Colegio de San Juan de Letran

Name : LAZO, MYLES N. Course : ENT112 Date :

Instruction: Briefly discuss how global firms compete with local firms
From what I have read, it is emphasized that big global brands in the consumer-packaged goods
market are now facing a competitive wake-up call in some surprising places including India, Indonesia,
China, and Brazil. Executives of well-established businesses in this field realize that the alarm bell has
been waking them for some time as they have lost ground to smaller, more local brands—but it has
proved difficult to respond effectively.
Emerging markets have become strongholds for major consumer-packaged goods (CPG) brands
such as Avon, Colgate, Olay and Axe which are sponsored by large, well-known firms. In Indonesia,
China, and India, the industry has grown at about 9% per year over the last 10 years, with Brazil rising at
about 3% per year. Yet major "power brands" have lost market share to smaller rivals. Their poor trend is
getting worse in Indonesia and China. According to Accenture study, in the last 10 years, the top three
global consumer products brands have lost more than 5% of their share in three of these four countries.
Local brands have influence in today’s markets. Note that in 2017, 75% of the top 3 brands in the
categories and countries we considered were small, recent or local brands. Products like Chando facial
care in China or Vini deodorant in India have reached the top ten of those markets within five years of
their entry. Huge consumer brands are working to better grasp what is driving this development in
order to perform more efficiently. Small consumer brands are ideally designed to manufacture hyper-
targeted products and sell them locally. Global supply chains, organized to make and transport vast
quantities of more narrowly desirable goods, are, by contrast, unyielding. Small businesses are casting
limited testing nets and are acquiring real-time, direct insight into (and feedback from) niche customer
segments. They rapidly use this unfiltered knowledge to create and optimize hyper-relevant goods. Big
R&D processes designed to determine the mass need are, by contrast, cumbersome.
And smaller businesses are making excellent use of social media and customer interaction on the
field. They do not need the "quality stamp" that comes with the backing of a long-established global
business; customers themselves are building brand loyalty in real time in their feedback, establishing a
new strategic arena in which smaller offerings will succeed by word of mouth.
In order to succeed in this modernized marketplace, global companies are working hard to
become more agile and cultivate the ability to establish more intimate and trustworthy relationships
with smaller groups of customers. They need to be what we call "living businesses"—smart
businesses that use data to deeply consider, predict and respond to smaller segments of customer
demands, and to change as consumer needs evolve.
A study and work indicates three distinct ways in which big, long-established global firms are
using to compete better with small, highly oriented local brands.
 Use of smaller local products in the product mix and embracing the added uncertainty that
comes with it—While large incumbents owe their size to top companies, they create hybrid portfolios
that include small, oriented, local brands alongside their main global brands to win in the future.
Importantly, although these brands may remain smaller than their larger siblings, recent expectations
indicate that they will eventually contribute greatly to the overall growth of the business. Global
companies strive to be equipped to accept the organizational challenge that comes with larger, more
varied product offerings.
In order to sustain their newly dynamic portfolio, large brands position global assets at the
disposal of small local brands. Most major corporations have worked hard to standardize corporate
processes and build streamlined organizational frameworks to maximize economies of scale
through a wealth of core properties i.e. product creation, engineering experience, delivery, customer
knowledge, talent and suppliers. One way to do so is with a modular approach—mixing and matching
assets as required to serve a new brand.
Examples of this technique can be seen from Coca-Cola and Unilever – Coca-Cola for its brand
of Zico coconut water, distributed in India, and Unilever for its Hijab Fresh moisturizer. As these
products were introduced, Unilever and Coca-Cola took global distribution power and R&D to these
markets to introduce these brands rapidly, exploiting regional customer insights. In order to succeed in the
future, this kind of dexterity would be required.
Changing assumptions about the lifecycle of the brand and its loss. "Build brand equity for
the long term" has been, and understandably so, a mantra for major global companies. With big up-front
investments, these companies have established identities that have survived decades and are still
important. However, this orientation also leads to intensive research, obsessive experimentation,
lengthy innovation times, and massive commitment in awareness-building and delivery. This leads
to product launch cycles that take 18-24 months. And it produces a risk-avoidance mentality, to the
point that several large businesses have not launched a new brand in years.
In order to compete against new start-ups, major corporations pushed towards having a more
experimental operation that tolerates more moving parts and pushes smaller brands out into the market
more efficiently. In doing so, the rate of brand loss would increase. They are focused on matching their
preferences with what small brands will offer. Hyper-targeted, highly important products could only
"peak" a few percentage points of market share. They increases profitability, and they are also prepared to
work for more in a shorter amount of time with greater versatility.
Bring thoughts back in the middle. Big companies perform different ways to be closer to local
customers and inspire teams on the ground to produce new ideas. They leverage their size by exploiting
their access to data in the service of those concepts and by encouraging accelerated testing, just as they
once developed an edge of multinational supply chains in the service of bringing major products to
customers. Often this occurs by M&A—we've had a number of instances where large corporations have
purchased small companies, their names and their talents in recent years, such as Unilever's purchase of
Dollar Shave Club and J&J's acquisition of OGX. However, the purchase of small labels is only one
option for big corporations. Encouraging the flow of new innovations internally by applicable external
collaborations is also crucial to the growth of these businesses.
The good news for incumbent global corporations is that they will still survive in a world that
increasingly favors small, concentrated, local brands if they are able to be nimble and connect with their
customers and end consumers. The winners will be those who make various improvements with pace and
determination.

BIBLIOGRAPHY
 Wright, S. (2019, February) “How Global Brands Can Respond to Local Competitors”
retrieved from https://hbr.org/2019/02/how-global-brands-can-respond-to-local-competitors

Taylor, E. (2004, September) “How Global Brands Compete” retrieved from

Thach, S., Unni, R. (2018, January) “Local Brands and Global Brands: Competition in
Emerging Markets” retrieved from
https://www.researchgate.net/publication/325750524_Local_Brands_and_Global_Brands_Competition_i
n_Emerging_Markets

Patterson, P. (2009, October) “How the local competition defeated a global brand: The case
of Starbucks” retrieved from https://www.sciencedirect.com/science/article/abs/pii/S1441358209000949

Farias, P. (2015, October) “Determinants of the Success of Global and Local Brands in Latin
America” retrieved http://www.scielo.br/scielo.php?script=sci_arttext&pid=S0034-75902015000500539