Competitive Advantage within an International Context: The Basic Framework. Competitive Advantage within an International Context: The Basic Framework.[r]
(1)Global Strategies and the
Multinational Corporation
Global Strategies and the
Multinational Corporation
•
Implications of International Competition for Industry
Analysis
•
Analyzing Competitive Advantage within an International
Context
•
Applying the Framework
(1) International location of production
(2) Foreign market entry strategies
•
Multinational Strategies: Globalization versus National
Differentiation
•
Strategy and Organization of the Multinational Corporation
(2)The Internationalization Process
The Internationalization Process
International
Global
Industries
Industries
aerospace automobiles military hardware oil
diamond mining semiconductors
agriculture consumer electronics
Domestic
Multinational/
Industries
Multidomestic
railroads
Industries
laundries/dry cleaning investment banking hairdressing hotels
milk consulting
In te rn at io n al T ra d e
Foreign Direct Investment
(3)The Automobile Goes Global:
The GM Pontiac Le Mans
The Automobile Goes Global:
The GM Pontiac Le Mans
Design: Germany (by Opel) Brakes: France, U.S. Sheetsteel: Japan S Korea Stamping of body parts: S Korea Tires: S Korea Engines: 1.6 liter S Korea Windshield: S Korea 2.0 liter Australia Battery: S Korea Fuel injection: U.S. Wiring harness: S Korea Fuel pump: U.S. Radio: Singapore Transmission: Canada & U.S. Assembly: S Korea Rear axle: U.S. Marketing &
(4)Implications of Internationalization
for Industry Analysis
Implications of Internationalization
for Industry Analysis
INDUSTRY STRUCTURE
•
Lower entry barriers around national markets
•
Increased industry rivalry
- lower seller concentration
- greater diversity of competitors
•
Increased buyer power: wider choice for dealers & consumers
COMPETITION
•
Increased intensity of competition
PROFITABILITY
(5)COMPETITIVE
ADVANTAGE
THE INDUSTRY ENVIRONMENT
Key Success Factors
FIRM RESOURCES
& CAPABILITIES
Financial resources Physical resources Technology
Reputation
Functional capabilities General management capabilities
THE NATIONAL ENVIRONMENT
National resources and capabilities (raw materials; national culture; human resources; transportation, communication, legal infrastructure
Domestic market conditions Government policies
Exchange rates
Related and supporting industries
Competitive Advantage within an International
Context: The Basic Framework
(6)National Influences on
Competitiveness: The Theory of
Comparative Advantage
National Influences on
Competitiveness: The Theory of
Comparative Advantage
A country has a relative efficiency advantage in those products
that make intensive use of resources that are relatively
abundant within the country E.g.
•
Philippines relatively more efficient in the production of
footwear, apparel, and assembled electronic products than in
the production of chemicals and automobiles.
•
U.S is relatively more efficient in the production of
semiconductors and pharmaceuticals than shoes or shirts
.
(7)Revealed Comparative Advantage for
a Certain Broad Product Categories
Revealed Comparative Advantage for
a Certain Broad Product Categories
USA Canada W Germany Italy Japan Food, drink & tobacco 31 28 -.36 -.29 -.85 Raw materials 43 51 -.55 -.30 -.88 Oil & refined products -.64 34 -.72 -.74 -.99 Chemicals 42 -.16 20 -.06 -.58 Machinery and trans- 12 -.19 34 22 80 portation equipment
Other manufacturers -.68 -.07 01 29 40
(8)Porter’s Competitive Advantage
of Nations
Porter’s Competitive Advantage
of Nations
Extends and adapts traditional theory of comparative
advantage to take account of three factors:
International competitive advantage is about
companies
not countries—
the role of the national environment is
providing a
home base
for the company.
Sustained competitive advantage depends upon
dynamic
factors
innovation
and the
upgrading
of resources and
capabilities
The critical role of the national environment is its impact
(9)FACTOR CONDITIONS
DEMAND CONDITIONS
RELATING AND SUPPORTING
INDUSTRIES
STRATEGY, STRUCTURE, AND RIVALRY
Porter’s National Diamond Framework
Porter’s National Diamond Framework
1. FACTOR CONDITIONS—“Home grown” resources/capabilities more important than natural endowments.
2 RELATED AND SUPPORTING INDUSTRIES—Key role of “industry clusters”
(10)