish it from its competition”(Craig and Douglas). Innovation is the key for survival in international market. Nokia was the market leader in mobile phone markets until a couple of years before. Recently, Apple introduced touchscreen phones (iPhones) in global market and succeeded in capturing a substantial market share in the current cellphone market. Samsung also followed the same path with the introduction of their galaxy series of touchscreen phones and currently Nokia is struggling to stay in the market. When most of the mobile phone manufacturers concentrated on traditional mobile phones, Apple thought differently and as a result of that they succeeded in capturing a substantial portion of the mobile phone market from Nokia. Innovation alone may not help an organization to ensure market dominance. Timing of introduction of product is as important as innovation. For example, Microsoft introduced tablet PC’s, a decade before. However, Microsoft’s tablet PC’s failed to make an impression in international market because of its untimely introduction. The technology was not advanced this much at that time and the consumers were not much aware of the necessities or utilities of tablet PC’s at that time. On the other hand, Apple introduced iPads only in recent times and tasted huge success in international market. Millions of iPad units were sold by Apple in international market until now. It is evident from the above fact that untimely introduction of even innovative products may not help an organization very much. Technology is another determinant in maintaining sustainable competitive advantages in international market. Same technology may not help an organization to sell its products globally. For example, Blackberry manufacturers, Research In Motion (RIM) is currently facing major problems in Indian and Chinese markets because of their failure in providing customized technologies to Indian and Chinese conditions. Time is running out for Canada's Research in Motion, to give the Indian government the means to track and read its secure email and instant messaging services that officials fear, have the potential to be misused by militants and to create political instability. India says it wants real time access to RIM's BlackBerry Enterprise Email and its Messenger services in a readable format. Security officials say the inability to monitor BlackBerry traffic undermines efforts to protect national security. RIM has so far said it cannot unscramble data of its enterprise customers because it does not possess the keys needed to do so. After several meetings, RIM proposed it could share the IP address of BlackBerry Enterprise Servers, and the PIN and IMEI numbers of BlackBerry mobiles. India says that is not enough because it doesn't provide access to mails (FACTBOX - Problems BlackBerry services face in India) In China also, Blackberry and iPhone are facing similar problems. Neither Blackberry nor Apple cannot neglect the huge markets in India and China since these countries are not only the heavily populated countries in the world, but also the most rapidly developing countries in the world at present. Customization of the product is necessary in international market. India is a country which is developing rapidly than other countries in the world at present. In other words, the per capita income of the Indian people has been increased a lot over the last few decades. Most of the prominent car manufacturers are now focusing more in India market after seeing tremendous business potentials there. However, it is difficult for the automobile manufacturers to sell luxury cars same way in India as they do in America or Europe. In other words, still, Indians cannot afford luxurious cars even though the economy is growing at a rapid pace. Mid segment cars are moving well in India and auto manufacturers are making lot of changes in their European or American model cars before introducing it in to the Indian market. P&G has had to modify existing detergents products as well as their positioning and develop new products to match differences in washing habits, water conditions and use of washing machines in different parts of the world. Ariel was initially developed in Europe as a low temperature detergent powder with an environmentally friendly version. In India, it has been marketed as a presoak, and in the U.S. as Cheer, an all-purpose detergent. Differences in the cost and availability of local resources may also suggest the desirability of tailoring how a competitive position is built and value delivered to customers from one market to another (Craig and Douglas). “Global processes must be tailored to local cultures” (Kanter & Dretler). As mentioned earlier, different countries may have different cultures, climate or environment, economy, politics and legal structures and therefore buying habits will be different in different countries. It is not necessary that people in country may show the same attitude towards products from different countries. For example, an Indian product may not be welcomed in Pakistan even if it is superior to its Chinese counterpart. This is because of the enmity Pakistanis keep towards Indians and Indian products and the friendship they show towards Chinese products. Chin and Pakistan have good political and economic relationships whereas same thing cannot be said about Pakistan’s relationships with India. In short, politics and culture plays an important role in making or breaking a product in a particular country or region. Corporate Social Responsibility (CSR) is another determinant which can make or break a company in overseas markets. It is the duty of the organizations to give something in return to the communities in which it operates, for the exploitation of local or community resources. Moreover, it is the duty of the organizations to operate in such a way that its operations may not cause any damage to the environment or the people. Coca Cola has recently forced to shut down its bottling plants in one of the Indian states, Kerala, because of their failure in identifying the local culture. They tried to exploit the underwater resources in region where people struggle to find enough drinking water. The scarcity of drinking water forced people in Kerala to start agitations against Coca Cola and Coke forced to stop its Kerala operations. Geographic dispersion of activities can also help an organization to increase its competitive power. It is impossible for Toyota or Honda to compete effectively in American or UK markets without establishing vehicle manufacturing units in these counties or regions. Even though, both Honda and Toyota are Japanese companies, practically it is difficult for these companies to manufacture vehicles in Japan and export it to America or Europe. If they try to do so, transportation cost will become more and they cannot compete effectively with the American and European car manufacturers. “Where the firm emphasizes customization of its offerings, proximity to customers may enable it to provide rapid response and tailoring of product and services to meet specific customer needs”(Craig and Douglas). It is difficult for Toyota or Honda to know the innovations and changes in strategies of their American or European counterparts, if they stay in Japan and try to control their business operation in these outside Japan regions. The firm’s ability to transfer capabilities across borders provides a firm-specific advantage relative to local competitors. For example, KFC whose business in the U.S. was built on "take-out" operations, has built its business in China around large "eat-in" restaurants, and has been able to transfer this capability successfully to other countries in Southeast Asia (Craig and Douglas). Pepsi and Coke have established a lot of vending machines in Middle East, America and Europe. However, they are not much interested in selling their products with the help of vending machines in India. This is because of the practical difficulties these companies facing in India in establishing vending machines. It is difficult for these companies to ensure safety of their vending machines in India like countries. Instead of vending machines, these companies rely heavily on the services of small groceries to supply soft drinks to the remote regions of Indian rural market. To conclude, sustainment of completive advantage in international market is not an easy task. The major determinants which help an organization to sustain its completive power in global markets are; knowledge management, cost leadership or differentiating, innovation or development of new products, timing of introduction of new products, customization of the product and technology, superior technology, ability to adapt with local cultures, commitment to demonstrates corporate social responsibility, geographic dispersion of activities etc. Works Cited 1. Craig Samuel C and Douglas Susan P. “Configural Advantage In Global Markets”. Web. 15 August 2011. 2. Doole Isobel & Lowe Robin “International Marketing Strategy: Analysis, Development and Implementation”. 2008. Cengage Learning EMEA 3. “FACTBOX - Problems BlackBerry Services Face in India”. 2010. Web. 15 August 2011. 4. Kanter Rosabeth Moss & Dretler Thomas D. “Global Strategy" and its Impact on Local Operations: Lessons from Gillette Singapore”. Web. 15 August 2011. 5. “Organising, Planning And Controlling Global Marketing Operations”. Web. 15 August 2011. 6. “Marketing Across Cultures”. Web. 15 August 2011. Read More