Competing with giants

face enormous fixed costs for product development,
capital equipment, marketing, and distribution.
Covering those costs is possible only through sales
in multiple markets. A single set of rulesgoverns
competition worldwide, and consumers are satisfied
with the standardized products and marketing
appeals that result.
At the other end of the spectrum are industries in
which success turnson meeting the particular demands
of local consumers. In beer and retail banking,
for example, companies compete on the basis
of well-established relationships with their customers.
Consumerpreferences vary enormously
because of differing tastes, perhaps, or incompatible
technical standards. Multinationals can't compete
simply by selling standardized products at lower
cost. Alternatively,high transportation costs in
some sectors may discourage a global presence. In
all of these industries, companies can still prosper
hy selling only in their local markets.
Most industries, ofcourse, lie somewhere in the
middle of the spectrum. International sales bring
some advantages of scale, but adapting to local preferences
is also important. By thinking about where
their industryfalls on the spectrum, managers from
emerging markets can begin to get a picture of the
strengths and weaknesses of their multinational
competitors. But they need to place their industry
carefully.As Bajaj found, industries
that seem similar may he far apart on
the spectrum-pressures to globalize
scooters turn out to be much weaker
than those to globalize automobiles.
Bajaj may go global inthe future, as the
Indian market evolves, but it has no
need to do so now.
Once they understand their industry,
managers need to evaluate their
company's competitive assets. Like Bajaj, mostemerging-market companies have assets that give
them a competitive advantage mainly in their
home market. They may, for example, have a local
distribution network that would take years for a...