Marketing Strategy and Competitive Positioning pdf ebook

Internal market networks: this describes the reformation of major companies to break 
free of the restrictions of traditional hierarchies and multi-divisional forms, by organis-
ing into internal enterprise units that operate as independent profit centres. For example, 
at one stage General Motors reorganised rigid and inefficient component manufacturing 
units into eight internal market units, each specialised in an automotive system area and 

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CHAPTER 15 STRATEGIC ALLIANCES AND NETWORKS
able to sell its products on the open market as well as to GM, including sales to GM’s 
competitors in automotive manufacture.
● 
Vertical market networks , or marketing channel networks : reflect the traditional view of 
vertical channel relationships, but go further to recognise the focal firm that coordinates 
upstream supplier firms and downstream distributor firms. Often the integrator special-
ises in marketing functions and uses specialists for manufacture and distribution. Early 
forms included the ‘hollow corporation’ – for example, Casio, Nike and Liz Claiborne. 
In such networks, the typical pattern is that the integrator is the firm that owns the brand 
and specialises in the marketing function, while alliance partners are specialised resource 
centres providing some aspect of product or production technology. An example is pro-
vided by IKEA, the retailer of Swedish furniture, which successfully operates a global 
sourcing network of 2,300 suppliers in 67 countries, to get 10,000 products on the shelf 
at prices up to 30 per cent cheaper than traditional rivals.
● 
Intermarket or concentric networks : this is largely the province of the Japanese and 
Korean economies – the well-known keiretsu and chaebol ‘enterprise groups’ represent-
ing alliances among firms operating in a variety of unrelated industries. The intermar-
ket network involves institutionalised affiliations among firms operating in different 
industries and the firms linked in vertical exchange relationships with them. They are 
characterised by dense interconnections in resource sharing, strategic decision making 
and culture and identity. The centre may be a trading company – possibly functioning as 
the marketing arm of the network – associated with manufacturing affiliates, which in 
turn have large vertical clusters of subcontractors, distributors and satellite companies, 
and are often involved in technology alliances with competitors. For example, Toshiba 
has around 200 companies in a direct exchange relationship, and another 600 ‘grandchild 
companies’ below them.
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