Question

1. Pick an established rival of a firm named in this case—for example, Steinway for Pearl River or Avon for Natura. Do some research to understand their resource similarity and market commonality between the pair of rivals (such as Avon versus Natura). Using the competitor analysis framework in Figure 13, predict what will happen to their competition in the home country of the established rival, the home country of the emerging challenger, and another third-country market.

Answer 1

• Market commonality à when firms produce similar products and compete for the same customer à high market commonality
• Resource similarity à the extent to which the firms tangible and intangible resources are comparable to competitors in terms of both type and amount

Avon VS Natura

Avon (Market Commonality): Seller of cosmetics and beauty-related items (fragrance, cosmetics, apparel, home furnishing) Targets women Originated from New York, USA	Avon (Resource Similarity) Marketing technique à direct sales (but also uses website, catalogue, brochures, and door to door selling) Brand image à women empowerment Competitor à loreal, lakme, sunsilk, etc Implemented premium and competitive pricing strategy Products are manufactured in China
Natura (Market Commonality) Sells cosmetics, perfume, hygiene products, hair care products Targets women (including women of color) Originated from Sao Paolo, Brazil	Avon (Resource Similarity) Marketing technique à direct sales (hires unemployed women) About 70% of its products are plant-based (came from the Amazon region) Open to changes

Both brands have both high market commonality as well as resource similarity, making them fall in cell 4, with the highest intensity of rivalry. Due to the intense competition, it has been reported that Natura is buying (acquiring) Avon.