The Management Of The Coo Effect Case Study
2.4 The Management of the COO Effect and its strategies
The following chapter will explain, how the COO effect can be effectively managed both on company, industry and government levels. First, the COE will be presented as a source of competitive advantage together with issues of the current world, which led to this view. Then, positioning strategies will be discussed to provide the reader with an overview, how to strategically foster a positive image or which strategies should be applied to overcome a negative image.
2.4.1 The COE as a source of competitive advantage
As the current global market is more and more competitive and companies become more homogeneous, it is becoming more difficult to establish a sustainable competitive advantage, …show more content…
Especially developing countries face unfair obstacles when selling their products and services, because their country image possesses a negative association in the eyes of consumers. On the other hand, companies from developed countries were proved to be able to charge higher prices for their offerings (Prats, 2015). Also, Agrawal proved that the country of origin may lead to competitive (dis)advantage in terms of price premiums or discounts (Agrawal & Kamakura, 1999).
− Trend of global sourcing. Many multinational companies try to acquire competitive advantages through global sourcing options, especially to reduce their operating costs. However, this strategic decision cannot ignore the possible damage of a negative country of origin effect on their overall image (Brodowsky, Tan, & Meilich, 2004).
To be really able to achieve a sustainable competitive advantage, companies have to pursue an intended country of origin strategy. This strategy can be understood as a positioning or branding strategy, because it tries to develop and maintain a sustainable competitive advantage based on familiarity with either the brand or the country. Also, positioning strategies increase customers´ perception, help to gain competitive advantage, and improve superiority and value over other companies (Kleppe, 2002). In the following, some positioning strategies on both company and industry levels will be presented.
2.4.2 Positioning strategies on a company …show more content…
The negative country image may lose its significance if a company engages in ethical business practices. Exemplary, ethical consumption, voluntary simplicity, welfare programs, fair trade business practices, philanthropic endeavors, promotions of cause-related marketing or similar activities may influence consumers´ purchasing intentions and may even override the negative COE (Rashid, 2017).
− Signaling strategy. Another strategy, which allows mitigating negative country stereotypes, is signaling. Participating in international awards, providing customers with an extra guarantee, a warranty may lead to lower perceived risk and thus signal better country image (Brouthers, Story, & Hadjimarcou, 2008).
− Neutralizing strategy. Hiding the negative country label through neutralization it may be another option how to overcome negative image. Exemplary, some Asian companies, as for example Canon, Sharp or Citizen, pursued a very country neutral marketing strategies to overcome the relation to poor quality (Nebenzahl & Jaffe,
The following chapter will explain, how the COO effect can be effectively managed both on company, industry and government levels. First, the COE will be presented as a source of competitive advantage together with issues of the current world, which led to this view. Then, positioning strategies will be discussed to provide the reader with an overview, how to strategically foster a positive image or which strategies should be applied to overcome a negative image.
2.4.1 The COE as a source of competitive advantage
As the current global market is more and more competitive and companies become more homogeneous, it is becoming more difficult to establish a sustainable competitive advantage, …show more content…
Especially developing countries face unfair obstacles when selling their products and services, because their country image possesses a negative association in the eyes of consumers. On the other hand, companies from developed countries were proved to be able to charge higher prices for their offerings (Prats, 2015). Also, Agrawal proved that the country of origin may lead to competitive (dis)advantage in terms of price premiums or discounts (Agrawal & Kamakura, 1999).
− Trend of global sourcing. Many multinational companies try to acquire competitive advantages through global sourcing options, especially to reduce their operating costs. However, this strategic decision cannot ignore the possible damage of a negative country of origin effect on their overall image (Brodowsky, Tan, & Meilich, 2004).
To be really able to achieve a sustainable competitive advantage, companies have to pursue an intended country of origin strategy. This strategy can be understood as a positioning or branding strategy, because it tries to develop and maintain a sustainable competitive advantage based on familiarity with either the brand or the country. Also, positioning strategies increase customers´ perception, help to gain competitive advantage, and improve superiority and value over other companies (Kleppe, 2002). In the following, some positioning strategies on both company and industry levels will be presented.
2.4.2 Positioning strategies on a company …show more content…
The negative country image may lose its significance if a company engages in ethical business practices. Exemplary, ethical consumption, voluntary simplicity, welfare programs, fair trade business practices, philanthropic endeavors, promotions of cause-related marketing or similar activities may influence consumers´ purchasing intentions and may even override the negative COE (Rashid, 2017).
− Signaling strategy. Another strategy, which allows mitigating negative country stereotypes, is signaling. Participating in international awards, providing customers with an extra guarantee, a warranty may lead to lower perceived risk and thus signal better country image (Brouthers, Story, & Hadjimarcou, 2008).
− Neutralizing strategy. Hiding the negative country label through neutralization it may be another option how to overcome negative image. Exemplary, some Asian companies, as for example Canon, Sharp or Citizen, pursued a very country neutral marketing strategies to overcome the relation to poor quality (Nebenzahl & Jaffe,