Four Models of Competition and their Implications for Marketing Strategy

Strategic Implications of the Globalization Model 
• The globalization model of competition highlights 
the importance to marketing strategy of knowing 
local market conditions. However, the value of this 
knowledge may disappear in a moment with the 
entry of a large multinational who changes the 
fundamental nature of an industry. Competition 
switches abruptly from competition of quantity 
and price to competition "from the new com 
modity, the new technology, the new source of 
supply, the new type of organization—competition 
which commands a decisive cost or quality ad 
vantage and which strikes not at the margins of 
profits and outputs of the existing firms but at their 
foundations and their very lives" (Schumpeter, 
1942, p 84). In short, competition in a global model 
is ever changing—from directions and sources that 
are extremely difficult to anticipate. Strategy under 
such conditions must emphasize the firm's en 
vironmental monitoring, anticipation, flexibility, 
quick reactions, efficiency, and most importantly, 
delivery of value to its customers. 
• Specific strategic options available to firms 
threatened by a multinational entry can be placed 
into offensive and defensive categories. Enterprises 
may tend to emphasize defensive strategies. For 
example, firms may downsize and niche by focus 
ing on a smaller market segment for which the 
firm's products and services are ideally suited. The 
firm might stress superiority in terms of its sales- 
Vol 19, No. 1, January-March 1994 
force and distribution channels, two elements of the 
marketing mix that multinationals will find dif-
ficult to match. The firm might search for its own 
multinational with whom to enter into a form of 
partnership—if one multinational enters a market, 
others are almost certain to follow. The firm might 
recognize that often its best defensive strategy is a 
strong offensive strategy.
 
• Enterprises have a number of available offensive 
strategies in the face of multinational entry. At a 
minimum, the firm must recognize that competi 
tion is about to increase by an order of magnitude 
and prepare itself for battle. The firm must estimate 
the strength of its enemy and consider just where 
his weakness lies, how long the weakness will be 
permitted to exist, and what actions can be taken 
when the weakness disappears. The firm might 
attempt to build strong core brands and core brand 
images to achieve customer loyalty at consumer 
and channel of distribution levels. "Flanker" brands 
and related products can be added to make market 
entry even less attractive. Hindustan Lever seems 
to be following such a strategy—it has introduced 
more brands and brand extensions in the Indian 
market over the last year than it has in its 100 year 
history. An offensive strategy will require a 
capable, loyal, and competitively oriented sales- 
force. Publicity and advertising may build plat 
forms on product value and, sometimes, on a 
"Made in ...." position. Most importantly, the 
enterprise must develop its own reputation as a 
formidable competitor. It must innovate, take chan 
ces, and attack the invader. 
• Marketing strategy may rely to some degree on 
absolute and comparative advantages present in 
the local market. However, such advantages fre 
quently diminish or disappear quickly in the face 
of strategic competitive advantage. Porter (1986, p 
38) makes the point nicely: "Many forms of compe 
titive advantage for the global firm derive less from 
where it performs activities than from how it per 
forms them on a worldwide basis; economies of 
scale, proprietary learning, and differentiation with 
multinational buyers are tied not to countries but to 
the configuration and coordination of the firm's 
worldwide system." In other words, marketing 
strategy should emphasize first 
effectiveness, 
then 
efficiency.
• Enterprises should seek markets either for export 
or entry where their existing successful strategies 
appear to "fit" local conditions. Such markets would 
demand a similar product, react similarly to com-
 
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mon promotion activities, and possess similar 
channels of distribution. Such markets should also 
have similar infrastructures and be in similar stages 
of economic development. These and other simila-
rities permit the firm to better coordinate marketing 
activities via transfer of know-how, to sequence 
product entries and marketing programmes, and to 
organize for best results (Takeuchi and Porter, 1986, 
P 141).
 
• International or global marketing strategies fre 
quently involve coordination in the domestic or 
foreign market either with one or more coalition