Slide 1

Maximizing Competitive Strategy:Lessons from Latin America and the USA

Professor Chris Robertson

Tools for entering potential foreign markets and adapting to national brand-building strategies

College of Business AdministrationCollege of Business Administration1Key globalization strategic decisionsMain decision: Efficiency vs. LocalizationEfficiency Cost reduction, Economies of scale, Standardized goodsLocal responsivenessAdapting to different tastes and preferencesCollege of Business Administration2HighLowHighPressure for EfficiencyPressure for Local ResponsivenessLowGlobalstrategyTransnationalstrategyMultidomesticstrategyCost-Responsiveness FrameworkCollege of Business Administration35Efficiency-Responsiveness FrameworkGlobalProduce and sell standardized products in different markets (Coca-Cola)TransnationalProduce and sell somewhat unique, yet somewhat standardized products in different markets (Caterpiller Japan)MultidomesticProduce and adapt products in different markets (Nestle)

College of Business Administration4Following multiple strategies at HasbroMultidomestic - Action Man

Global Mr. Potato Head

Transnational - Trivial Pursuit

5

College of Business Administration5The International Strategy - Exporting National Identity

International strategy - products produced for the domestic market initially sold internationally with minimal localization Low cost pressures and low responsivenessExamples: Chateau MargauxSalvatore FerregamoJuan ValdezRolex

College of Business Administration6Implementing Globalization: Choice of Entry Mode ExportingFranchisingLicensingJoint VentureWholly-owned subsidiary

How does leveraging national brand relate to entry mode?Control!! Adaptation!!College of Business Administration7Country Choice Decision. Key factors to considerSize of target marketIncome level of target marketPerception of foreign products (my country !)College of Business Administration8

Aligning firm strategy with country brandingWhere are these pictures from?9

College of Business Administration9Brand Building for Low Cost CompetitorsHuman Resource ManagementPolicies designed to reduce costs and minimize turnoverRewards for cost saving ideasMarketingTeam up with governmental promotion eventsLow-cost methods to promote products (Internet, billboards)Let other firms take the leadOperations and logisticsEfficient delivery schedule; shared containers if smallSome vertical integration10College of Business Administration10Brand Building for DifferentiatorsHuman Resource ManagementPolicies designed to enhance innovation and new ideasRecruitment of entrepreneurial thinkers, best local talentMarketingCo-sponsor promotions with government. Take the lead!Celebrate history and culture-let it flow into productsOperations and logisticsEmphasize service! It adds competitive advantage for quality firms.Maybe vertical integration to control quality

11College of Business Administration11Strategic Group Map of Restaurant IndustryPrice / Quality / ImageProduct Line / Merchandise MixHighLowMediumLimited menuMedium varietyBroad varietyBroad-categoryPizza Restaurants Dominos, Pap Johns, etcIntl Chains: TGI Fridays, Chilis, etcSteak Houses: Ruths Chris, Smith & WollenskysGourmet LocalFast Food Chains: McDonalds Burger King KFCDonutsCoffee Houses: StarbucksJuan Valdez, etcNational Theme Restaurants: ChiChisTanta

Sandwich Shops: Subway, etcDinersDiscountersCollege of Business Administration12PriceQualityExpensiveTraditionalDiscountLowHighBodegas Norton,Other MalbecsCatena Zapata,French Bordeaux.Strategic Groups: Competitive PositioningCollege of Business Administration13

A few examples of firms that are leveraging national brands

14

College of Business Administration14Linking Country Brand and Image to Products (or not!)Catena Zapata- ArgentinaAjegroup and PISCIS- PeruSamuel Adams- USA-BostonD& Bond- EcuadorTam-Brazil15

College of Business Administration15Catena Zapata- Argentina

Leveraging the image of Argentina and the mountains of MendozaVineyard started in Mendoza in 1902 by Nicola Catena, Italian immigrantGrandson, Nicholas, received Ph.D. In Economics and taught at Cal-Berkeley while studying California winesSince 1980s high quality, differentiation, strategy focused on premium Malbecs and ChardonnaysCautious brand extensionDifferent brands for Argentine and Foreign Markets

16

College of Business Administration16Ajegroup- Peru, global imageKola Real - BackgroundAjegroup Corporation, created in 1988 by Eduardo and Mirta Aaos Founded in Ayacucho, PeruInitially sold soft drinks in returnable beer bottlesOriginal competitive edges were location and costBig Cola

College of Business Administration17International ExpansionCountryYearMkt SharePeru198815-20%Venezuela199910%Ecuador200110%Mexico 2002 4%Costa Rica2004 8%Exports to Guatemala and NicaraguaThailand, Colombia, Brazil 2006-2008College of Business Administration18Update 2012 Ajegroup International Growth Peru, Ecuador, Colombia, Brazil, Venezuela, Mexico, Central America, ThailandNEW: Vietnam, India, IndonesiaNext: ChinaNew Products: beer, juice, sport drinks, energy drinks, waterSome concentrate purchased from outside suppliers (COTT, USA)More than 10,000 employees and over US$ 1 billion in revenuesCollege of Business Administration19

A Peruvian Product from the AndesThe firm specializes in Rainbow TroutHigh quality focus with packaging/seasoning tailored to client preferencesPISCIS has 40 different products (i.e. Grill-Ready BBQ trout for Norway)

College of Business Administration20PISCIS, exportsCurrently exports are destined for 8 nations:NorwayCanadaSwedenUSA (Costco)PolandGermanyMexicoBoliviaRecent entry into Argentina and BrazilCollege of Business Administration21

College of Business Administration22Samuel Adams Boston- USAColonial roots, a true American brandVisionary Founder Jim KochCraft Brew Segment LeaderDomestic FocusSells Internationally to Build World Class Brand ImageOnly US Beer to adhere to German Brewing StandardsConstant innovation yet under same Rebel Patriot theme

23

College of Business Administration23D & Bond is one of the leading sweater manufacturers and retailers in EcuadorD & Bond exports sweaters and other woven items to five other countries in Latin America: Colombia, Mexico, Brazil, Bolivia and ChileEmphasizes the English roots of one of the founders, Rosalind Bond of Scotland Recently expanded into related products such as jeans and kitchen items.

D & Bond, Quito Ecuador,emphasizing the English

College of Business Administration24 D & Bond Brands

College of Business Administration25Tam Airlines, BrazilProud to be BrazilianFounded by Captain Rolim Adolfo Amaro in 1976 and now has over 40% of Brazilian marketStarted as a regional airline within BrazilCurrently member of Star AllianceIn talks with LAN to form LATAMWhat is Brazilian about TAM:Still embraces spirit of founderPassion for Flying Command at Service Spirit to Serve trace back to Captain Amaro

26

College of Business Administration26