MINISTRY OF EDUCATION AND TRAINING
UEH UNIVERSITY–COLLEGE OF BUSINESS SCHOOL OF
INTERNATIONAL BUSINESS–MARKETING
FINAL ESSAY
GLOBAL STRATEGIC MANAGEMENT
1. CHAPTER 2 – QUESTION 3: WHAT BENEFITS DO EMERGING MARKETS
CHAMPIONS GET FROM OEM CONTRACTS?
2. CHAPTER 5 – QUESTION 6: WHAT TYPES OF COMPETITIVE ADVANTAGE
DOES BEING A FIRST MOVER PROVIDE?
3. CHAPTER 6 – QUESTION 2: WHAT IS THE ‘MIDDLE-CLASS EFFECT’?
Student fullname : Lê Thanh Thúy
Student ID : 31221023398
Class : Global Strategic Management
Class ID : 23C1BUS50313902
Supervisor : Hoàng Cửu Long
Ho Chi Minh City, Friday, December 17, 2023
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TABLE OF CONTENT
I. CHAPTER 2 – QUESTION 3: WHAT BENEFITS DO EMERGING MARKETS CHAMPIONS GET
FROM OEM CONTRACTS? ...............................................................................................................................2
II. CHAPTER 5 – QUESTION 6: WHAT TYPES OF COMPETITIVE ADVANTAGE DOES BEING
A FIRST MOVER PROVIDE? .............................................................................................................................3
III. CHAPTER 6 – QUESTION 2: WHAT IS THE ‘MIDDLE-CLASS EFFECT’? ..................................5
REFERENCES .......................................................................................................................................................6
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I. CHAPTER 2 – QUESTION 3: WHAT BENEFITS DO EMERGING MARKETS
CHAMPIONS GET FROM OEM CONTRACTS?
First, let’s define the meaning of "Emerging markets". This is a term used to refer to an economy
that has significant economic growth and possesses some but does not include all the
characteristics of a developed economy. Emerging markets are countries that are moving from
the "developing" stage to the "developing" stage.
Next, about some definitions of OEM. OEM – also known as original equipment manufacturer,
is a term that often appears in the automotive and information technology industries. Originally,
the term referred to manufacturers associated with a company that produced a product that was
later resold or renamed by another company. However, through time, the meaning of this term
has been increasingly developed and expanded, applied in many different fields.
Besides, we have another definition of OEM item, this is an item manufactured by a factory or
enterprise specializing in performing tasks such as supplying products and manufacturing
according to the orders of the partner unit.
Take Apple and Foxconn, for example. Apple is the customer, the party responsible for research,
technology development and product distribution, Foxconn is the OEM company, the
manufacturer for Apple, based in many places such as Taiwan, China, India, ... (Vissarion Yfantis,
2018)
So, what are some benefits an Original Equipment Manufacturer (OEM) contract can bring to
emerging market champions? An OEM relationship typically involves a company (OEM)
manufacturing products or components that are then sold under another company's brand (buyer
or brand owner). Here are some potential benefits for emerging market champions when entering
an OEM contract:
• Generate revenue and profit: OEM agreements ensure a consistent source of income for
emerging market leaders by securing bulk orders, enabling stable financial planning and
increased profitability.
• Market Access: Partnering with established OEMs allows emerging market champions
to penetrate previously inaccessible markets, expanding their reach across different
regions and industry sectors.
• Technology transfer: Through OEM contracts, emerging market champions gain access
to innovative technologies, manufacturing processes, and technical expertise, enhancing
their capabilities and driving innovation.
• Economies of scale: Mass production of components or products for OEMs allows
emerging market champions to benefit from economies of scale, reduced costs per unit,
and improved overall cost efficiency and competitiveness.
• Brand identity and reputation: Partnering with reputable OEMs enhances the status and
credibility of emerging market champions, leveraging the trust associated with established
brands to enhance their own image.
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• Risk mitigation: Long-term OEM contracts provide stability, protecting emerging market
champions from market fluctuations and demand uncertainty, thus minimizing business
risks.
• Learning Opportunities: Partnering with established OEMs provides valuable learning
experiences, exposing emerging market champions to industry best practices, quality
standards, and efficient processes, contributing to continuous improvement.
• Supply chain integration: Tight integration with OEM supply chains allows emerging
market champions to optimize manufacturing processes, leading to more efficient
inventory management, and improved overall operational efficiency.
• Customization and innovation: The need to customize products in OEM contracts drives
innovation in emerging market champions, encouraging the development of new and
improved products or solutions.
• Global expansion: Engaging with international OEMs facilitates global expansion for
emerging market champions, providing international visibility, diversified revenue
streams, and global partnership opportunities.
In conclusion, OEM contracts offer diverse advantages to emerging market champions, including
financial stability, technological advancements, market expansion, and operational
improvements. These agreements play a significant role in accelerating the growth and
development of companies in emerging markets.
II. CHAPTER 5 – QUESTION 6: WHAT TYPES OF COMPETITIVE
ADVANTAGE DOES BEING A FIRST MOVER PROVIDE?
In the beginning, what does “a first-mover advantage” mean? It contributes to a company's
enhanced position relative to competitors by being the first to introduce new products in the
market. The concept of first-mover advantage highlights a company's ability to gain a
competitive edge as the pioneer in product introduction. The first mover is identified as the
company that secures a competitive advantage by being the initial entrant with a new product.
Notably, this advantage is applicable primarily to successful companies, as they can build
customer loyalty and establish a robust brand presence. The advantage gained by being the first
to market is termed as the first-mover advantage. In essence, the first-mover advantage denotes
the competitive edge attained by the first significant player in a market segment (Robert Purcell,
2023). Here are some ideas for the question:
• Market Leadership: Being the first mover allows a company to establish itself as a
market leader, influencing consumer perceptions and creating a lasting brand presence
that competitors may find challenging to surpass.
For instance, Amazon was the producer of the first online store for books that became
immensely successful. However, before the other entrants created their online bookstores,
Amazon had attained relevant brand recognition. Thus, this enabled Amazon to parlay its
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first – mover advantage into marketing various additional unrelated outputs. Based on the
2019 Forbes rankings, Amazon is the second most innovative firm globally. Furthermore,
the annual revenue of Amazon ranges at 280 billion dollars.
• Early Market Share: Quickly gain a significant portion of the market share, creating a
barrier for later entrants who must contend with an established player with a head start.
• Technological Leadership: The ability to introduce groundbreaking technologies or
innovations, positioning the company as a technological pioneer and setting the standard
for the industry. In the other hand, it also makes technology harder for replication by the
following entrants.
• Establishment of Network Effects: Benefiting from the establishment of network
effects, where the value of their product or service increases with more users, creating
standards in key countries right at the beginning of the product life cycle.
• Economies of Scale: Early entry allows a company to achieve economies of scale more
rapidly than competitors, leading to lower average costs of production and a competitive
edge in terms of pricing and profitability. Besides, building volume rapidly.
• Learning Curve Benefits: The experience gained as a first mover provides valuable
insights into market dynamics, consumer preferences, and operational efficiencies,
contributing to continuous improvement and adaptability.
• Customer Loyalty: Being able to build a loyal customer base early on, creating a level
of trust and satisfaction that makes it less likely for customers to switch to new entrants
when they eventually enter the market. Besides, being a first mover also makes a lasting
impression on customers.
• Regulatory Advantage: The influence over industry regulations or standards is a
strategic advantage for first movers, allowing them to shape the regulatory environment
to align with their operating model and potentially creating barriers for later entrants.
• Access to Scarce Resources: Early entry enables companies to secure critical resources,
such as prime locations, distribution, exclusive partnerships, and available talent, which
may become more scarce or competitive as the market matures.
For example, Walmart locates its stores within small town, preventing other firms from
venturing into the market.
• Strategic Alliances: First movers can establish strategic alliances and partnerships,
enhancing their market position through collaborations that later entrants may find
challenging to replicate.
While the advantages of being a first mover are significant, it's essential to recognize the
associated risks and challenges, including the high costs of innovation, market uncertainties, and
the need for ongoing adaptation to stay ahead of changing conditions. Competitors entering the
market later may also learn from the experiences of the first mover, leveraging that knowledge
to their advantage.
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III. CHAPTER 6 – QUESTION 2: WHAT IS THE ‘MIDDLE-CLASS EFFECT’?
The middle class illustrates a socio-economic group situated between the working class and
the upper class. Karl Marx, in his analysis of capitalism, categorized the middle class as part
of the bourgeoisie, (the "petit bourgeoisie" or small business owners), in contrast to the
working class, referred to as the "proletariat." Over time, the term "middle class" has
undergone a shift in meaning. Originally, it denoted individuals with the means to rival
nobility, but in contemporary usage, it aligns more closely with the upper segment of the
working class.
According to the Pew Research Center, the "middle class" is defined by an income range
between two-thirds and double the median income. The specific income boundaries for a
middle-class household vary based on family size and location, accounting for regional
differences in the cost of living. For a three-person household in 2020, this translates to an
annual income between $52,000 and $156,000. Individuals in the middle class typically have
enough disposable income for modest luxuries like vacations or dining out but often resort to
borrowing for significant expenditures such as homes and cars.
As per a 2022 analysis by the Pew Research Center, approximately 50% of Americans were
classified as middle class in 2021. This group comprises individuals employed in white-collar
professions, small businesses, or skilled trades. However, this percentage reflects a significant
decline from the 61% reported in 1971. This decline is attributed to factors such as the loss
of well-paid manufacturing jobs and the widening gap in economic inequality. (Adam Hayes,
2023)
"Middle-class effect" is a term that describes middle-class influence in society. For business
and strategic management, understanding the middle-class effect is important because it often
involves changes in consumer thinking, purchasing patterns, and other factors that can affect
a business's strategy.
Changes in the consumer mindset of the middle class may include an emphasis on quality,
the shopping experience, and a sensitivity to latest trends. Their procurement patterns can
also influence a business's access to the market and product promotion.
Business strategy needs to be flexible and adaptable to take advantage of opportunities from
changing priorities and desires of the middle class, while ensuring that products and services
meet the diverse needs of this audience. This may include both optimizing marketing
strategies and developing products to adapt to specific characteristics of the middle class.
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REFERENCES
Vissarion Yfantis. (2018, June 25). What Does OEM Mean and How Does It Work?:
https://www.parallels.com/blogs/ras/what-does-oem-mean/
Robert Purcell. (2023, November 21). First Mover Advantage | Definition, Strategy &
Examples:https://study.com/learn/lesson/first-mover-overview-advantages
disadvantages.html
Adam Hayes. (2023, June 25). Middle Class: Definition and Characteristics:
https://www.investopedia.com/terms/m/middle-class.asp
