Luis Enrique Lpez Lpez A00813238

The end of corporate imperialism

Analytical report

The basic conditions in the industry

The basic conditions can be the consumer demands, consumer tastes, the
level and distributions of income, geographic and demographic factors,
distribution of population. Also the basic conditions in supply like technology
is important, the development of cheap and rapid
transportation/communication system. In the political environment: Federal
Antitrust Laws to halt the spread of monopoly, anti-merger provisions limit
mergers between large firms, and other government rules restrictions and
regulations which either prohibits firms actions like horizontal mergers or
encourage monopoly.

The structure of the industry

Economies of Scale may result from adaptation of technology (as in basic

conditions), the way some tasks which complement production like coordination, resource acquisition, research, promotion and distribution are
performed, to have access to the better/improved information by the firm.
Barriers to Entry are the results of the basic conditions like the technology
developed by an existing firm may be protected be patent law and thus may
be denied to all others. All other factors which prohibit firms to enter a
particular industry.
The Industry Concentration: the number and relative size of firms in the
market, scale economies are an important determinant of firm size, barriers
to entry are a major limit on the ability of outsiders to challenge established
firms in the market.
Product Differentiation: differentiation is the market adaptation to certain
market imperfection. Differences in tastes, locations, and imperfection in
consumer information are all preconditions for differentiation, it represents
the absence of pure competition--competition based solely upon price in the
market. Products supplied by different firms are not perfect substitutes for
one another, and competition may take the form of shifting demands.

The conduct of the industry

Conduct is the term used in reference to the behavior of firms in the market.
How the firm reacts to the conditions imposed by the market structure and
interact with rivals.
Pricing and Product Design Behavior:
-direct control of price----perfect monopoly,
-no control at all of price----pure competition,
-product manipulation by a firm may result in changes in market structure.
Internal Organizational Behavior: a change in size or scope of activity may
result in profit increase and that may increase the market power, this market
power could alone be a competitive advantage if your competitor fails to
follow suit.

The market performance

The market performance has five ultimate values:

-Freedom refers to free choice in consumption, free entry and investment,
and free political parties and national security.
-Equality refers to equal opportunity, economic power, equal bargaining
power for supplier/buyer.
-Justice and fairness refer to prohibition of unfair practices, honesty, full
disclosure, fair labor standards.
-Welfare/Happiness refers to full employment, price stability, health, safety,
and clean environment.
-Progress refers to rising real income and technological development.
EMERGING MARKETS

China

New consumer base consisting of hundreds of millions of people.

Distribution in China is primarily local and provincial. Under the former
planned economy, most distribution networks were confined to political
units, such as countries, cities, or provinces. Even at present, there is no real
national distribution network for most products. Many MNCs have gained
access to provincial networks by creating joint ventures. But these JVs are
now impediments to the creation of the badly needed national network.
Chinese JV partners protect their turf. This gap between the MNCs, need for a
national, cost-effective distribution system and the more locally oriented
goals of their partners is creating serious tensions.
Ironically, the lack of a national distribution system in China may be an
advantage. MNCs with patience and ingenuity can more easily build

distribution system to suit their needs, and doing so might confer

competitive advantages.
Cultural and language difficulties in countries like China and India typically
limit expats' interaction with the locals as well as their effectiveness. In
addition, the need to understand how to deal with the local political system,
especially in China, makes long-term assignments desirable. It often takes an
expatriate manager two years to get fully up to speed.
In China, massive governmental interference in the economy makes a
uniform country strategy necessary. The Chinese government tends to view
the activities of individual business units as part of a single company's effort,
and therefore concessions made by any one unit -such as an agreement to
achieve a certain level of local sourcing - may well become requirements for
the others. An MNC in China must be able to articulate a set of principles that
conforms to China's announced priorities, and it should coordinate the
activities of its various business units so that they resonate with those
priorities.
Given the way most multinationals operate, "presenting one face" to China is
very difficult. Business units have their own P&L responsibilities and are
reluctant to lose their autonomy. Reporting lines can become overly complex.

India

New consumer base consisting of hundreds of millions of people. Consumer

are experimenting and changing their choice of product rapidly. Indians, for
example, will buy any product once, but brand switching is common. One
survey found that Indian consumers tried on average 6.2 brands of the same
packaged-goods product in one year, compared with 2.0 for American
consumers. This growth of consumer demand adds up to a wealth of
opportunity for the MNCs.
In India, individual entrepreneurs have already put together a national
distribution system in a wide variety of businesses. Established companies
such as Colgate-Palmolive and Godrej in personal care, Hindustan Lever in
packaged goods, Tatas in trucks, Bajaj in scooters -the list is long- control
their own distribution systems. Those systems take the form of long-standing
arrangements with networks of small-scale distributors throughout the
country, and the banking network is part of those relationships.
Any MNC that wants to establish its own distribution system in India
inevitably runs up against significant obstacles and costs.

Since 1991, the Indian government has scaled back its efforts to shape what
MNC do in the country. Business units may therefore act more independently
than would be appropriate in China. The strategy for India can be developed
on a business-by -business basis. Nonetheless, the market is large and
complex. National regulations are onerous and state-level government still so
different from one another that MNCs are well advised to develop knowledge
that they can share with all their business units in India.
As corporate imperialism draws to a close, multinational will increasingly look
to emerging markets for talent. India is already recognized as a source of
technical talent in engineering, sciences, and software, as well as in some
aspects of management. All high-tech companies recruit in India not only for
the Indian market but also for the global market.

The market of China is attractive because its growth in 2016 will continue to
slow, putting pressure on companies to repay a mountain of debt, which will
in turn put pressure on Chinas banks. Chinas savers are responding by
trying to sneak out as much money as they can to invest abroad, which is
tightening credit even further and pulling down Chinas currency, the yuan.
Exporters earn more as a result, but being no fools, are choosing to keep
more of their foreign income offshore. All of this is pushing China ever closer
to a wave of defaults and a potential credit crisis.
The market of India is even more attractive than China. Nearly two decades
of economic liberalization, along with robust domestic demand, a growing
middle class, a young population, and a high return on investment make
India a credible investment destination. Business leaders said they found
India's macroeconomic and political stability, FDI policy and ease of doing
business more attractive in 2015 than last year.

I think that the market analysis framework of Greer Douglas is

comprehensive and complete as analytical model.