Answer: Huge markets for goods and services reside in the rest of the
world that can be catered to. Barriers to international trade and investment
have significantly reduced. Catering to these markets makes the company go
Why do companies go global? Once a company has
decided to go global what entry modes could the company leverage to break in to
the global market?
Chapter 8 Questions:
Strategy and the Global Environment
Answer: First movers are the
companies that strive first to develop a revolutionary product. The first mover
now in a monopoly position where the product satisfies unmet high consumer
demand. The consumer can capture a significant chunk of the market and
revenues. The takeaways include: opportunity to exploit network effects and
positive feedback loops locking consumers into its technology. Two they establish
brand loyalty. Three, be able to maximize sales volume ahead of rivals. Four,
create switching costs for its customers that make it difficult for rivals to
enter markets. Five, accumulated knowledge related to customer needs,
distribution channels, product technology, process technology help the first
mover gain significant grounds in the industry. But there are often prone to
mistakes, its expensive to develop new technology, is a lot riskier and they
may invest in obsolete technology. The second movers can take the shortcoming
of the first movers and use it to their advantage to better suit the needs of
Define first and second movers. How do these two
entities interact within and industry, and who learns what as the industry
Answer: Pricing can be key
in the process of standardization and format war. Keeping the product prices
low, stimulating demand increases the installed base and then trying to make
high profits on the sale of complements or other third party licensed products.
Strong partnerships with competitors can sometimes drive out all the other
competition and create a win-win situation for you and your partners.
During a format war, describe how competition occurs
and how a price war can take shape.
Answer: Standardization helps to guarantee compatibility between
products and their complements. The economic benefits include reduction in
costs. It helps reduce confusion in the minds of consumers. It reduces the risk
associated with supplying complementary products.
Once standardization occurs, how does the industry
Answer: Standardization and format war take place when multiple
companies are making a product with the same set of features but with different
implementations. Each company/organization tries to push out its own standard
to consumers. The company that can successfully push their standard will win a
huge majority of the market.
Describe standardization, format wars, and how
standardization can lead to a format war.
Chapter 7: Strategy