Strategic responses to low-cost-country competition

Over the recent decade economic growth of low-cost countries outstripped Western countries by far. Facing stagnant markets at home, Western firms have considered China, South-East Asia, and Eastern European countries as an opportunity for growth. But as these economies mature, new competitors also emerge with expansion strategies not only limited to their domestic markets. Thereby these firms benefit from lower factor costs, giving them a competitive advantage in exports destined for Western markets. Considering low-cost countries as a challenge rather than as an opportunity, the key question is: how should Western manufactures respond to increased low-cost-country competition? Yet this question remains largely unexplored despite its growing practical relevance. Based on a survey among 210 German and 213 US manufacturing companies this book summarizes the results out of a research project conducted at the WHU – Otto Beisheim School of Management in Germany. The content is directed to academics, managers, and consultants alike who are interested to learn more about: i) the set of strategies best suited in response to competitors from low-cost-countries and how these responses differ with respect to national differences between Germany and the USA, ii) those environmental and company characteristics that have a significant influence on the choice of the respective strategy, iii) environmental characteristics that either intensify or weaken the degree of low-cost-country competition in a specific industry, and iv) the impact on financial performance of the respective strategy chosen as a response to low-cost-country competition.