Country specific competence and how to overcome that

My view is mostly limited to US and Indian market since I have stayed in both these countries only. My view on European offerings comes from the products that I see and from various articles that I read . Most of the examples are from Auto industry as that is my favorite.

Competence for any organization has its roots firmly in the country of origin’s culture and work ethics. The reason for this is every country has its strengths and weakness due to the situation it faces in that geography and depends much on the political leadership/History/Geography/Culture.

Look at some of common products and you will be able to sense the qualities of any other product from that same country.

Italy has been foremost in latest design so any Italian product is best in design be it super-cars, leather goods, shoes etc.

English craftsmanship is famous so all the good hand built cars from UK are somewhat sophisticated and the royal brands emerged there.

Small and efficient started in Japan so all Japanese tech products are highest quality (thanks to Deming).

Few people know about Russian products which are sturdy, practical and easy to repair mainly due to the communist ideology and harsh weather.

German technological superiority needs no introduction and that is evident in all German products- cars, OEMS, appliances etc coz people never settle for less and want the best in quality.

US products are practical and quality depends on the price of the product, people value price and willing to spend less if they get comparable quality at less price than the original high price tag brands, they are more risk taking in trying out new brands.

Today few can match India in managing Information technology and this goes back to the history of Indians knowing all about mathematics and being good at calculations. Also, Handiwork was also best historically in jewelry, hand-looms etc.

Switzerland is famous for watches and banking apart from tourism.

Sometimes political pressure and rivalry creates jointly developed products like Airbus spans across Germany, France and other EU specific nations to compete against Boeing from USA.

The Markets:-

Most of the US and high end western European markets are dominated by premium European/US or Japanese brands. Other Asian companies from China and Korea stared making inroads by learning from other countries and improving their technology.

However still there is a big market in emerging countries and Africa because as the society become more financially powerful, that creates markets for products that become in reach of this new consumers.

Strategy for beating the established Country specific brands.

1.      Copy the strengths and attack in the weak points of the competitor.

Example of this is Korean companies followed Japanese model in heavy industries and technology but started providing more value at the same or less price. Hyundai corrected its quality and then moved up the value chain by designing cars in Italy/Germany. In a market like US it slowly started upgrading its new brand Genesis that competes head-on with established German/Japanese luxury car brands, customers there are willing to try new brands because they see how much value one gets at lesser price.

2.      Right Products for the market-

German products are robust and over engineered. Sometimes the company loses focus on its auxiliary offerings and become sluggish in updating the technology, classic example is Salesforce from US raced past SAP CRM as it took advantage of slowness from SAP in providing an updated CRM solution that matched its versatility and user delight.

Historically during world war 2 German technology was superior to that of USA and UK, one German tank could easily blow up 5-6 US Sherman tanks without getting hit, but the tide of war changed due to the sheer numbers that US poured artileery in the continent, like 50k German tanks vs 500K US tanks. My point here is one need to access the market and the competitor every time.

In the same way you don’t need to match your competitor in technical capability always, you can still lead the market with what the mass markets require. Like Suzuki leads in India in car production even though the products are not sophisticated compared to other superior brands.

Korean companies lead in India when it comes to appliances even though US/German companies are also there because their pace of product development is much faster at an affordable price for the market.

3.      The exclusive customer approach- Some customers like me prefer products that are unique and not common in the market, the pros are you will stand out of the crowd whereas the cons is you will get low resale value as well as low serviceability in few cases.

When Dutch car manufacturer Koenigsegg decided to compete against the Italian super-cars it had a tough task, matching the technical prowess was one thing but gaining the racing heritage was very difficult. So it created a whole new segment- Hyper-car, there are only 2 hypercars in market today- Bugatti and Koinnisegg. It is for customers who don’t want to own any Italian supercar but need even better speed demon.

4.      Cult following factor- US pickup truck market is dominated by American truck manufactures Ford, Chevy and Ram.

Toyota/Nissan tried hard but still cannot match the sheer powerful lineup that US customers demand. German sophistication is too much so they are yet not able to put any product in the truck segment in USA.

Similarly, Jeep is unbeatable in Japan as there is no alternative to that cult brand.

5.      Be wary of the thin line of failure while copying-

When copying someone’s business model it is difficult to sustain long term if you cannot update as per market trends, for example Flipkart started in India way before Amazon and gained good market in e-commerce but ultimately Amazon is most preferred in India and Flipkart could not match the quality of sales/service and even product offerings.

6.      Buy if you cannot replicate- Prominent brands sometimes go on a period of loss due to lack of updates or various other factors, that is the right time to purchase those but then start reinventing the product lineup while keeping the brand essence intact otherwise it can fail.

Polaris motorcycles were not able to match Harley Davidson due to Cult factor so they purchased ailing Indian brand and now compete comfortably. Similarly Royal Enfield is unshakable in the sub 500cc segment in India and no Japanese, European or Indian brand is able to overcome it, even Harley.

Likewise Coke bought Thumbs-up in India and tried to kill it but it cannot replicate the demand so it had to reintroduce that with the same features (less sweet and high soda content).

Tata Steel bought Corus and NatSteel to gain inroads in Europe and Southeast Asia respectively on early 2000s.

But again this is not always successful because nurturing a different brand is not easy task, Oracle is know to acquire many products to improve its suite of ERP products but it was unable to nurture and improve itself that much as compared to SAP.

7.      Timing and market readiness is important- In developing nations the standard of living increases fast but you need to wait and continuously access the market on when to enter. Entering early increases losses, entering late also will affect sales. Right product at right time will do the trick and you can establish you brand against the competitors sooner, the art here is to capture the customer’s aspiration based on current demand and current products present in the market. Sometimes it makes sense to enter with a subsidiary or a new brand to invoke freshness in your offering.

IKEA entered India only when market was ready, the success failure is yet to determine in coming years as Ikea’s competitors are city specific local furniture manufactures only which are hard to beat. Ikea lacks the handiwork and artistic design that Indians need in their furniture , not to mention the cost factor, so it might not be able to succeed that well in India as compared to US/Europe.

MG and KIA entered India when market was ready for midsize SUVs and people were looking for newer options and they are successful in short span of time.

Summary - One must analyse the strengths and weakness not just by product but by the way of thinking of the company which is rooted somewhere in its country of origin.