International Marketing (Week 4 Chapter 4)

Porter's diamond

The characteristics of the home base play a central role in explaining the international competitivevness of the firm - the explaining elements consist of factor conditions, related and supporting industries and firm strategy - structure and rivalry, chance and government

Porter's five-forces model (industry level)

the state of competition and profit potential in an industry depends on five basic competitive forces: new entrants, suppliers, buyers, substitutes, buyers and market competitiors

Five-sources model

Corresponding to the Porter's five competitive forces there are also five potential sources for building collaborative advantages together with the firm's surrounding actors

Competitive triangle

Consists of customer, the firm and a competitior. The firm or competitor "winning" the customer's favour depends on perceived value offered to the customer compared to the relative costs between the firm and the competitior

Perceived value

The customer's overall evaluation of the product/service offered by a firm

Relative cost advantage

A firm's cost position depends on the configuration of the activities in its value chain vs. that of the competitors

Resources

Basic units of analysis - financal, technological, human and organizational resources - found in the firm's different departments

Competences

Combination of different resources into capabilities and later competences - being something that the firm is really good at

Core competences

Value chain activities in which the firm is regarded as better than its competitiors

Competitive benchmarking

A technique for assessing relative marketplace performance compared with main competitiors

Value net

A company's value creation in collaboration with suppliers and customers (vertical network partners) and complementors and competitors (horizontal network partners)

Red oceans

Tough head-to-head competition in mature industries often results in nothing but a bloody red ocean of rivals fighting over a shrinking profit pool

Blue oceans

The unserved market, where competitors are not yet structured and the market is relatively unknown. Here it is about avoiding head-to-head competition

Porter's model versus Burton's Model

5 forces of competition versus 5 forces of collaboration

Complementors

Companies or entities that sell or offer goods or services that are compatible with, or complementary to, the goods or services produced and sold in a given industry

core competency

a set of knowledge and skills that make the organization (or person) superior to competitors and create value for customers

ERRC

eliminate, reduce, raise, create

Strategic Canvas

graphical depiction of a company's relative performance vis-a-vis its competitors across the industry's key success factors

Steps in Red Ocean to Blue Ocean

1. 5 competitors

2. 10 areas of competition

3. Red Ocean Strategic Canvas

4. ERRC

5. Blue Ocean Strategic Canvas

Criticisms of Porter

1. Technology

2. National Governments

3. Black Swan

Black Swan

an incident of extreme consequence, unexpected or considered highly improbable