strategic management ch 10
development
-a new and complementary source of competitive advantage -relies on differences across countries -modes for acquiring new capabilities
deepening
-an existing competitive advantage -uses differences across countries to either decrease cost or increase WTP
deployment
-deploy a home market competitive advantage in new geographic location. -strategy: replicating same source of advantage in home market across national markets -wedge stays the same but volume of sales increases -relies on similarities across countries
advantages of going global
-gain access to a larger market -gain access to low cost input factors -develop new competencies
the industries or products that distance affects the most
-ones with high linguistic content (TV) -ones related to national and/or religious identity (foods) -ones carrying country specific quality associations (wines)
deployment, development, deepening
3 generic competitive strategies
power distance, individualism, masculinity-femininity, uncertainty avoidance
4 main dimensions of culture
international strategy, multidomestic, global standardization, transnational
4 strategic positions in the integration responsiveness framework
Globalization hypothesis:
Assumption that consumer needs and preferences throughout the world are converging and thus becoming increasingly homogenous
Death of distance hypothesis:
Assumption that geographic location alone should not lead to firm level competitive advantage because firms are now more than ever able to source inputs globally.
Administrative and political distance
Captured in factors such as the absence or presence of shared monetary or political associations, political hostilities, and weak or strong financial institutions.
Geographic distance:
Does not simply capture how far two countries are from each other but also includes additional attributes, such as the country's physical size, the within country distances to its borders, the country's topography, its time zones, and whether the countries are contiguous to one another or have access to waterways and the ocean
Porter's Diamond Framework:
Explains why certain industries are more competitive in specific nations than others. 4 interrelated factors: • Factor conditions • Demand conditions • Competitive intensity in focal industry. • Related and supporting industries/complementors.
Global standardization strategy:
Strategy attempting to reap significant EOS and location economies by pursuing a global division of labor based on wherever best of class capabilities reside at the lowest cost
Integration responsiveness framework:
Strategy framework that juxtaposes the pressures an MNE faces for cost reductions and local responsiveness to derive four different strategies to gain and sustain competitive advantage when competing globally.
Multidomestic strategy:
Strategy pursued by MNE's that attempts to maximize local responsiveness, with the intent that local consumers will perceive them to be domestic companies
Transnational strategy:
Strategy that attempts to combine the benefits of a localization strategy (high local responsiveness) with those of a global-standardized strategy (lowest cost position attainable)
International strategy:
Strategy that involves leveraging home based core competencies by selling the same products or services in both domestic and foreign markets
Local responsiveness:
The need to tailor product and service offerings to fit local consumer preferences and host-country requirements
National competitive advantage:
World leadership in specific industries
multinational enterprise (MNE)
a company that deploys resources and capabilities in the procurement, production, and distribution of goods and services in at least 2 countries
factor conditions
a country's endowments in terms of natural, human, and other resources
CAGE distance framework
a decision framework based on the relative distance between home and a foreign target country along four dimensions (cultural distance, administrative and political distance, geographic distance, and economic distance)
foreign direct investment (FDI)
a firm's investments in value chain activities abroad
liability of foreignness
additional costs of doing business in an unfamiliar cultural and economic development, and of coordinating across geographic distances.
location economies
benefits from locating value chain activities in the world's optimal geographies for a specific activity, wherever that may be
competitive intensity in a focal industry
companies that face a highly competitive environment at home tend to outperform global competitors that lack such intense domestic competition
cultural distance
cultural disparity between an internationally expanding firm's home country and its targeted host county -differences in language, ethnicity, religion and social norms
4 interrelated factors in porter's diamond framework
factor conditions, demand conditions, competitive intensity in focal industry, related and supporting industries/complementors
disadvantages of going global
liability of foreignness -loss of reputation -loss of intellectual property
Economic distance:
o Wealth and per capita income of consumers is the most important determinant of economic distance o Rich trade with rich o Poor trade with rich
global strategy
part of a firm's corporate strategy to gain and sustain a competitive advantage when competing against other foreign and domestic companies around the world.
demand conditions
specific characteristics of demand in a firm's domestic market
natural culture
the collective mental and emotional programming of the mind that differentiates human groups
globalization
the process of closer integration and exchange between different countries and peoples worldwide, made possible by falling trade and investment barriers, advances in telecommunications, and reductions in transportation costs.
when does distance increase between two countries
when there are different languages, ethnicities, religions, social norms, dispositions -lack of connective ethnic or social networks -lack of trust/mutual respect
