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In the article Competing with Giants, Niraj Dawar and Tony Frost discuss the strategies that companies from developing countries can use in order to compete with international corporations. The authors argue that selling out or leaving the market is not always the most optimal solution for small businesses. According to this article, the managers should focus on the following issues:
- Identification and assessment of ones competitive assets. The managers should focus on the strengths that their businesses may have, for example, well-developed distribution networks, low-cost of production, or loyalty of the customers. This knowledge will be essential for them in the future.
- The degree to which the assets of the company can be transferred abroad. For instance, they should determine whether they have sufficient resources to enter foreign markets. Similarly, they should analyze the strategies of their competitors from the same perspective. This analysis will help them better develop their strategies and predict the actions of competitors.
- Finally, they should evaluate globalization pressures or the likelihood that a foreign rival can enter their niche market.
Apart from that, the writers describe four possible strategies that local companies can adopt when facing foreign competition. Depending upon the path that these businesses take, they can be categorized into four groups:
- Defenders or companies that focus on one of their competitive strengths and meet the needs of one target group that cannot be reached by foreign corporations. For instance, one can mention Bajaj Auto a manufacturer of scooters. They target people who are interested in durability and low cost of a scooter, rather than its brand. In this way, they can rival with large corporations like Honda.
- Dodgers or those businesses that can redefine their goals and main strengths. In other words, they can move to a different market that is of little interest to international companies. For instance, one can refer to Chinese software developers that chose to design programs for Windows, instead of developing operating systems.
- Extenders or those organizations that strive to transfer their capabilities into foreign markets. These businesses usually seek markets similar to their own. One of such organizations is Jollibee Foods which is a Philippine fast-food chain that operates in China and Japan.
- Contenders or those companies that attempt to improve their capacities in order to compete with large international companies. Among such companies one can single out Samsung or Sony.
On the whole, this study outlines several ways in which local companies can withstand the rivalry of foreign corporations, namely:
- Upgrading organizational strengths and capabilities so that the company did not have to move from a particular market entered an international corporation;
- Diversifying the range of the products or services;
- Moving to a different segment that is of no interest to a foreign competitor;
- Focusing on the needs of a particular group of customers and offering products that can appeal to these people, their values, and income level.
The authors show that the arrival of international companies does not always lead to the failure of the local ones. The managers of such businesses should remember that the policy of protectionism cannot always shield them against their rivals from abroad. The strategies described in this article can help many local businesses from developing countries.
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