Deck 11: Managing Global Competitive Dynamics

Question 1

ON ETHICS: As a CEO, you are concerned that your firm and the industry in your country are being devastated by foreign imports. Trade lawyers suggest filing an antidumping case against leading foreign rivals and assure you a win. Would you file an antidumping case Why or why not

Answer 1

Anti-dumping case:
Anti dumping law prohibits the exporter to sell goods below cost abroad. Anti dumping law is advantageous in these ways:
• Anti dumping law safeguards the domestic firms by prohibiting the exporters to sale goods below the price prevailing in the domestic country.
• Anti dumping law saves the domestic industries from crippling down.
• It helps in maintaining fair trade practices in the country.
Thus, anti dumping law is advantageous to the domestic industries and should be supported. So, the anti dumping case should be filed against foreign rivals.
However, before filing this case, the company should make a thorough analysis of the other factors that would work against or with their interest.

Question 2

Using the United States as a case study, describe four arguments that managers may make regarding antitrust law.

Answer 2

Antitrust law protects the trade and commerce from unfair methods of competition.
The arguments made by managers in favour of antitrust law are as follows:
• Antitrust law provides an opportunity to enter into new market.
• It helps in maintaining the quality of goods and services delivered to customers.
• Antitrust law helps in maintaining fair price of product in the market.
• Antitrust law protects local businesses in the market by government interventions and offer fair means of competition.

Question 3

You are an executive assistant for the CEO of Mediterranean Shipping Company (MSC) of Switzerland. Two competitors-Maersk of Denmark and CMA CGM of France-have asked your CEO to jointly discuss the possibility of setting up an alliance that is called the P3 Alliance. Citing the blessing from governments on global airline alliances such as One World, Sky Team, and Star Alliance, executives from Maersk and CMA CGM believe that the relevant governments for the P3 Alliance are likely to be supportive. Having made up his mind to participate in the negotiations, your CEO has asked y0u to prepare a report on the do's and don'ts of such discussions. He has also requested that you accompany him to the discussions. What else do you need to prepare in addition to the report

Answer 3

NO ANSWER

Question 4

Using Peng Atlas Map 3.1, in your option would it be easier or more difficult to apply competitive dynamics in those countries that are at the bottom

Question 5

Name and describe the five factors that make an industry particularly conducive to collusion.

Question 6

As part of your firm's strategy to gain competitive advantage, it wants to cut prices by looking for alternate locations in which to manufacture and market its products. You are part of a committee attempting to select a new manufacturing location. What information in PengAtlas Map 3.3 or 3.4 will be most relevant Based on your choice, what will your committee recommend and why

Question 7

EMERGING MARKETS: How Firms from Emerging Economies Fight Back
Market opening throughout emerging economies often means the arrival of multinational enterprises (MNEs) from developed economies. While MNEs put an enormous amount of pressure on local firms, MNEs also serve a useful purpose of demonstrating what is possible and motivating local firms to try harder. Since the best defense is offense, trying harder in addition mounting a rigorous defense usually means to get out of local firms' increasingly crowded home markets. How do firms from emerging economies fight back Specifically, how do they enter foreign markets
At least four strategic patterns have emerged. The first is to follow the well-known Japanese and Korean strategies of first establishing a beachhead by exporting something good enough and then raising quality, perception, and price. By following these steps, Pearl River of China has dethroned Yamaha to become the largest piano maker in the world. It has also significantly improved quality so that the market leader Steinway, after first rejecting Pearl River for an alliance proposal, more recently approached Pearl River to become Steinway's original equipment manufacturer for its low-end models. Likewise, Mahindra Mahindra of India solidly established itself in the American heartland, and ended up becoming the world's largest tractor maker by volume.
A second path is to follow diasporas. To bring Bollywood hits to the diaspora, Reliance Media of India launched the BIG Cinemas chain in the United States. King of fast food in the Philippines, Jollibee chased the diaspora by expanding to Hong Kong, Dubai, and southern California. But joining the mainstream has been hard for companies focusing on the diaspora. More interesting is a "reverse diaspora" strategy: Corona beer of Mexico, after giving American customers a happy time when visiting Mexico, successfully chased such customers back to their home country. Corona is now one of the most frequently served beers in American bars and restaurants that do not have anything to do with Mexico or Mexican food. In short, Corona has "gone native" to become a local beer in the US.
Third, some emerging multinationals simply buy Western companies or brands off the shelf. Before Lenovo purchased the PC division from IBM in 2004, most people in the world, including a lot of gurus, asked: "IBM PC was purchased by whom " Now most readers of this book already knew Lenovo before opening the book. Likewise, Tata Motors of India bought Jaguar Land Rover, and Geely of China acquired Volvo. Such high-profile acquisitions significantly enhanced the global profile and brand awareness of these ambitious firms from emerging economies.
Fourth, firms from emerging economies have to overcome enormous institution-based barriers, some formal and some informal. Although Huawei of China successfully exported telecom equipment to 45 of the world's top 50 telecom operators, it had a hard time penetrating the remaining five, all of which are in the United States. A major reason is blatant discrimination by the US Congress, which labeled Huawei a "national security threat" in the absence of hard evidence. Undeterred, Huawei became an emerging contender in smartphones, in addition to strengthening its excellence in telecom equipment. In addition to formal barriers, how to overcome informal consumer perceptions that typically associate emerging economies with poor quality is another challenge. For example, cosmetics users in the world do not think of Brazil highly-or do not think of Brazil at all. Natura of Brazil has no precedents to follow, because no Brazilian consumer products brands have succeeded outside Latin America. Highlighting its natural ingredients from the Amazon rainforest, Natura endeavored to tap into Brazil's positive country-of-origin image of biodiversity. This reigning queen of cosmetics in Brazil was trying hard to show its charm overseas. Sometimes, governments helped. In an effort to help their firms climb mountains, in the Western media the Indian government ran the "Incredible India" campaign and the Taiwanese government the "innovalue" campaign.
In summary, facing an onslaught of MNEs from developed economies, many firms from emerging economies are determined to fight back by turning up the competitive heat in developed economies as well as numerous other markets. Many will fail, but some will succeed. How rivals from developed economies interact with them by competing with, collaborating with, and/or ignoring them will shape a large part of the future of global competition.
Sources: Based on (1) P. Deng, 2009, Why do Chinese firms tend to acquire strategic assets in international expansion Journal of World Business, 44: 74-84; (2) Economist, 2013, Looks good, September 28 (special report): 14-15; (3) Economist, 2013, The emerging-brand battle, June 22: 70; (4) V. Govindarajan C. Trimble, 2012, Reverse Innovation, Boston: Harvard Business Review Press; (5) S. Lange, 2016, Huawei deals with liability of foreignness, in M. W. Peng, Global Strategy, 4th ed., Cincinnati: Cengage Learning; (6) C. Mutlu, Z. Wu, M. W. Peng, Z. Lin, 2015, Competing in (and out of) transition economies, Asia Pacific Journal of Management (in press); (7) M. W. Peng, 2012, The global strategy of emerging multinationals from China, Global Strategy Journal, 2: 97-107.

ON ETHICS: Are the institution-based barriers in some developed economies fair or unfair

Question 8

ON ETHICS: As part of a feint attack, your firm (firm A) announces that in the next year, it intends to enter country X, where the competitor (firm B) is strong. Your firm's real intention is to march into country Y, whereby B is weak. There is actually no plan to enter X. However, in the process of trying to "fool" B, customers, suppliers, investors, and the media are also being intentionally misled. What are the ethical dilemmas here Do the pros of this action outweigh its cons

Question 9

Some countries' competition and antitrust policies are pro-competition and pro-consumer, whereas other countries' policies are pro-incumbent and pro-producer. How do they differ

Question 10

EMERGING MARKETS: How Firms from Emerging Economies Fight Back
Market opening throughout emerging economies often means the arrival of multinational enterprises (MNEs) from developed economies. While MNEs put an enormous amount of pressure on local firms, MNEs also serve a useful purpose of demonstrating what is possible and motivating local firms to try harder. Since the best defense is offense, trying harder in addition mounting a rigorous defense usually means to get out of local firms' increasingly crowded home markets. How do firms from emerging economies fight back Specifically, how do they enter foreign markets
At least four strategic patterns have emerged. The first is to follow the well-known Japanese and Korean strategies of first establishing a beachhead by exporting something good enough and then raising quality, perception, and price. By following these steps, Pearl River of China has dethroned Yamaha to become the largest piano maker in the world. It has also significantly improved quality so that the market leader Steinway, after first rejecting Pearl River for an alliance proposal, more recently approached Pearl River to become Steinway's original equipment manufacturer for its low-end models. Likewise, Mahindra Mahindra of India solidly established itself in the American heartland, and ended up becoming the world's largest tractor maker by volume.
A second path is to follow diasporas. To bring Bollywood hits to the diaspora, Reliance Media of India launched the BIG Cinemas chain in the United States. King of fast food in the Philippines, Jollibee chased the diaspora by expanding to Hong Kong, Dubai, and southern California. But joining the mainstream has been hard for companies focusing on the diaspora. More interesting is a "reverse diaspora" strategy: Corona beer of Mexico, after giving American customers a happy time when visiting Mexico, successfully chased such customers back to their home country. Corona is now one of the most frequently served beers in American bars and restaurants that do not have anything to do with Mexico or Mexican food. In short, Corona has "gone native" to become a local beer in the US.
Third, some emerging multinationals simply buy Western companies or brands off the shelf. Before Lenovo purchased the PC division from IBM in 2004, most people in the world, including a lot of gurus, asked: "IBM PC was purchased by whom " Now most readers of this book already knew Lenovo before opening the book. Likewise, Tata Motors of India bought Jaguar Land Rover, and Geely of China acquired Volvo. Such high-profile acquisitions significantly enhanced the global profile and brand awareness of these ambitious firms from emerging economies.
Fourth, firms from emerging economies have to overcome enormous institution-based barriers, some formal and some informal. Although Huawei of China successfully exported telecom equipment to 45 of the world's top 50 telecom operators, it had a hard time penetrating the remaining five, all of which are in the United States. A major reason is blatant discrimination by the US Congress, which labeled Huawei a "national security threat" in the absence of hard evidence. Undeterred, Huawei became an emerging contender in smartphones, in addition to strengthening its excellence in telecom equipment. In addition to formal barriers, how to overcome informal consumer perceptions that typically associate emerging economies with poor quality is another challenge. For example, cosmetics users in the world do not think of Brazil highly-or do not think of Brazil at all. Natura of Brazil has no precedents to follow, because no Brazilian consumer products brands have succeeded outside Latin America. Highlighting its natural ingredients from the Amazon rainforest, Natura endeavored to tap into Brazil's positive country-of-origin image of biodiversity. This reigning queen of cosmetics in Brazil was trying hard to show its charm overseas. Sometimes, governments helped. In an effort to help their firms climb mountains, in the Western media the Indian government ran the "Incredible India" campaign and the Taiwanese government the "innovalue" campaign.
In summary, facing an onslaught of MNEs from developed economies, many firms from emerging economies are determined to fight back by turning up the competitive heat in developed economies as well as numerous other markets. Many will fail, but some will succeed. How rivals from developed economies interact with them by competing with, collaborating with, and/or ignoring them will shape a large part of the future of global competition.
Sources: Based on (1) P. Deng, 2009, Why do Chinese firms tend to acquire strategic assets in international expansion Journal of World Business, 44: 74-84; (2) Economist, 2013, Looks good, September 28 (special report): 14-15; (3) Economist, 2013, The emerging-brand battle, June 22: 70; (4) V. Govindarajan C. Trimble, 2012, Reverse Innovation, Boston: Harvard Business Review Press; (5) S. Lange, 2016, Huawei deals with liability of foreignness, in M. W. Peng, Global Strategy, 4th ed., Cincinnati: Cengage Learning; (6) C. Mutlu, Z. Wu, M. W. Peng, Z. Lin, 2015, Competing in (and out of) transition economies, Asia Pacific Journal of Management (in press); (7) M. W. Peng, 2012, The global strategy of emerging multinationals from China, Global Strategy Journal, 2: 97-107.

Pick an established rival of a firm named in this case-for example, Steinway for Pearl River or Avon for Natura. Do some research to understand their resource similarity and market commonality between the pair of rivals (such as Avon versus Natura). Using the competitor analysis framework in Figure 11.3, predict what will happen to their competition in the home country of the established rival, the home country of the emerging challenger, and another third-country market.

Question 11

Suppose in Country A, a widget firm has absorbed all of its fixed costs (costs that do not change with the level of output such as rent), and now all additional costs are only variable costs-costs that do vary with the level of output such as raw materials. In Country A, the price was enough to cover both its fixed cost of $100 and variable cost of $10 and provide an additional profit of $10. It sold only one for a price of $120. Suppose the widget firm received an order from Country B for one widget and indicated that it would pay $20-enough to cover the variable cost of $10 and provide a $10 profit. If the widget firm agrees, it will have total costs for the two widgets (one sold in Country A and one sold in Country B) of $100 fixed costs plus $20 variable cost-i.e., an average total cost for two units of $60. If it sells the widget to Country B for $20, will it be selling it above or below cost Explain.

Question 12

Use your own examples to identify how resources and capabilities affect competitive dynamics.

Question 13

ON CULTURE: How do a firm's corporate culture and organization affect its ability to engage in competitive actions

Question 14

Name and describe three drivers for counterattacks.

Question 15

EMERGING MARKETS: How Firms from Emerging Economies Fight Back
Market opening throughout emerging economies often means the arrival of multinational enterprises (MNEs) from developed economies. While MNEs put an enormous amount of pressure on local firms, MNEs also serve a useful purpose of demonstrating what is possible and motivating local firms to try harder. Since the best defense is offense, trying harder in addition mounting a rigorous defense usually means to get out of local firms' increasingly crowded home markets. How do firms from emerging economies fight back Specifically, how do they enter foreign markets
At least four strategic patterns have emerged. The first is to follow the well-known Japanese and Korean strategies of first establishing a beachhead by exporting something good enough and then raising quality, perception, and price. By following these steps, Pearl River of China has dethroned Yamaha to become the largest piano maker in the world. It has also significantly improved quality so that the market leader Steinway, after first rejecting Pearl River for an alliance proposal, more recently approached Pearl River to become Steinway's original equipment manufacturer for its low-end models. Likewise, Mahindra Mahindra of India solidly established itself in the American heartland, and ended up becoming the world's largest tractor maker by volume.
A second path is to follow diasporas. To bring Bollywood hits to the diaspora, Reliance Media of India launched the BIG Cinemas chain in the United States. King of fast food in the Philippines, Jollibee chased the diaspora by expanding to Hong Kong, Dubai, and southern California. But joining the mainstream has been hard for companies focusing on the diaspora. More interesting is a "reverse diaspora" strategy: Corona beer of Mexico, after giving American customers a happy time when visiting Mexico, successfully chased such customers back to their home country. Corona is now one of the most frequently served beers in American bars and restaurants that do not have anything to do with Mexico or Mexican food. In short, Corona has "gone native" to become a local beer in the US.
Third, some emerging multinationals simply buy Western companies or brands off the shelf. Before Lenovo purchased the PC division from IBM in 2004, most people in the world, including a lot of gurus, asked: "IBM PC was purchased by whom " Now most readers of this book already knew Lenovo before opening the book. Likewise, Tata Motors of India bought Jaguar Land Rover, and Geely of China acquired Volvo. Such high-profile acquisitions significantly enhanced the global profile and brand awareness of these ambitious firms from emerging economies.
Fourth, firms from emerging economies have to overcome enormous institution-based barriers, some formal and some informal. Although Huawei of China successfully exported telecom equipment to 45 of the world's top 50 telecom operators, it had a hard time penetrating the remaining five, all of which are in the United States. A major reason is blatant discrimination by the US Congress, which labeled Huawei a "national security threat" in the absence of hard evidence. Undeterred, Huawei became an emerging contender in smartphones, in addition to strengthening its excellence in telecom equipment. In addition to formal barriers, how to overcome informal consumer perceptions that typically associate emerging economies with poor quality is another challenge. For example, cosmetics users in the world do not think of Brazil highly-or do not think of Brazil at all. Natura of Brazil has no precedents to follow, because no Brazilian consumer products brands have succeeded outside Latin America. Highlighting its natural ingredients from the Amazon rainforest, Natura endeavored to tap into Brazil's positive country-of-origin image of biodiversity. This reigning queen of cosmetics in Brazil was trying hard to show its charm overseas. Sometimes, governments helped. In an effort to help their firms climb mountains, in the Western media the Indian government ran the "Incredible India" campaign and the Taiwanese government the "innovalue" campaign.
In summary, facing an onslaught of MNEs from developed economies, many firms from emerging economies are determined to fight back by turning up the competitive heat in developed economies as well as numerous other markets. Many will fail, but some will succeed. How rivals from developed economies interact with them by competing with, collaborating with, and/or ignoring them will shape a large part of the future of global competition.
Sources: Based on (1) P. Deng, 2009, Why do Chinese firms tend to acquire strategic assets in international expansion Journal of World Business, 44: 74-84; (2) Economist, 2013, Looks good, September 28 (special report): 14-15; (3) Economist, 2013, The emerging-brand battle, June 22: 70; (4) V. Govindarajan C. Trimble, 2012, Reverse Innovation, Boston: Harvard Business Review Press; (5) S. Lange, 2016, Huawei deals with liability of foreignness, in M. W. Peng, Global Strategy, 4th ed., Cincinnati: Cengage Learning; (6) C. Mutlu, Z. Wu, M. W. Peng, Z. Lin, 2015, Competing in (and out of) transition economies, Asia Pacific Journal of Management (in press); (7) M. W. Peng, 2012, The global strategy of emerging multinationals from China, Global Strategy Journal, 2: 97-107.

Why are firms from.emerging economies so eager to expand from their home markets

Question 16

Military terminology and strategy are often used in dealing with global competitors. In your opinion, is there any risk in doing so Is there a risk in failing to do so Why

Question 17

ON ETHICS: As a CEO, you feel that the price war in your industry is killing profits for all firms. However, you have been warned by corporate lawyers not to openly discuss pricing with rivals, whom you know personally because you went to school with them. How would you signal your intentions

Question 18

Under what conditions may a firm assume a defender strategy

Question 19

Your home country market (the United States) is being challenged by price wars launched by your top three foreign competitors from three countries that do not share the same US-style antitrust tradition. Prepare a report outlining your top five strategic choices on how to respond to such challenges, discussing the pros and cons of each choice. Then identify, recommend, and defend your top choice.

Question 20

Under what conditions may a firm adopt an extender strategy

Question 21

Explain the differences between tacit and explicit collusion.

Question 22

What criteria may induce a firm to choose a dodger strategy over a contender strategy, and vice versa

Question 23

EMERGING MARKETS: How Firms from Emerging Economies Fight Back
Market opening throughout emerging economies often means the arrival of multinational enterprises (MNEs) from developed economies. While MNEs put an enormous amount of pressure on local firms, MNEs also serve a useful purpose of demonstrating what is possible and motivating local firms to try harder. Since the best defense is offense, trying harder in addition mounting a rigorous defense usually means to get out of local firms' increasingly crowded home markets. How do firms from emerging economies fight back Specifically, how do they enter foreign markets
At least four strategic patterns have emerged. The first is to follow the well-known Japanese and Korean strategies of first establishing a beachhead by exporting something good enough and then raising quality, perception, and price. By following these steps, Pearl River of China has dethroned Yamaha to become the largest piano maker in the world. It has also significantly improved quality so that the market leader Steinway, after first rejecting Pearl River for an alliance proposal, more recently approached Pearl River to become Steinway's original equipment manufacturer for its low-end models. Likewise, Mahindra Mahindra of India solidly established itself in the American heartland, and ended up becoming the world's largest tractor maker by volume.
A second path is to follow diasporas. To bring Bollywood hits to the diaspora, Reliance Media of India launched the BIG Cinemas chain in the United States. King of fast food in the Philippines, Jollibee chased the diaspora by expanding to Hong Kong, Dubai, and southern California. But joining the mainstream has been hard for companies focusing on the diaspora. More interesting is a "reverse diaspora" strategy: Corona beer of Mexico, after giving American customers a happy time when visiting Mexico, successfully chased such customers back to their home country. Corona is now one of the most frequently served beers in American bars and restaurants that do not have anything to do with Mexico or Mexican food. In short, Corona has "gone native" to become a local beer in the US.
Third, some emerging multinationals simply buy Western companies or brands off the shelf. Before Lenovo purchased the PC division from IBM in 2004, most people in the world, including a lot of gurus, asked: "IBM PC was purchased by whom " Now most readers of this book already knew Lenovo before opening the book. Likewise, Tata Motors of India bought Jaguar Land Rover, and Geely of China acquired Volvo. Such high-profile acquisitions significantly enhanced the global profile and brand awareness of these ambitious firms from emerging economies.
Fourth, firms from emerging economies have to overcome enormous institution-based barriers, some formal and some informal. Although Huawei of China successfully exported telecom equipment to 45 of the world's top 50 telecom operators, it had a hard time penetrating the remaining five, all of which are in the United States. A major reason is blatant discrimination by the US Congress, which labeled Huawei a "national security threat" in the absence of hard evidence. Undeterred, Huawei became an emerging contender in smartphones, in addition to strengthening its excellence in telecom equipment. In addition to formal barriers, how to overcome informal consumer perceptions that typically associate emerging economies with poor quality is another challenge. For example, cosmetics users in the world do not think of Brazil highly-or do not think of Brazil at all. Natura of Brazil has no precedents to follow, because no Brazilian consumer products brands have succeeded outside Latin America. Highlighting its natural ingredients from the Amazon rainforest, Natura endeavored to tap into Brazil's positive country-of-origin image of biodiversity. This reigning queen of cosmetics in Brazil was trying hard to show its charm overseas. Sometimes, governments helped. In an effort to help their firms climb mountains, in the Western media the Indian government ran the "Incredible India" campaign and the Taiwanese government the "innovalue" campaign.
In summary, facing an onslaught of MNEs from developed economies, many firms from emerging economies are determined to fight back by turning up the competitive heat in developed economies as well as numerous other markets. Many will fail, but some will succeed. How rivals from developed economies interact with them by competing with, collaborating with, and/or ignoring them will shape a large part of the future of global competition.
Sources: Based on (1) P. Deng, 2009, Why do Chinese firms tend to acquire strategic assets in international expansion Journal of World Business, 44: 74-84; (2) Economist, 2013, Looks good, September 28 (special report): 14-15; (3) Economist, 2013, The emerging-brand battle, June 22: 70; (4) V. Govindarajan C. Trimble, 2012, Reverse Innovation, Boston: Harvard Business Review Press; (5) S. Lange, 2016, Huawei deals with liability of foreignness, in M. W. Peng, Global Strategy, 4th ed., Cincinnati: Cengage Learning; (6) C. Mutlu, Z. Wu, M. W. Peng, Z. Lin, 2015, Competing in (and out of) transition economies, Asia Pacific Journal of Management (in press); (7) M. W. Peng, 2012, The global strategy of emerging multinationals from China, Global Strategy Journal, 2: 97-107.

What distinguishes firm-specific resources and capabilities of some of the winning firms from emerging economies

Question 24

Do you support or oppose antidumping restrictions Why