![]() ![]() And by assessing where your own competitive assets are most effective, you can gain insights into the breadth of business opportunities available to you. And in the fall of 1998, Honda announced it was pulling out of its scooter-manufacturing equity joint venture in India.īajaj’s story points to the two key questions that every manager in emerging markets needs to address: First, how strong are the pressures to globalize in your industry? Second, how internationally transferable are your company’s competitive assets? By understanding the basis for competitive advantage in your industry, you can better appreciate the actual strengths of your multinational rivals. Bajaj’s share, meanwhile, slipped only a few points from its earlier mark of 77 %. Honda, allied with another local producer, did quickly grab 11 % of the Indian scooter market, but its share stabilized at just under that level. The company beefed up its distribution and invested more in research and development. Instead of forming a partnership with Honda, Bajaj’s owners decided to stay independent and fortify their existing competitive assets. Honda, which offered sleekly designed models sold mostly through outlets in major cities, did not. ![]() Bajaj, which sold cheap, rugged scooters through an extensive distribution system and a ubiquitous service network of roadside-mechanic stalls, fit the Indian market well. Consumers looked for low-cost, durable machines, and they wanted easy access to maintenance facilities in the countryside. The makeup of the Indian scooter market, moreover, differed in many ways from Honda’s established customer base. While Honda would enjoy some advantages in product development, Bajaj would not have to spend heavily to keep up. The scooter industry was based on mature and relatively stable technology. But faced with Honda’s superior resources, what else could the company do?Ī closer look at the situation convinced Bajaj’s managers that Honda’s advantages were not as formidable as they first appeared. For the independent-minded Bajaj family, a joint venture with Honda was not an option. ![]() Its remarkable success selling motorcycles in Western markets and in such nearby countries as Thailand and Malaysia was well known. Honda, which sold its scooters, motorcycles, and cars worldwide on the strength of its superior technology, quality, and brand appeal, was planning to enter the Indian market. When India opened its automotive sector in the mid-1980s, the country’s largest maker of motor scooters, Bajaj Auto, confronted a predicament similar to what many “emerging-market” companies face. Aligning Assets with Industry Characteristics By studying these examples, managers of other companies from emerging markets can gain insight into their own strategic options. Others, including Jollibee Foods in the Philippines and Cemex in Mexico, have built on strength at home and launched international expansion strategies of their own. Vist in Russia and Shanghai Jahwa in China, for example, have managed to successfully defend their home turfs against such multinationals as Compaq and Unilever. In markets from Latin America to Eastern Europe to Asia, we have studied the strategies and tactics that successful companies have adopted in their battles with powerful multinational competitors. We believe there are other options for companies facing stiff foreign competition. How can they overcome-and even take advantage of-their differences with competitors from advanced industrial countries? Many of these managers assume they can respond in one of only three ways: by calling on the government to reinstate trade barriers or provide some other form of support, by becoming a subordinate partner to a multinational, or by simply selling out and leaving the industry. Strategists at multinational corporations can draw on a rich body of work to advise them on how to enter emerging markets, but managers of local companies in these markets have had little guidance. Often, the very survival of local companies in emerging markets is at stake. Accustomed to dominant positions in protected markets, they suddenly face foreign rivals wielding a daunting array of advantages: substantial financial resources, advanced technology, superior products, powerful brands, and seasoned marketing and management skills. ![]() For local companies, however, the influx often appears to be a death sentence. Their arrival is a boon to local consumers, who benefit from the wider choices now available. As protectionist barriers crumble in emerging markets around the world, multinational companies are rushing in to find new opportunities for growth. ![]()
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