INSTRUCTIONS: Please RESPOND to this answer from the Point of view as a student. Use credible sources and respond as if you are a manager of a marketing agency. Tell this student what your marketing agency would think of each of these answers from a Management perspective:
At times I am a little frustrated that my detailed industry knowledge is within the military sphere. Mostly because the amount of contextual information required for an example difficult to write without going to many pages of history. On the other hand it gives me a chance to use some really cute examples of some business models that come from the military side. As I stated in another post until the mid to late 20th century if you were talking or writing about strategy you were talking about armies (and navies).
Barriers to entry are an interesting concept in reference to industries. The auto industry is a great example of having barriers, the last successful attempt to make a US Auto company was 1925, we see similar histories in other states. What changed is the ability to move goods, something that has little to do with the industry but effected it in a fundamental way. The idea is called Power Projection.
In the most simple terms Power Projection is the ability to show up in another country and impose your will by force. There are only two states that have any real global power projection ability, the US and to a lesser extent the UK. It is like an auto manufacturer, you can produce as many cars as you like at your factory but the barrier to entry to the US market is that you have to ship them across a fairly large pond, and do so at a cost that allows you to compete with the ones driven out of the local factory.
The great thing about the auto industry is that it is a direct benefactor of the technology of the first great power projection, also called WWII. In both cases a number of technologies, from communications to shipping millions of tons of machinery had to be done quickly and cheaply. So if you think about all the industries that are involved in getting your car to the lot and then the parts to repair it that becomes pretty complex. As the owner of a BMW I can tell you that the words ‘From Germany’ when uttered in the repair shop used to be the sign of having to borrow a ride for a week or two.
So why is the US the only country that maintains a large power projection capability. Strategically because it allows us to play in anyone’s pond we choose. Why don’t others, like China and Russia, have the same capability? Because the barriers to entry are so incredibly high, in terms of both hardware and expertise. It is not simply hulls and trains that are needed but the practice of making them all work together so that the millions of bits that need to come together in the right place at the right time. If we go back to the problem of ordering the right parts from Germany for my BMW, consider that at any one time less than a quarter of the Russian planes in Syria can fly. A nation’s ability to project power is more complex than any outsider would think, and expensive to maintain but more expensive to build from the ground up.
In the auto world BMW does not have to own information systems, transports and repair facilities, these are provided by outside industries. A ship that hauls BMWs to New York returns with Fords. This was not always the case in all industries, the rise of Standard Oil is an excellent example. The use of the Value Chain and VRINE model increasingly lead to these activities being split off as opposed to being internal to the company. There is a certain logic and success to this, however it would also be nice to force your competitor to pay you to bring cars to your market.
Power projection is interesting because it has a direct correlation to penetrating new markets. The concept of military force as a business maybe a clunky comparison but if you take the definition of a state a political science professor of mine used it becomes more elegant. “A state is a geographically defined entity in which a single political body has a monopoly on the use of force.” So power projection is just breaking an existing monopoly.