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Products with a competitive advantage have more
price or value benefits than competitive products
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A value relationship is the amount of benefits
received given the product’s price
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Early U.S. dominance immediately after the war
Economic recovery and growth throughout 1960’s
and 1970’s in Western Europe and Eastern Asia.
China and Russia opened to foreign trade in
1980’s
Former Soviet bloc countries open to trade in
1990’s
Today many more countries are participating in
global trade, causing U.S. competitive advantages
to begin disappearing
Making the product uniquely different than
competitors
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Higher quality
Strong brand image
Better features
Better service
Meet needs faster
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http://www.youtube.com/watch?v=qfdOUSS9Bn0
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Differentiated strategy
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Lower production costs mean lower prices for
consumers
Achieving economies of scale: large volume of
product is produced, lowering the cost of each
individual product
Improving productivity: increasing the amount of
product that can be produced with a limited set
of economic resources (land, labor, capital)
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Focusing on a single market in a single country
allows a company to concentrate it’s resources
on the market where it is the strongest
Discourages competition
http://www.youtube.com/watch?v=GrZk9P1hun8
Focused strategy
http://www.youtube.com/watch?v=TkArtkF2R0I
Students work in pairs and complete the following
•Businesses are continually trying to find ways to make their
companies more efficient, save costs, and become more profitable.
One method many companies use is a process called “ERP
Systems.”
•Your objective for this assignment is to research “ERP Systems”
and prepare a brief report in PPT format that discusses the
following questions:
•
•What does ERP stand for? What is an ERP system?
•What advantages does an ERP system provide for a business –
how can it improve business performance?
•How can an ERP system help global business performance?
•Do
not copy and paste- use your own words
•Hint: try using a search for “ERP Systems” or global
ERP
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Top management should have international trade
experience
Labor force should be well-trained in manufacturing
processes
Some countries have well educated labor forces, but
more costly
Developing countries may have less educated work
force, but lower labor costs
Developing economies are continually upgrading their
education systems to train managers and increase their
competitive position
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Access to financial markets enables businesses to raise
financial resources needed to by other resources
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Lowering interest rates for loans makes it easier for
companies to borrow, and encourages business
development
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Less availability of markets/banks in developing countries
However, easy lending practices can run the risk of
creating too much bad debt
Micro-loans in developing countries (usually around
$100) enable entrepreneurs to start businesses and
make money
http://www.youtube.com/watch?v=PGtiQBkO9_w
Micro-loans
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Manufacturing: processing raw materials into final
goods
Japan has competitive advantage in automobile
manufacturing—largest producer in world. Why?
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Industry of suppliers that produce high quality products
Just-in-time inventory system; no storage of parts lowers
costs—parts are received, immediately assembled with
other components, and immediately shipped without being
held in inventory
Continuous assessment of manufacturing processes and
identifying improvements
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Customers: advantage to companies selling in their own
culture because they share cultural heritage with
customers
Distribution channels: comprised of individuals and
businesses that participate in the exchange of goods and
services, moving the product and its components through
the supply chain, from raw materials, to manufacturer, to
distributors, to end users.
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Often difficult to enter new markets and find supply sources
Brand image: the strength of global brands creates
consumer demand, and gives the company an advantage
when seeking distributors
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Direct competition—competitors working in the same
industry, selling similar products to the same target
market
Indirect competition: different types of products that
provide similar benefits
Example Honda grew from a motorcycle manufacturer
(indirect competitor for automobiles) to become an
automobile manufacturer (direct competitor)
http://www.songfacts.com/detail.php?id=2000 Honda
1960
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Intellectual property laws: patents, trademarks,
copyrights limit other firms trying to enter the
marketplace
Trade policies: Quotas, tariffs, license requirements
force competitors to drive up prices, which places them
at a competitive disadvantage
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May benefit businesses, but not necessarily customers
Limiting competition may result in higher prices and/or
poorer quality
Market power: exists when a firm can control prices
within an industry Companies with large market share,
or monopolies, can lower prices and drive out
competitors.
http://www.youtube.com/watch?v=a5SMyfbWYyE
Steve Jobs
•Students
work with their partner and complete the
following:
•Identify
2 direct and 2 indirect competitors to the
business they have selected for their business plan.
•Indicate
the advantages and disadvantages &
strengths and weaknesses of these businesses
compared to the student’s proposed business
•How
will you counter these competitor issues?