Black out of the blue light: An analysis of Kmart store closing decisions

We investigate the spatial and economic factors that influenced Kmart's decision to close about 600 under-performing stores as part of its Chapter 11 financial objectives review in 2002 and 2003. We develop a theoretical model of retail store location and estimate an empirical counterpart using a Logit model to investigate the economic and spatial factors that influenced this decision, including the degree and proximity of competition in the local market as well as local demographic characteristics. In general, our empirical results offer statistical support for the accepted paradigm, but our model offers modest predictive ability as to which stores were actually closed. One interesting extension is a discussion of the potential implications of store closing on the local population, especially with respect to low-income households’ access to discount stores.     

The Strategic Importance of Retail Investment in Asia and Its Implications for the Metro Group in Asia

Abstract

The speed, intensity and reach of retailers' foreign expansion are rising. As more distant markets have to be chosen to stay competitive, the pressure to expand abroad is increasing. Often, changing or stretching the initial business model in order to comply with local market demand maintains the performance of the firm. This phenomenon of strategy alteration after market entry is examined, using the Metro Cash and Carry expansion into Asia as an example. First, the investment attractiveness of Asia as a region is examined. Second, there is a review of countries in Asia that are especially considered for business expansion. Finally, the question of how an overall internationalisation strategy or business concept of a company changes after market entry into Asia is explored.     

千惠便利店选址的实证研究

随着大润发和人人乐的进驻,已经汇集了沃尔玛、家乐福、麦德龙、新一佳等国内外知名企业的长沙零售市场,竞争将日趋白热化,对本地零售企业来说则意味着面临巨大的市场挑战,这使得我们不得不关注这连锁便利店这一行业的发展前景。本文通过千惠便利店选址的实证分析,总结出连锁便利店选址的规律和方法,从而促进长沙市连锁便利店的发展,使其生存和发展于激烈的竞争之中。     

Entry deterrence/accommodation with imperfect strategic thinking capability

Both through empirical research and laboratory experiments it has been shown that managers are heterogeneous in strategic thinking-i.e., not all the managers can accurately conjecture their competitors’ behavior and actions. In this paper, we examine the entry deterrence/accommodation strategy of an incumbent firm facing a potential entrant that may behave less strategically than the incumbent in the way of conjecturing competitors’ actions and beliefs. We adapt the Cognitive Hierarchy model to capture this heterogeneity among the managers of the entrant firm and the incumbent firm. Surprisingly, we show that the incumbent can deter entry by investing in expanding the market size and the competition may increase the incumbent’s incentive to invest in market expansion. If entry does occur, the market expansion in our model also benefits entrant comparing to the case without market expansion. This feature of our result sets it apart from the standard result in the entry deterrence literature, which tends to suggest that incumbent has to either over-invest in actions harmful to entrant if entry occurs. In our model investing in expanding the market size makes the entrant to update its belief about the incumbent’s strategic thinking capability downward and thus, decreases the entrant’s expected profitability, which in turn deters entry. Our research has important implications especially for emerging markets given that the lack of management talent is a particularly severe problem among local firms in emerging markets and multinational companies pioneer in the emerging markets with great market expansion opportunities have to face the potential entry of local companies.     

中国发电行业有效竞争状况实证分析

本文采用ISCP分析框架对发电行业的竞争活力进行分析,发现电力体制改革后发电市场集中度大大降低,但发电行业仍处于高度管制状态,垄断现象依然存在,竞争活力不足;对31家发电上市企业的实证分析后发现,大型发电集团由于产能扩张呈现规模报酬递减趋势,多数发电企业是规模不经济的。     

Interactive effects of marketing strategy formulation and implementation upon firm performance

Abstract

This study employed an integrative approach to investigate the influence of external business environment, strategy formulation, viability of marketing strategy, and strategy implementation upon firm performance. The findings show that while technological change and market competition negatively influence the credibility of the strategy, market attractiveness has a positive influence upon the viability of strategy employed. Moreover, market competition has a positive influence upon the involvement of marketing managers in terms of strategy making and that the presence of an innovative culture is strongly required in executing a strategic marketing plan. In addition, the study shows that the involvement of marketing managers in strategy making, which is strongly supported by an innovative culture, generates their commitment to the strategy, which positively influences strategy viability.     

我国大中型百货零售企业发展战略选择——模型与适用性分析

在零售市场竞争日益激烈、消费者需求变化趋势多样化的背景下,现有的百货企业为了谋求生存和发展就必须站在战略的高度考虑问题,不断地创新以适应迅速变化的环境。百货企业应当根据外部环境和内部条件,对各种可能的战略方向的可行性做出合理的决策。因此,必须构造一个百货企业发展的战略模型并对其适用性进行分析和评价。     

全球铁路建设市场及影响因素的协整分析

鼓励企业"走出去"直接参与国际市场竞争,是经济全球化条件下我国推进改革开放的一项重要战略.本文基于经济分析的视角,识别目前对全球铁路市场有较重要影响的主要经济因素,通过搜集计算相关数据,建立协整分析模型,分析全球铁路建设市场的发展趋势,并考察影响因素的作用机制,以期为我国铁路企业实施"走出去"战略提供参考.     

Small business growth through geographic expansion: A comparative case study

Although the small business sector as a whole is achieving phenomenal growth, an important concern in the field has been identifying the problems, challenges, and success characteristics associated with the prudent growth of individual firms. A strategy utilized by many small firms to achieve their growth objectives is one of geographic expansion. This approach involves expanding a firm’s business from its original location to one or more additional geographic sites, and is particularly well suited for firms that cannot expand in their present location but believe that their products or services may be appealing to consumers in other markets.Surprisingly, despite the prevalence of geographic expansion as a means of small firm growth, this is a neglected area of small business research. Although researchers have examined the common challenges associated with small firm growth, a small business that expands from one location to several locations is subject to a number of potentially unique challenges. For example, during the course of opening a new geographic site, a small business manager will be confronted with the task of managing an existing business and a start-up at the same time. The challenge created by this undertaking, along with the other challenges associated with geographic expansion, have not been specifically identified. An improved understanding of these challenges may help small firm managers maximize their changes of leading successful expansion efforts.As a result of the lack of research in this area, this study used a comparative case study methodology to develop a theoretical model of the antecedents of effective small business geographic expansion. The model was developed in two steps. First, a preliminary model of the antecedents of effective small business geographic expansion was developed from the existing small business growth literature. Second, using analytic induction, the preliminary model was compared with the experiences of five small businesses that have engaged in a growth strategy of geographic expansion for the purpose of developing a more thorough and more valid theoretical model. A unique attribute of the sample is that not all of the businesses have been successful in their expansion efforts. Two of the five small businesses included in the study have had failed expansions, providing us the rare opportunity to contrast failed expansion efforts against successful ones.The model that emerged from this approach supports the notion that geographic expansion involves a unique set of managerial challenges. The consistent evidence across the five case studies indicated that effective small business geographic expansion involves the following six major areas of concern: planning for growth, managing growth, reasons for growth, expansion site characteristics, a set of moderator variables, and expansion performance.Among the implications of the study is that the unique nature of the geographic expansion process adds a layer of complexity to firm growth that exacerbates the need for planning. Along with the normal challenges involved with adding structure to accommodate growth, a firm that engages in geographic expansion must do this in an unfamiliar location, where the market potential and legitimacy of the firm’s business concept is untested. The consistent evidence that emerged from the cases is that planning helps attenuate these challenges. In addition, the recruitment and selection of qualified personnel to staff expansion sites is a critical activity, along with networking in the expansion site locations to establish organizational legitimacy. Three variables were found to moderate the relationship between managing growth and expansion performance. Learning and flexibility were found to have a positive influence on the managing growth expansion performance relationship, whereas environmental turbulence was found to have the opposite impact. Finally, a complex set of relationships emerged from the study pertaining to expansion site characteristics. For instance, the evidence generated across the cases suggested that planning helps a firm develop a set of heuristics for expansion site selection, which helps a firm avoid placing a site in an undesirable location.     

Competition in local-service sectors

Although economically very important, local-service sectors have received little attention in the extensive literature on competitive interactions. Detailed data gathering in these sectors is hard, not only because of the multitude of local players, but also because key service dimensions are hard to quantify. Using empirical entry models in the tradition of Bresnahan and Reiss [Bresnahan, T.F., and Reiss, P.C. (1990). Entry in monopoly markets. Review of Economic Studies, 57 (192), 531–553, Bresnahan, T.F., and Reiss, P.C. (1991). Entry and competition in concentrated markets. Journal of Political Economy, 99 (5), 977–1009], we infer information on these sectors' degree of competition from the observed entry decisions in different local markets.We apply the empirical entry model to the video-rental market. Additional entries of video stores are found to significantly increase the level of competition. This occurs not only when a second player enters the market, but also in markets already characterized by two or more incumbents. Unlike the predictions of many economic models, we find this increase to be larger when the entry occurs in a duopoly than in a monopoly.Several control variables included in the model offer additional insights. As such, we find evidence of cannibalization from the upstream channel (movie theatres), but not from the downstream channel (premium cable). In addition, various socio-demographic characteristics of the trading zone, such as income and household size, are found to also have a significant impact on store performance.     

Product-Market Competition in the Water Industry: Voluntary Non-discriminatory Pricing

Since franchise bidding in the piped water industry is problematic due to extensive investment requirements, product-market competition or common carriage is a valuable alternative for the introduction of competition. This paper analyses product-market competition by considering a simple model of interconnection where competition is introduced between vertically integrated neighbouring water suppliers. The model contains water markets specificities such as local and decentralised networks and related difficulties of regulating access charges. Even without any regulation, we show that: (i) an inefficient incumbent will give up its monopoly position and lower the access price far enough so that the low-cost competitor can enter his home market; (ii) efficiency of production will rise due to liberalisation; and (iii) in contrary to prejudicial claims, investment incentives are not destroyed by the introduction of competition for the market. Investments of low-cost firms may even increase.JEL classification: L95, L43, D21, Q25     

Spatial Interaction,Spatial Multipliers and Hospital Competition

The hospital competition literature shows that estimates of the effect of local market structure (concentration) on pricing (competition) are sensitive to geographic market definition. Our spatial lag model approach effects smoothing of the explanatory variables across the discrete market boundaries, resulting in robust estimates of the impact of market structure on hospital pricing, which can be used to estimate the full effect of changes in prices inclusive of spillovers that cascade through the neighboring hospital markets. The full amount, generated by the spatial multiplier effect, is a robust estimate of the impacts of market factors on hospital competition. We contrast ordinary least squares and spatial lag estimates to demonstrate the importance of robust estimation in analysis of hospital market competition. In markets where concentration is relatively high before a proposed merger, we demonstrate that Ordinary Least Squares (OLS) can lead to the wrong policy conclusion while the more conservative lag estimates do not.     

中国百强连锁企业区域分布与区域扩张战略的实证分析

本文通过对百强连锁企业总部和店铺布局的考察,对中国连锁企业的跨区域扩张战略进行了初步研究。研究结果表明:中国连锁企业跨区域扩张正处于初级阶段,长三角、珠三角和环渤海地区是连锁企业及其店铺分布最密集的地区;连锁企业市场选择主要考虑城市市场环境、城市市场竞争和人力资源可获性、城市区位条件,以及城市市场的消费能力等因素;企业在跨区域扩张时主要采取由近及远、密集布局、逐步推进与重点进入、点面结合的店铺布局战略。     

Transforming an Online Portal Site into a Playground for Netizen

ABSTRACT

NHN was a laggard in the Internet portal business in Korea. When it entered the market, global giants such as Yahoo already had built a formidable presence in the Korean market, where leadership advantage was cited as a defining success factor. NHN was far behind not only because of timing but also because of information sources–which are the real root of their business–due to a lack of open web sites in Korea. They also discovered that an information portal has an inherent limitation in creating stickiness in its site. People click and leave the typical information portal upon finding their query results. However, the portal site business model is based on web advertisement, and performance depends on stickiness. This case explains how NHN beat the odds and became the leading portal in Korea. This company's innovative technology and customer-oriented strategy not only allowed it to surpass all of its competitors, but it also is revolutionizing the portal business both in Korea and globally.     

企业海外扩张的不确定性动态模拟

近几年,中国企业海外扩张提速,但企业海外扩张具有很大的不确定性。本文从新的角度出发,将企业海外扩张看作是对海外当地市场体系的一种扰动,并在此基础上结合生态学Tilman多物种共存模型提出企业海外扩张干扰模型。数值模拟发现,企业海外扩张具有明显的不确定性。市场占有率小的企业在海外当地市场中由于不能适应新环境无法成功扩张,被排斥在市场之外;若市场占有率足够大,在几年或几十年时间内就会在新环境中以指数增长形式扩张,致使当地企业倒闭,扩张成功;海外扩张企业不一定会一直持续下去,或许在百年或几百年时间内突然倒闭,当地市场体系又恢复到原来水平。本文的模拟同样也揭示了并购七七定律,显示了企业海外扩张中的不确定性。     

Wal-Mart Korea: Challenges of Entering a Foreign Market

Wal-Mart entered South Korea in late 1990s for its international expansion; however, IT had a major failure in this market and left Korea in 2005 as the American way of marketing did not translate well in Korea. Wal-Mart had critical shortfalls in enabling value exchange with the Korean consumers as the Korean consumers had significantly different taste and preferences compared to American consumers. Wal-Mart's Every Day Low Price (EDLP) strategy was not perceived to have the “value” in the minds of the Korean consumers, while its store locations were not strategically well positioned to create sufficient customer traffic. Wal-Mart's competitive advantage of low cost and low price was not suitable in the Korean competition and consumption context. Wal-Mart was not prepared to develop an effective localization strategy that might have stemmed from not having a clear projection of how much it was willing to invest and grow in this market. This Wal-Mart Korean case shows the importance of the compatibility of a corporate unique value proposition and strategic fit with the local market conditions.     

中国环境下的跨国企业市场与非市场战略、策略以及战术间的关系

许多管理者认为,在中国市场上非市场环境应该与市场环境受到同样的高度关注,跨国企业经营战略应该由市场(或竞争)部分和非市场两部分组成。因此,本文提出了一个市场与非市场战略、策略以及战术之间关系的概念性理论模型。该模型反映了跨国企业在中国市场上是如何进行贸易或投资选择、策略选择和制定实施战略的。     

An Empirical Evaluation of the Corporate Strategies of Nigerian Companies

ABSTRACT

As a result of substantial and contemporary changes in the Nigerian business environment, a study was designed to evaluate the corporate strategies used by Nigerian organizations to cope with these changes. Using the survey research methodology of questionnaire on a sample of 1280 corporate executives working in quoted companies in Lagos state of Nigeria, it was found that some aspects of operationalised grand corporate strategies were highly emphasized by Nigerian organizations, while some were not highly emphasized. For example, market penetration strategy was the most emphasized grand corporate strategy, while planned liquidation strategy was the least emphasized strategy. Also, the research revealed that local competition had the highest impact on corporate strategy, while foreign competition posed the least impact on the corporate strategies of Nigerian companies. Nigerian organizations were most effective in achieving profitability objective through their grand corporate strategies, while corporate social responsibility was the least achieved corporate objective via corporate strategies. These findings and their managerial implications were discussed along the salient issues of the research with respect to the research problem, research questions, relevant literature, managerial actions, and Other cognate issues.     

Chain-wide and store-level analysis for cross-category management

When planning and implementing their price-promotions strategy, retail chain managers face the typical dilemma of “thinking globally, but acting locally.” In other words, they must plan their strategy, keeping in mind the global chain-level impact of their promotions, to deliver on the commitments made to manufacturers. At the same time, managers need to make sure that the implementation of such strategy takes into account the fact that each store caters to a different market with different needs and responses to marketing programs. Moreover, the retail chain manager must consider not only how the promotion of a brand affects competing brands and total category sales, but also how it could affect sales in other categories.Our proposed model addresses these two important aspects of chain-wide and store-level cross-category analysis. First, our proposed factor-regression model takes store differences and longitudinal market shifts into account, thereby providing the retail chain manager with unbiased global, chain-level estimates. It also provides stable local estimates of cross-category promotion effects at the store level. Second, while allowing this flexibility, our proposed model is parsimonious enough over existing alternatives, making it particularly useful for chain-wide and store-level cross-category analysis.We apply the proposed model to store-level data from one retail chain, comparing it with several competing approaches, and demonstrate that it provides the best balance between flexibility and parsimony. Most importantly, we show that the proposed model provides useful insights regarding cross-category effects at the chain-level, for individual stores, and their patterns across stores.     

Opening the OTC drug market: The effect of deregulation on retail pharmacy’s performance

Governments in many countries have deregulated the retail pharmacy market to offer easier and broader access to pharmacy services. Such deregulation has spurred the competition by allowing the entry of new drug distribution channels. Current research leverages the Pharmaceutical Affairs Law revision introduced in South Korea in November 2012. The policy change allowed 24-hour convenience stores to sell 13 first-aid drugs directly to patients. This research investigates the causal effect of new retailers’ entry on incumbent pharmacies’ financial performance in terms of pricing, revenue, and market exit. The findings, based on the panel data of 2,795 pharmacies in a 36-month period from 2011 to 2013, suggest deregulation posed a significant competitive threat to incumbent pharmacies, resulting in lower average prices for the deregulated drugs, significant drops in revenue and accelerated financial failures. A significant heterogeneity in the treatment effect is found across pharmacies. Pharmacies with less loyal customers and poorer financial performance suffered more after deregulation. Our findings suggest that although such deregulation is intended to enhance consumers’ access to health care, opening the OTC drug market to new retailers may hamper consumers’ access to pharmacy services because of the exit from the market of underperforming incumbents.