Shifting exchange rates pose
significant risks to a company's
competitiveness in foreign markets.
Exporters win when the
currency of the country where
goods are being manufactured
grows weaker, and they lose
when the currency grows
stronger. Domestic companies
under pressure from lower-cost
imports are benefited when
their government's currency
grows weaker in relation to the
countries where the imported
goods are being made.
Multicountry competition exists
when competition in one national
market is not closely connected
to competition in
another national market—there
is no global or world market,
just a collection of selfcontained
country markets.
Global competition exists
when competitive conditions
across national markets are
linked strongly enough to form
a true international market and
when leading competitors compete
head to head in many different
countries.
A multicountry strategy is appropriate
for industries where
multicountry competition dominates
and local responsiveness
is essential. A global strategy
works best in markets that are
globally competitive or beginning
to globalize.
Companies can pursue competitive
advantage in world
markets by locating activities in
the most advantageous nations;
a domestic-only competitor
has no such opportunities.
Companies with large, protected
profit sanctuaries—
country markets in which a
company derives substantial
profits because of its strong or
protected market position—
have competitive advantage
over companies that don't have
a protected sanctuary. Companies
with multiple profit sanctuaries
have a competitive
advantage over companies
with a single sanctuary.
Cross-market subsidization—supporting
competitive offensives in one
market with resources and
profits diverted from operations
in other markets—is a powerful
competitive weapon.
Strategic alliances can help
companies in globally competitive
industries strengthen their
competitive positions while still
preserving their independence.
Strategic alliances are more effective
in helping establish a
beachhead of new opportunity
in world markets than in
achieving and sustaining global
leadership.
Profitability in emerging markets
rarely comes quickly or
easily—new entrants have to
be very sensitive to local conditions,
be willing to invest in developing
the market for their
products over the long term,
and be patient in earning a
profit.
