When local markets mature and opportunities are not coming up as they used to, firms must reallocate their position and their strategy. Entering new markets offers advantages and developing opportunities. In order to achieve profitability Michael Porter established a 4 strategy matrix, three of which might be found very useful to a company that wishes to follow international headway (Michael Porter, 1980). Through this assignment Porter’s matrix and his proposals are about to be presented as a helpful tool for any enterprise that whishes development off its country’s borders. Two major companies, worldwide known for their products in beverage market segment are about to ...view middle of the document...
Enterprises own different positions in the market depending on their marketing strategy. Michael Porter (1980) suggested 4 strategies that could be followed by enterprises, three of which are profitable and successful. Forth strategy usually leads to failure thus it doesn’t been taken into consideration. According to cost leadership theory, the firm is trying to achieve the lower possible cost in production and distribution facilities so that it could set the prices lower than those of the competitors, owning that way the highest market share (Michael Porter, 1980). Additionally, in a price war time, firm can maintain its profits while competitors will suffer looses. While the market matures and the prices decline, the enterprise will still be profitable while its cost production is already low. Companies using that kind of strategy can easily target broad markets (Sumit Kumar Chaudhuri, 2006).
Sententiously their strengths are:
• They have good access to the capital that is required to make a significant investment.
• Designing product skills so that manufacturing would be more efficient
• High level of expertise in production area
• Efficient distribution channels (Michael Porter, 1980).
Cost-leaders can face a number of dangers some of, are:
• There is a possibility that the competitor’s prices would get lower.
• If the firm has already low prices then the competitive advantage is lost and the firm face looses (Kotler, Armostrong, Saunders and Wongm, 2008).
Acting differentiative, M. Porter (1980) supports that attention into a very different product line should be paid. Using that strategy product’s leadership in the specific segment could be achieved. The idea in this strategy is that the customers should prefer the brand than the price (Sumit Kumar Chaudhuri,2006).
The Internal strengths of the company that follows such a strategy are:
• access to leading scientific research
• highly skilled and creative product development
• strong sales team
• Corporate reputation for quality on innovation (Michael Porter, 1980).
On the other hand the risk that might face a cost leading company is:
• The imitation and the possibility of changing customer’s preferences.
• Focused planning firms may some times achieve even greater differentiation in their segment (Sumit
Kumar Chaudhuri, 2006).
International markets cannot be ignored in times that the business environment continuously changes. Global markets are important when the local are matured and they are no more offering opportunities for development (Karen Asner,2006). Additionally, since the global trade becomes liberalized, firms are facing the external competitor in the home market more often than it used to be in the...