Global Industries Classification :

Analytically, following Jain’s approach, on the basis of industry, mobility barriers and sources of differentiation, global industries may be classified into:

1. Stalemate industry

2. Fragment industry

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3. Volume industry

4. Significant industry

Stalemate Industry :

It has the following characteristics:

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1. It is evolved to maturity.

2. Its product has become a commodity.

3. It has little score for differentiation.

4. It has small potential for competitive advantage.

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5. It has no further scale for economies of scale.

6. Paper, steel, petro chemiacals, intermediate chemicals, fertilisers and tyres are regarded as stalemate global industries.

7. Innovations in stalemate industries is mostly of process type.

8. MNCs in advanced countries operating under such stalemate industries seek to delocate to low cost countries to reduce output cost.

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9. For example, General Motors transferred radiator caps plant to TVS-Lucas in India on this count.

Fragmented Industry :

1. In this sort of industry, there are low entry and exit barriers.

2. There are a large number of local producers in fragmented industries.

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3. Man consumption – goods industries – bread, biscuits, printing, paint, shoes, photocopying, stationeries, soaps, furniture, garments, restaurants, processed food among others are included in this category.

4. Competition is high in fragmented industry.

5. Host country public does not like entry of foreign firms in fragmented sectors.

6. Niche type strategy is an effective strategy in fragmented industries. Producers find ways and means of product diferrentiation such as product attributes, quality improvement, characteristic differentials, after sales services and so on for customer focus to earn high profits with relatively lower capital investments.

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7. Bread, biscuits, chocolates, ice-creams, fast-food, soft drinks and such other consumer items having good market potential in a developing middle income country such as Malaysia or Thailand or in a low income but developing big country such as India or China attracts MNCs. As a result, domestic fragmented industries face tough competition in these fragmented sectors. To protect their own interest of domestic enterprises, the entry of MNCs is commonly criticised on the following counts:

1. reservation and protection for the SMEs which is the rim of industrial sector in a developing country

2. cultural distortions

3. preservation of employment

4. preservation of domestic wealth

Volume Industry :

It refers to the industries based on volume strategy in which return on investment are directed related to the sales or total market share.

1. Passenger cars, specific pharmaceuticals and drugs (e.g., serums), semiconductors chips and such other high-tech industries are designated as volume industries.

2. A volume industry is subject to both product and process type innovations. It is characterised with a focus on high R&D.

3. In the Asian region, Singapore, Malaysia and Thailand have large FDI in such volume industries. As a result these nations have progressed fast and become world’s largest exporters of products like chips, disk-drives and semiconductors. Now, China is also in the race. India can also be a good base for the FDI in volume industries, on account of its low factor cost, easy availability of required skilled labour and growing IT sector. A suitable industrial policy framework is warranted for the country in this regard.

Significant Industry :

It refers to crucial industry in creating nations’ unique competition advantage on a long-term basis. It is characterised with high technology and huge investment.

1. Bio-engineering, telecommunication, networking, computer software, defence goods, fibre optics, commercial aircrafts, space exploration, and such other technology intensive innovative industries are regarded as significant industries in the global arena today. These industries have large spin-off potential. Success in such industries can empower the nation to be a global leader. In industrial policy, agenda of a developing country with a vision should give a high priority to such industry. Moreover, the government investments should be undertaken as a national priority as the flow of FDI is unlikely to be pervasively large in this sector.

Walter and jain’s Model :

Walter (1981) and Jain (1994) observed distinguished relationship of Return on Investment (ROI) to size/market share of the industries, such as:

1. Stalemate industries have upward sloping. ROI come upto a limit corresponding to the market share or size of the firm. Economies of scale are nullified by the rising cost of logistics management after a point.

2. Fragmented industries ROI curve is disk shaped. Firms adopting high market share strategy fetch better ROI in comparison to those who do not do so.

3. The ROI curve of volume industries is steeply upward sloping. It suggests higher profits on account of high capital intensity – higher leverage effort caused by and relatively lessenompetition.

Significant industries have rising ROI slope but scattered in nature owing to a lot of spin­offs.

4. A global manager should not form a rigid mind and has to develop pro-active strategies, structures and systems with a continuous fine-tuning in the task of building the competbiw advantage of the firm. So is the case with a country’s policy make in achieving the national competitive advantage in global setting.