Question 1: How can analysis of national competitiveness explain the competitive

advantage of the single firm? Support your answer with examples?

Answer 1: National prosperity does not grow out of a countrys natural endowments, its labor
pool, its interest rates, or its currencys value, as classical economics insists.
A nations competitiveness depends on the capacity of its industry to innovate and upgrade.
Companies gain advantage against the worlds best competitors because of pressure and
challenge. They benefit from having strong domestic rivals, aggressive home-based suppliers,
and demanding local customers.
Competitive advantage is created and sustained through a highly localized process. Differences
in national values, culture, economic structures, institutions, and histories all contribute to
competitive success. There are striking differences in the patterns of competitiveness in every
country; no nation can or will be competitive in every or even most industries. Ultimately,
nations succeed in particular industries because their home environment is the most forwardlooking, dynamic, and challenging.
Around the world, companies that have achieved international leadership employ strategies that
differ from each other in every respect. But while every successful company will employ its own
particular strategy, the underlying mode of operationthe character and trajectory of all
successful companiesis fundamentally the same.
Single firm achieve competitive advantage through acts of innovation. They approach innovation
in its broadest sense, including both new technologies and new ways of doing things. They
perceive a new basis for competing or find better means for competing in old ways. Innovation
can be manifested in a new product design, a new production process, a new marketing
approach, or a new way of conducting training. Much innovation is mundane and incremental,
depending more on a cumulation of small insights and advances than on a single, major
technological breakthrough. It often involves ideas that are not even newideas that have
been around, but never vigorously pursued. It always involves investments in skill and
knowledge, as well as in physical assets and brand reputations.
Some innovations create competitive advantage by perceiving an entirely new market
opportunity or by serving a market segment that others have ignored. When competitors are slow
to respond, such innovation yields competitive advantage.
For instance, in industries such as autos and home electronics, Japanese companies gained their
initial advantage by emphasizing smaller, more compact, lower capacity models that foreign
competitors disdained as less profitable, less important, and less attractive.

Question 2. What relevance has the international product life cycle theory for pricing
strategy in international firms?
Answer 2: Product life cycle theory divides the marketing of a product into four stages:
introduction, growth, maturity and decline. When product life cycle is based on sales volume,
introduction and growth often become one stage. For internationally available products, these
three remaining stages include the effects of outsourcing and foreign production. When a product
grows rapidly in a home market, it experiences saturation when low-wage countries imitate it
and flood the international markets. Afterward, a product declines as new, better products or
products with new features repeat the cycle.
Growth
An effectively marketed product meets a need in its target market. The supplier of the product
has conducted market surveys and has established estimates for market size and composition. He
introduces the product, and the identified need creates immediate demand that the supplier is
ready to satisfy. Competition is low. Sales volume grows rapidly. This initial stage of the product
life cycle is characterized by high prices, high profits and wide promotion of the product.
International followers have not had time to develop imitations.
The company tends to keep prices high for the growth stage under International PLC, it may not
be the case for the normal PLC.
Maturity
In the maturity phase of the product life cycle, demand levels off and sales volume increases at a
slower rate. Imitations appear in foreign markets and export sales decline. The original supplier
may reduce prices to maintain market share and support sales. Profit margins decrease, but the
business remains attractive because volume is high and costs, such as those related to
development and promotion, are also lower.
In normal PLC, prices are kept same, but for an international product in maturity stage, prices are
slashed because there are huge no. Of competitors.
Decline
In the final phase of the product life cycle, sales volume decreases and many such products are
eventually phased out and discontinued. The follower economies have developed imitations as
good as the original product and are able to export them to the original supplier's home market,
further depressing sales and prices. The original supplier can no longer produce the product
competitively but can generate some return by cleaning out inventory and selling the remaining
products at discontinued-items prices.

Question 3. When would an organization adopt a standardization approach to

international marketing communications? Under what circumstances a standardization
approach may not work?
Answer 3: Adoption of Standardization Approach helps when people are expecting the same
level of quality of any specific brand anywhere around the world.
Standardization also supports positive consumer perceptions of a product (Products and
International Marketing).
If a company enjoys strong brand identity and a strong reputation, choosing a standardized
approach might work to its benefit.
Positive word-of-mouth can mean an increase in sales around the globe.
Another advantage includes cost reduction that gives economies of scale. Selling large quantities
of the same, non-adapted product and buying components in bulk can reduce the cost-per-unit.
Other advantages related to economies of scale include improved research and development,
marketing operational costs, and lower costs of investment.
In addition, standardization is a reasonable strategy at a time where trade barriers are coming
down.
Finally, following a standardized approach helps companies aim focus on a uniformed
marketing mix specifically focusing on one single product, leaving enough room for quality
improvement. By emphasizing on one uniformed product, staff can be trained to enhance the
quality of the product attracting manufacturers to invest in technology and equipment that can
safeguard the quality of the standardized product offering (Products and International
Marketing, n.a).
Under what circumstances a standardization approach may not work?
Standardisation may not always work because different markets mean different preferences.
Selling one unified product lacks uniqueness. This allows competition to gain market share
through tailoring their products to meet the need of a specific market/segment. Since different
markets have different needs and tastes, by using the standardized approach, companies can
become vulnerable. One example is Walmarts failure in entering global markets. The retail giant
faced many challenges when entering foreign markets such as Germany, Brazil, South Korea and
Japan as it discovered that its formula for success in the USA (low prices, inventory control and a
large collection of merchandise) did not translate to markets with their own discount chains and
shoppers with different habits. The biggest problem was that Walmart, a uniquely powerful
American enterprise, tried to impose its values around the world.

Question 4 When would it be feasible and advisable for a global company to

centralize the coordination of its foreign market distribution systems?
When would decentralization be more appropriate?

Answer 4: Decision-making in a supply chain network can be performed in a centralized or a

decentralized way. In a centralized structure, there exists a central authority responsible for
decision-making, whereas in a decentralized structure the individual entities can make their own
decisions. In practice no supply chain can be completely centralized or decentralized and both
approaches have their advantages and disadvantages. Most commonly the strategic decisions are
usually made centrally while operation decisions are decentralized. The performance of each
approach has been found to depend on the specific environment and the particular decisions
Before deciding on any channel of distribution or middlemen, the international marketer must
understand the characteristics of their market and the established system most commonly used in
the foreign market they are entering. Marketing manager must ask questions prior to the
centralization or decentralization decision.
Centralized distribution is crucial in improving the range of products available in the varied
independent stores that the company is operating in. It will help suppliers too, as it means that
they have their products delivered across a wider distribution. This allows even the smallest
retailer to access products from all over the country, which wasnt the case before centralized
distribution. In addition there is considerable saving of time and money and a reduced number of
deliveries.
An integrated manufacturing information system does requires some standardization across the
logistics chain, such as standard part numbers for unique item identification, common
documentation, and a common understanding of capacity and resource use parameters.
Standardization in such areas is vital if planning for the logistics chain is to centralize.
In short, Company which is operating at a relatively small scale, requires standardization, sells
unique item and does not want to lose control can go for centralization.