COMPETITIVE ADVANTAGES Janez Prašnikar January, 2011 Structure New business models in globalization Competitive advantages and strategic positioning Horizontal boundaries Vertical boundaries/The Transaction Cost Theory Diverzification How to analyze competitive advantage? Sustainable competitive advantage Complementary capabilities The traditional view (Ch 1, 8) Structure-Conduct-Performance Paradigm: Market structure → Firm’s behavior → Performance Picture: Rate of competition Number of suppliers LOW HIGH monopoly oligopoly monopolistic competition perfect competition Company C Company B Company A differentiated products HIGH LOW entry barriers 4 Market structure • Market concentration (number of sellers) • • Distribution of market shares • Measures of market structure – Let us order M firms on the market by their market shares S1 > S2 > … > SN > … > SM. – N-firm concentration ratio: CN is the market share held by N largest firms. 5 Market structure – Herfindahl index: HI (S i ) 2 i – Suppose there are two firms on the market. • They split the market 50:50, C2 and H ? • They split the market 90:10, C2 and H ? 6 Market structure 7 Market structure and competition Nature of competition Herfindahl index Intensity of price competition Perfect competition Usually below 0.2 Fierce Monopolistic Usually below 0.2 Depending on product differentiation competition Oligopoly 0.2 – 0.6 Depending on interfirm rivalry Monopoly Above 0.6 Light, if no entry threats 8 New business models Old economy: Firm-centric, Focus on Transformation Costs Inputs Transformation Outputs New Economy: Net-centric, Focus on Transactions Costs and Interaction Costs (Risks, Profits, Volatility, …) Inputs Transformation Outputs Transaction and interaction costs Source: Kleindorfer, 2005. Partnerships and Value Constellations Porter Value Chain (1985) Support Activities Firm Infrastructure Human Resource Management Technology Development Procurement Inbound Operations Outbound Marketing Service Logistics Logistics & Sales Total Cost Primary Activities Margin = Value To - Producing Buyers Value Core Competency Theory and Process Management Market Segments Strategy Development Technology & Core Knowledge Competitive Competencies Development Forces Key & Core Processes Re-Sourcing Internal SA JV BPO&O Source: Hamel and Prahalad, 1994. Value Chain Restructuring in 1980- 2010 period 2005 Global Fulfillment Architecture and Risk Management Distributors Suppliers Producers Customers & Retailers 1980s 1990s 2000s JIT ECR CRM 2010 Sustainable Management Lean Operations Pervade and Permeate the Entire Life of the Product, Including the Management of Product Recovery and Reverse Flows Some Emerging Net-centric Models The Strategic Partnership Model with Stable and Optimized Supply Chains (e.g., Contract Manufacturing in Electronics and Semiconductors) The Reconfigurable Model (possibly driven by a particular product or particular company) Contract Manufacturing Models All Value Chain Activities Outsourced Raw EMS Company Products Materials Parts of the Value Chain Outsourced Raw Outsourced Outsourced Outsourced Products Materials OEM, OED, OEB Functions and Competencies e-markets as primary intermediators Supplier Supplier Supplier Supplier Information Third Party B2B Market Sources Service Providers Buyer Buyer Buyer Buyer Buyer Buyer Buyers Source: Ravi Aron, 2002. Global Puzzle Company has to focus on what it is best at and let others fill other parts of the puzzle Global Puzzle Company has to focus on what it is best at and let others fill other parts of the puzzle Global Puzzle Company has to focus on what it is best at and let others fill other parts of the puzzle Outsourcing and Networking Publisher Retailer Manufacturer Distributor Value-Added Reseller End User Suppliers Corporate Financing Reseller Provider Structure New business models in globalization Competitive advantages and strategic positioning Horizontal boundaries Vertical boundaries/The Transaction Cost Theory Diverzification How to analyze competitive advantage? Sustainable competitive advantage Complementary capabilities Benchmarking and Strategic Management OBJECTIVES BENCHARKING BENCHARKING STRATEGIES MISSION OF COMPETITIVE OF STRATEGIES ADVANTAGE EVALUATION PROCESS BENCHARKING PERFORMANCE MISSION EXECUTION BENCHARKING REALISATION BUSINESS RESULTS Case 1: Benchmarking and Strategic Management The role of Benchmarking Benchmarking and Strategic Management • Benchmarking of Competitive Advantages • Benchmarking of Strategies • Benchmarking of Strategies • Performance Benchmarking Competitive Advantage and Value Creation (Ch. 13) A firms is said to have a competitive advantage in a market if it earns a higher rate of economic profit compared to the average economic profit in the industry Economic profit earned by a firm depends on the market conditions as well as the economic value created by the firm Competitive Advantage and Value Creation BUSINESS ENVIRONMENT BENEFIT POSITION ECONOMIC RELATIVE TO PROFITABILITY COMPETITORS VALUE CREATED RELATIVE TO COMPETITORS COST POSITION RELATIVE TO COMPERITORS Source: Besanko et al., 2003 HORIZONTAL BOUNDARIES: Sources of cost benefits (BDSS, Ch. 2) Economies of scale Declining average cost with volume Economies of scope Cost savings when different goods/services are produced “under one roof” Learning curve Cost advantage from accumulated expertise and knowledge L-Shaped Cost Curve Cost ($ per unit of output) AC Minimum Efficient Size Output Measuring Economies of Scale Measuring Economies of Scale Measuring Economies of Scope The degree of economies of scope measures the savings in cost can be written: – C(Q1) is the cost of producing Q1 – C(Q2) is the cost of producing Q2 – C(Q1Q2) is the joint cost of producing both products Sources of Economies of Scale/Scope Production related: Spreading of fixed costs Inventories Cube-Square rule Related to other functions: Purchasing Advertising R&D Other The Learning Curve Hours of labor per machine lot 10 8 6 4 2 0 0 10 20 30 40 50 Cumulative number of machine lots produced Economies of Scale Versus Learning Cost ($ per unit of output) Economies of Scale A B AC1 Learning C AC2 Output Transaction cost theory ( Prašnikar + BDSS, Ch 3,4) • The neoclassical model of profit maximisation • The sales maximisation hypothesis • Williamson’s model of managerial discretion • The Baumol multi-period profit maximising model • Marris’s multi-period managerial model • Satisficing and organisation coalition • A firm as an internal organisation. The theory of transaction cost Profit Maximization Firm C(q) Cost, R(q) A Revenue, Profit $ (per year) B 0 q0 q* π(q) Output (units per year) Profits are maximized when MC = MR. The sales maximisation hypothesis TC Profit, revenue, costs TR p0 p0' p 0 Q3Q1 Quantity Q2 Firm’s reaction on the rise of fixed cost Profit p 0 Q3 Q2 Q1 Quantity p1 p2 Firm’s reaction on the rise of variable cost Profit p 0 Q1 Q2 Q3 Q4 Quantity p1 p2 37 Firm’s reaction on the rise of a corporation tax Profit p2 p 0 Q3 Q2 Q1 Quant p1 38 Williamson’s model of managerial discretion Williamson argues that the most imporatnt motives of business men are the desires for salary, security, dominance and professional excellence. This can be gained by: additional expenditures on staff, S managerial perquisites, M discresionary investment, ID 39 Williamson’s model of managerial discretion Williamson argues that the most imporatnt motives of business men are the desires for salary, security, dominance and professional excellence. This can be gained by: additional expenditures on staff, S managerial perquisites, M discresionary investment, ID – U = f (S, M, ID) – Actual profit: p = R - C - S – Reported profit: pR = p - M = R - C - S - M – Minimum (post-tax) profit constraint: p0 – Discretionary investment: ID = pR - p0 - T Comparative static predictions Model Lump Fixed Output Variable Corporation sum costs tax costs tax tax (T ) ( FC ) ( Qt ) ( VC ) (t ) Profit 0 0 0 maximiser Sales maximiser Managerial discretion The Baumol multi-period profit maximising model Present value of expected profit growth PV(TR) PV(TC) PV(p) 0 Rate of growth (g) The Marris model: Supply growth curve, demand growth curve and equilibrium growth (B) profit Supply-growth curve A B Demand-growth curve 0 Rate of growth (g) 44 The Marris model: Shareholders equilibrium and managerial equilibrium. Managerial indiference Shareholders indiference curves Valuation ratio Z curves profit B’ M3 I3 M2 I2 M1 I1 Demand-growth curve 0 growth 0 growth Satisficing and the organisational coalition Since managers have imperfect knowledge on which to base decisions, they act with “bounded rationality (Simon). Business men “satisface”, they do not maximise search behavior (rebalancing). If aspiration levels are not achieved, the managers become apathetic and aggressive. • Firms are composed of individuals who make up the “organizational coalition” (Cyert and March). For the firm, as an organisation, to remain in existence, the coalition members must be satisfied with less than their maximum objectives since the resources are not available to satisfy them all. Organizational slack: • 1) capacities are not fully utilised; • 2) the finger decision-making rule; • 3) a firm is a nexus of contracts Decision making by committee and Arrow’s impossibility theorem V = M + P + F • M = marketing manager’s sub-goal (sales • maximisation) • P = production manager’s sub-goal (cost • minimisation, specialisation on a narrow group of products) • F = finance manager’s sub-goal (capital outlay • minimisation, minimal inventories) 1st choice 2nd choice 3rd choice Marketing manager M P F Production manager P F M Finance manager F M P A firm as an internal organisation. The theory of transactions costs A firm is a nexus of contracts (Cyert, March). The firm is embracing both external market relationship as well as internal contracts (Coase, 1937). Coase Theorem The parties to any contract have value maximisation as an objective. If they bargain efficiently, if they bargain until there is no further possibility of mutual benefit, the parties draw up a contract which maximises the aggregate value (Coase, 1960). Land use rights awarded to Cattle farmer Grain farmer Profits on cattle Cattle will be Cattle will be farmed. Cattle £1,000 farmed earning farmer will pay grain farmer a Profits on grain cattle farmer rental of > £600 and < £1,000 £600 £1,000 Profits on cattle Grain will be Grain will be farmed earning £600 farmed. Grain grain farmer £1,000 Profits on grain farmer will pay £1,000 cattle farmer a rental of > £600 and < £1,000 Transaction costs fall into two main categories coordination costs: outside the firm (costs of using the price system) within the firm (transmission of directions downwards and gathering and trasmissions of informations upwards) motivation costs: information asymmetries imperfect commitments (Bosch: Kolektor) Transaction dimensions Specific assets Frequency and duration Complexity and uncertainty Difficulty of measuring performance Connectedness to other transactions Bounded rationality and strategic behavior Economic subjects attempt, within the limits of the information available to them, to achieve a satisfactory level of performance Since each is attempting to satisfice, or optimise within constraint of information, strategic behavior is ecpected Pre- contractual opportunism and adverse selection Pre-contractual opportunism is a result of informational asimetries. When the costs and benefits of different plans are known to one party alone or when the likelihood of different possible outcomes are private information, these informational asimetries can prevent any agreeement. IF ASSYMETRIC INFORMATIONS, THE INEFFICIENT OUTCOME IS AVOIDED WHEN BENEFITS OF EXCHANGE ARE LARGE ENOUGH FOR BOTH PARTNERS. Market for lemons Informational asymmetries cause adverse selection the market for lemons The Market for Used Cars Buyers and sellers can distinguish between high and low quality cars There will be two markets PL Initially, the supply of low and high quality SH are as shown... SL PH PL …and the demand for high and low SH quality cars are 10,000 as shown. DH SL 5,000 DL 50,000 QH 50,000 QL Buyers will find it difficult to PL determine quality. They lower their expectations of the average quality of used cars. Demand for low SH and high quality used cars shifts to DM. 10,000 DH SL DM 5,000 DM DL 25,000 50,000 QH 50,000 75,000 QL PH PL The increase in QL reduces expectations and demand to DLM. SH 10,000 DH SL DM 5,000 DM DLM DLM DL 25,000 50,000 QH 50,000 75,000 QL PL The adjustment process continues until demand = DL. SH 10,000 DH SL DM 5,000 DM DLM DL DLM DL 25,000 50,000 QH 50,000 75,000 QL With asymmetric information: • - Low quality goods drive high quality goods out of the market. • - The market has failed to produce mutually beneficial trade. • - Too many low and too few high quality cars are on the market. • - Adverse selection occurs; the only cars on the market will be low quality cars. The Lemons Problem - applications Medical Insurance – Question • Is it possible for insurance companies to separate high and low risk policy holders? – If not, only high risk people will purchase insurance. – Adverse selection would make medical insurance unprofitable. Asymmetric Information and Daily Market Decisions • - Retail sales • - Antiques, art, rare coins • - Home repairs • - Restaurants • Question – How can these producers provide high quality goods when asymmetric information will drive out high- quality goods through adverse selection? – Answer – Reputation – Screening – Signaling – Quaranties – Standardized supply (Pizza Hut) Post-contractual opportunism and moral hazard Post-contractual opportunism is an ex post concept and refers to opportunistic hidden action occuring after contracts are entered into realisation. Moral hazard occurs when the party to be insured can affect the probability or magnitude of the event that triggers payment. Determining the Premium for Fire Insurance Warehouse worth $100,000 Probability of a fire: .005 with a $50 fire prevention program .01 without the program Moral hazard in the real life Examples Partnerships team work (job shirking) Re-contracting and hold-up How to proceed against moral hazard? controllers P-A problem hostages franchising Transaction costs and the modern corporation Te rise of a modern corporation is explained by the transaction costs (Chandler): First mover advantage Oligopoly power and geographical expansion Investments in physical assets, marketing and management Diversification Divisional organization (M-form) supplemented centralized organization (U-form) and holding organization (H-form). Picture 9: The Divisional firm CENTRE DIVISION 1 DIVISION 2 DIVISION 3 VERTICAL BOUNDARIES (BDDS, Ch. 5,6) The Position of the Firm in a Vertical Chain • For each step in the vertical chain the firm has to decide between market exchange and vertical integration • The degree of vertical integration differs – Across industries – Across firms within an industry – Across transactions with in firm Benefits and costs of using the market A. Benefits of using the market B. Costs of using the market 1. Economies of Scale 1. Coordination Problems 2. Agency and Influence Costs 2. Leakage of Private Information 3. Transactions Costs Differential Agency and Technical Efficiency $ k** T k k* A C Case 2: Nucleon • Case allows us to explore common manufacturing strategy dilemma-make or buy decision • This dilemma is presented on the case of small biotechnological company Nucleon that has to decide whether or not to V.I • The purpose of this case is to present how to methodologically approach such a problem • Questions: 1. Develop a proper decision tree 2. Develop a table with pros. and cons for a. phase I&II b. phase III 3. Calculate Pilot manufacturing + V.I. DIVERSIFICATION (BDSS, Ch. 7) • Firms can diversify in different ways – They can develop new lines of business internally – They can form joint ventures in new areas of business – They can acquire firms in unrelated lines of business Strategic styles of diversified enterprises Multidivisional Firm CENTRE DIVISION 1 DIVISION 2 DIVISION 3 Strategic management styles Largely corporate Centralized High corporate STRATEGIC PLANNING Planning influence STRATEGIC CONTROL Low corporate FINANCIAL CONTROL Holding Largely Company business Flexible strategic Tight strategic Tight financial Control influence Rationales for diversification 1. Economies of scale and scope 2. Financial synergies 3. Economizing on transactions costs 4. Managerial self interest SCALE AND SCOPE ECONOMICS: Nokia sales by region 1988 Other Other W countries Europe 13% countries 40% Finland Other nordian 30% countries 17% 1998 Asia/Pacific 21% Other America European 21% countries Other Finland 52% 2% 4% SCALE AND SCOPE ECONOMICS: Norwegian School of Management • One of the largest business schools in Europe • 18000 students, 9000 part-time students • 750 fully employed, 750 part-time employed • revenue: 100 milions ECU, 11% from the state • international network BI Norwegian BI Norwegian School of School of BI Oslo Marketing Retailing BI Nordland BI Lithuania BI Bergen BI Shanghai BI Centre for Graduate BI Stavanger Net Based Education studies BI Agder BI Centre for Financial Education RESEARCH Executiv BI Tromsø BI Kristiansund Under- e graduate BI Trondheim BI Møre studies school BI Telemark BI Østfold BI Buskerud BI Vestfold BI Skedsmo BI Gjøvik International network to exchange students and professors 8 61 5 16 1 4 Europe 1 9 9 2 6 3 4 2 7 1 8 1 3 3 2 FINANCIAL STRATEGIES: Financial markets FINANCIAL MARKET (broad term) MONEY MARKET CAPITAL MARKET Bilateral credit Open market Bilateral credit Open market agreements (tradable agreements (no (securities: bonds (non tradable) securities) securities) and shares) Interbank market Secondary Primary market market Internal financing Cost of ) S(W1 S(W2) Funds r D Wo W 1 Ko K1 K° Capital Stock Figure 1. Informational Imperfections and Underinvestment Case 3: Kolektor • The period before 2000: – Single product development – The role of internal financing – Internal growth – Building capabilities in production of commutators • The period after 2000: – The need for diversification – Internal growth and acquisitions – Complementary competencies – Related diversification Structure New business models in globalization Competitive advantages and strategic positioning Horizontal boundaries Vertical boundaries/The Transaction Cost Theory Diverzification How to analyze competitive advantage? Sustainable competitive advantage Complementary capabilities Competitive Advantage and Value Creation Competitive Advantage and Profitability: Evidence How to analyze competitive advantage 2 VIEWS ON ORGANIZATION Resource-based view Activity-based view Organization as a Organization as a system collection of resources: of activities: Attributes of the firm that could Processes that deliver value to not be varied in the short run customers Physical resources (plants, locations), intangible assets Procurement, logistics, (patents, brands), knowledge, production, marketing, sales … organizational culture, composite resources … Where is the “root” of competitive advantage: in company’s resources or activities? Porter’ s tools (BDSS, Ch. 12) Support Activities Value What buyers are willing to pay Primary Activities A distinct strategy is needed for each business HIT Case Threat of entry Competitors Guests/Customers Limited No. of Concessions Ca’Noghera Purpose of visit and restricted investments Casino Austria ↑potential of Italian market (legislation) New competitors (theme parks) bipolarity Low entry barrier for getting Low replacement cost, high a license customer power→ demand price Threat from competition sensitive Lower entry barriers for narrowly focused guests High entry barriers for widely Economic power of focused guests (location) customers Power of the state Threats from substitute products Tax legislation in Slovenia Gaming tax-proportional Concession fee-progressive→ Rivaliry between firms Substitute products negative impact on investment in Location Broader: all forms of free time activities expanding of business Extent of differentiation (purpose of Narrow: classical gambling, gambling Effective use of concession fee in visit) on the internet, slot machines outside local community Benefit vs price casinos Effect of Casino Venice on competitiveness of HiT P P0 P1 P2 Dt DHIT AC’’ AC’ MC AC D’HIT MRt MC’ MR’HIT MRHIT Source: Prašnikar et al., 2002. Q2 Q1 Q0 HIT covers: 99 Smaller investment captures: 100 Big investment captures: 101 Cournot After Tough Commitment (BDSS, Ch. 9) 102 Zara Case Word-of- Cutting- mouth edge fashion at marketing and moderate price repeat buying Widely and quality popular styles Customers chic but Very cost- frequent conscious Little media Global team product advertising of trend- changes spotters Advanced production Production machinery Extensive in Europe use of store sales data Prime store Tight Very flexible locations in high JIT coordination with production traffic areas delivery 20 wholly- system owned factories Fit is about leveraging what is different to be more different Source: Zara Case, 200?. Structure New business models in globalization Competitive advantages and strategic positioning Horizontal boundaries Vertical boundaries/The Transaction Cost Theory Diverzification How to analyze competitive advantage? Sustainable competitive advantage Complementary capabilities Sustainable Competitive Advantage (BDSS, Ch. 12) Competitive advantage is sustainable if it persists despite competitors’ efforts to duplicate it or neutralize it Sustainability can occur in two ways Firms may differ with respect to resources and capabilities and the differences persist Isolating mechanisms (analogous to barriers to entry) may work to protect the competitive advantage of firms Sustainable Competitive Advantage DIFFERENCES OF RESOURCES AND CAPABILITIES Scarce resources and capabilities that are critical for value creation can be imperfectly mobile and cannot be acquired in the open market: Resources may be non tradable (Example: Customer loyalty built through a frequent flyer program) Resources may be relationship specific (Example: Landing slots in an airline’s hub, Location of retail outlets) Sustainable Competitive Advantage ISOLATING MECHANISMS Isolating mechanisms are to firms what entry barriers are to industries Two distinct types of isolating mechanisms can be observed Impediments to imitation Early mover advantage Sustainable Competitive Advantage IMPEDIMENTS TO IMITATION These mechanisms impede the potential entrants from duplicating the resources and capabilities of the incumbent firm Five important types of impediments exist Legal restrictions Superior access to inputs/customers Market size and scale economies Intangible barriers Strategic fit Sustainable Competitive Advantage EARLY MOVER ADVANTAGE Four different isolating mechanisms fall under the category of early mover advantage Learning curve Network externalities Reputation and buyer uncertainty Switching costs Sustainable Competitive Advantage Benchmarking of Competitive Advantages SCARCE RESOURCES AND SUSTAINABLE BENEFIT CAPABILITIES COMPETITIVE ADV. ADVANTAGES CREATED ECONOMIC INTERNAL VALUE FACTORS IMMITATION BARRIERS & CONTESTABLE COST ADVANTAGES FIRST MOVER ADV. COMPETITIVE ADV. ECONOMIC BENCHMARKING OF COMPETITIVE ADVANTAGES PROFIT BUSINESS SPECIFICS OF BUSINESS ENVIRONMENT KNOWLEDGE INDUSTRY BROADER BUSINESS ENVIRONMENT Structure New business models in globalization Competitive advantages and strategic positioning Horizontal boundaries Vertical boundaries/The Transaction Cost Theory Diverzification How to analyze competitive advantage? Sustainable competitive advantage Complementary capabilities Capabilities and competencies (Rajkovič, Prašnikar,BDSS, Ch. 13) COMPETENCIES Sustainable and synchronized utilization of resources Spread across multiple products, markets, functions Network of capabilities CAPABILITIES Patterns of activities Utilize firm’s resources (physical, intellectual, cultural capital) Product and industry specific Technological, marketing and complementary capabilities Capabilities Utilization of scientific and technical knowledge for R&D of products/processes Capabilities Competencies Synergy/fit between technological and marketing capabilities; Practical & teoretical know-how, methods, new applications of existing knowledge procedures, experience Competencies Integration of specialties and functions, TECHNOLOGICAL exploitation of synergies, integration of capabilities competencies internal&external resources, generation of dynamic capabilities COMPLEMENTARY Competitive capabilities competencies advantage MARKETING capabilities competencies Capabilities Knowledge and skills that generate customer value and facilitate effective response to market challenges Competencies Marketing research, channel management, customer relationship management, forecasting and responding to competitors’ strategies Technological, marketing and complementary competencies in Slovenian companies Methodology Sample of 50 medium-sized and large Slovenian manufacturing companies Questionnaire tested in 12 companies (R&D managers, production line managers) Questionnaire structure Competencies Technological, marketing, complementary Industry characteristics Innovation performance The characteristics of the R&D function Business performance Competencies’ development Analysis of the segments Transfer of technological and marketing knowledge within the company Contribution to the industry trends Strategy explicitness R&D knowledge transfer between strategic partners TECHNOLOGICAL MARKETING COMPETENCIES COMPETENCIES Developmental processes Perception of changes in customer R&D advancement preferences and needs Acquirement Number & width of technological competencies of real time information about competitors Efficiency in predicting technological trends Product development COMPLEMENTARY Establishment and management of long- term customer relations Time needed to develop completely new product COMPETENCIES Time needed to improve product Establishment and management of long- term supplier relations Production: product quality Cost efficiency of product development Three segments of companies The leading firms Technology Followers with Followers with leaders strong weak Innovative performance competencies competences Technological competencies Marketing competencies Complementary competencies New product development Product quality Lag behind in The smallest Number of terms of the number of new available quality number of products and the technological innovations but poorest quality Innovative firms capabilities high quality of Lags behind in The best business Obtaining real new products it terms of performers time information does produce obtaining real on customers time information Low market Participation in on customers uncertainty and relationship strategic technological building partnership New product development lead times Case 4: Technological and marketing capabilities in Gorenje Inc. Questions: 1. Methodology for measuring technological and marketing capabilities 2. Application of the methodology to Gorenje 3. Complementary capablities Linear and interactive innovation models and the role of design (d) Linear innovation model (R) (D + d) BASIC RESEARCH APPLICATIVE DEVELOPMENT & PRODUCTION SALES BASIC SCIENCE APPLICATIVELLY RESEARCH DESIGN (Bohr) ORIENTED BASIC (Edison) RESEARCH (Pasteur) 6.2 6.0 6.1 Interactive innovation model with design (d) RESEARCH (R) Postojeće zalihe znanja (sveučilišta, instituti, tvrtke...) (D) Sales Potential Exploratory Extended KNOWING MARKETS: INVENTION Production MARKETING CAPABILITIES markets development development 6.3 6.4 (Market Brands) (d) Designers and product leaders Source: Forbes, Wield, 2000, Amsden, Tschang, 2003.