International Marketing Philips and Matsushita Review and Theory October 5, 2007

Bradley’s View Professor Bradley from the University College of Dublin states the following: The firm’s ability to earn profits depends on the success of the firm in establishing competitive advantage over rivals. The attractiveness of the industry in which the firm competes.

Sources of Competitive Advantage Bradley further states that the two sources of competitive advantage are 1.The ability of the firm to reduce costs 2.Its ability to differentiate itself in ways that are important to customers

Bradley’s View on Profitability The firm’s ability to earn profits depends on 1.the success of the firm in establishing competitive advantage (CA) over rivals. 2.The attractiveness of the industry (IA) in which the firm competes. In terms of developing research hypotheses to test Bradley’s view on profitability we can use notation to formalize the definition: Profitability = f(CA, IA)

Sources of Competitive Advantage Bradley further states that the two sources of competitive advantage (CA) are 1.The ability of the firm to reduce costs (RC) 2.Its ability to differentiate itself (DI) in ways that are important to customers Likewise, using notation CA = f(RC, DI)

Substituting Profitability = f(CA, IA) CA = f(RC, DI) Therefore, Profitability = f(RC, DI, IA) But is there more to the definition?

Research Approach A good researcher will now take the next step and see who else has defined profitability and competitive advantage through a thorough literature review. The important steps would be 1.to record how other researchers define these terms 2.to study how researchers have measured these terms 3.To search for any inconsistencies in the methods that may lead to new research ideas.

Comparing Bradley to Bartlett at Harvard Bartlett says that competitive advantage must be built in layers that do not cause conflict with organizational capabilities. Example: 1.Philips needs to build global scale efficiency without losing national responsiveness 2.Matsushita needs to develop national responsiveness while retaining existing global efficiency

Bartlett Notation competitive advantage must be built in layers (AL) that do not cause conflict with organizational capabilities (OCC). CA = f(AL&~OCC) However, I am not sure how he defines advantage layers so I would have to pull his original research: Christopher A. Bartlett and Sumatra Ghoshal, Managing Across Borders: The Transnational Solution, (Boston, HBS Press, 1998).

International Marketing Research Process The idea is to keep searching for definitions and organizing these definitions until they form patterns – this is the reason for a literature review. 1.Look for inconsistencies 2.Look for established methods of measurement (valid and reliable)

After the Literature Review Once you have completed the literature review and know the issues and the organization of the research in a particular area then you write out the major research questions. For example, you may be interested in advantage layers and potential conflicts in organizations and come up with some new ideas to test.

Ideas to Test Advantage layers and organizational capabilities conflict will most likely occur with OEM companies. Advantage layers and organizational capabilities conflict are minimized through enterprise integration and the development of a good, solid, well designed ERP system ISO certification has minimal impact on advantage layers and organizational capabilities conflict

Relate the Ideas Back to the Literature Once you have the ideas, you have to link these research questions to existing literature to show that there is a reason why you believe your idea may be supported. Once you have created these links back to the literature, then you write out your formal hypotheses.

The Methodology Next, you have to be able to measure your variables and create a way to test the formal hypotheses. Typically, we re-use previous research methods and ways of measuring. Previous published research that is peer reviewed and current is considered to be valid and reliable. That is, unless your research issue is to demonstrate that an existing way of defining and measuring is inaccurate.

Other Ideas from the Philips and Matsushita Case Are there often discrepancies between strategic intent and organizational capabilities? Is the real challenge for management to build and embed the organizational capabilities to deliver the strategic intent or is it better just simply to execute the strategic intent? Is it better to focus on structural change (restructuring committees, reassigning managers, changing responsibilities, acquiring control) or better to create processes and relationships that break down barriers across organizational units?

Final Comments Developing strategic intent is the easy part, building organizational capability to deliver the intent is where most companies fall short. In building organizational capabilities a common cause of failure is to focus on structural change and underestimate the importance of bringing about process and cultural change. Build on rather than undermine the existing embedded organizational capabilities.