Restricted National Market Scope (a)

1. Restricted National Market Scope (a) - national market development over time - sustainability of national strategies - measuring competitive advantage - inter-market comparison - benchmarking*

2. Market Share Objective High Low Global High Share Strategy Global Niche Strategy Global S c o p e National High Share Strategy National Niche Strategy National Károly Barakonyi - 5

3. (2) • the link between competitive advantage and business performance • what measure to use in assessing competitive advantage, in what market and over which competitors? • the importance of undertaking inter-market comparisons • the role of benchmarking in assessing and developing performance improvement* Károly Barakonyi - 5

4. Restricted national market scope • focused on a single national market • do not seek to leverage competencies, interdependencies across different national markets • critical: long term viability! What are the conditions for developing and sustaining a competitive advantage?* Károly Barakonyi - 5

5. Phase 4 Worldwide Phase 3 International regional Internationalisation Retrenchment Int’l market entry & development Phase 2 Phase 1 Restricted national market scope Figure 5.1 The phase model of international business development Károly Barakonyi - 5

6. Int’l competitor: able to leverage greater competencies => national forced to become international When is current national competitive strategy is sustainable? Both external and internal contexts are supportive! Unstable, if one of them is unsupportive: reorientate itself => move* Károly Barakonyi - 5

7. Internal context seeking Int’l focus Nat’l focus Nat’l focus Stable Unstable External context seeking Int’l focus Unstable Stable Analyze current strategic posture as well as dynamics of competitive environment* Figure 5.2 International business development matrix Károly Barakonyi - 5

8. Necessary conditions for nat’l strategy: product-market demand: national tastes and preferences competitive interdependencies: ability to supply market competitively Sub-dividing nat’l strategy: local: highly localized, small local area national regional: number of local markets national: cover nat’l market comprehensively Size: show marked variation by individual nations (UK, US, Hungary)* Károly Barakonyi - 5

9. Local: family owned boulangerie 46,000 bread bakery in France (1-2 in a village) 1 bakery/1200 people, no change over the last century So far: resisted to regional bakeries Cultural differences: - bread brought twice a day - Napoleon: regulated opening hours, purity, price Position less secure when: new kinds of bread accepted changes in cultural habits (promoted by larger retailers) Károly Barakonyi - 5

10. National regional newspaper • Local newspaper: provide local news • Nordwest Zeitung: WW-II • Strategic recipe: • tailor common format to meet special needs of local markets • front section exclusively devoted to local community • other three: the same in all edition • Further areal extension • local newspapers joined • NZ concentrates on nonlocal section, production, sales, advertisement • Partners: on local news, distribution • (competed on quality of local content) • NZ: advertising broker: saving in overhead, direct costs Károly Barakonyi - 5

11. The national company: South African Breweries Ltd Virtual monopoly: 98% lager beer, 10th largest in the world Series of regional markets, served by a regional brewery - centralization too expensive - homogenous national brand is supplied Károly Barakonyi - 5

12. Why do companies move from being local to national over time? What are the implications for key business functions and processes? How do companies grow and develop over time?* National market development over time Károly Barakonyi - 5

13. Why? Internal context seeking Focus  National regional Local National Local Stable Unstable Unstable External context seeking National regional Unstable Stable Unstable National Unstable Unstable Stable Figure 5.3 Local/national strategy matrix Károly Barakonyi - 5

14. External Product-market demand: greater homogenuity in tast, preferences => acceptance of national brands Competitive interdependence: supply local market more competitively becoming a national supplier (economies of scale) Internal innovative vision of key managers: combined with succession events results in a dramatic change to the strategic intent development of knowledge, competencies: able to exploit it National regions: offer an intermediate stage* Károly Barakonyi - 5

15. Figure 5.4: Internal and external triggers to a discontinuity in business development External triggers Discontinuity: new strategic thrust Next phase Current phase Internal triggers Károly Barakonyi - 5

16. Extending business scope: significant challenges traditional ways: no longer be appropriate managing important discontinuities in key functions, processes managerial needs will change Specific needs will vary according to a number of factors* Implications Károly Barakonyi - 5

17. Characteristics LocalNational=================================================Characteristics LocalNational================================================= Market coverage local national Products local brand nat’l brand Marketing unsophisticated highly dev. Human resources few employees increases Operations very simple managerial needs Logistics uncomplicated complexity Finance capital need low substantial Nr. of competitors many, few, fragmentedconcentrated Károly Barakonyi - 5

18. How companies move from having local strategy to a national? Organic (internal growth): in matured market can be difficult Acquisition (external growth): purchasing an established operation; greater risk * How? Károly Barakonyi - 5

19. Internal growth Context industry is still growing fragmented, not dominated by larger companies Resources requirements develop its own resource basis difficult needs managerial and financial resources Relative benefits and disadvantages incremental growth (“learn from doing”) risk: easier to manage strategy can be abandon slow initially low level of market penetration (many years) Károly Barakonyi - 5

20. External growth Context enter a mature market highly concentrated small number of sellers Resources requirements may be good management may require drastic actions make viable necessary management and financial resources (?) Relative benefits and disadvantages immediate presence in the market risk: no guarantees of quality after entering not easily reversed (extra costs!) successful integration: management is crucial Károly Barakonyi - 5

21. US microbreweries Early 80’: American beers dull, uninteresting produced by major national producers indistinguishable in taste Early 90’: 400 new small local breweries uniquely flavored products variety of local beers market niche market share in the region: 1% Larger breweries: start producing distinctive beers, too Concentration new entries!! Károly Barakonyi - 5