Lecture 1 Flashcards
What is international strategy?
Matching a multinational enterprise’s internal strengths with the opportunities and challenges found in cross-border environments, while overcoming the disadvantages of being a foreign company, and/or capitalizing on the advantages of being a foreign company, and/or capitalizing on the advantages of having an international network
What is Swapfiets’ (international) strategy?
To build upon its unique resources and capabilities (business model, service excellence, distinctive branding, partnerships with suppliers) - “bicycles as a service”
Its international strategy relies on markets outside the Netherlands (focusing on cities). started with the cities with the biggest cycling infrastructure and culture, and is somewhat based on local adaptation
What is Apple’s (international) strategy?
To build upon its unique resources and capabilities (technology, brand, complementary products)
Its international strategy relies on global markets for smartphones and electronic products, global opportunities for sourcing and manufacturing - has a global network (even from the Netherlands), increasingly tapping into foreign knowledge and partnering, and similar offerings around the world
What is IKEA’s (international) strategy?
To build upon its unique resources and capabilities (design, unique business model, brand)
Its international strategy relies on global opportunities for design, sourcing and manufacturing (has a global network of suppliers), global customers, and a certain level of local adaptation (heat in India, balconies or size in China, size in USA)
What are the 4 elements of international strategy according to Benito (2015)?
Why, where, what, how
What does the WHY of internationalization refer to?
Internationalization motives (market seeking, efficiency seeking, resource seeking, strategic asset seeking)
What does the WHERE of internationalization refer to?
Location choice (attractiveness of country, “distance” to home country
What does the WHAT of internationalization refer to?
Marketing & sales, manufacturing, purchasing, extraction, R&D
What does the HOW of internationalization refer to?
Export, licensing, franchising, joint venture/alliance, FDI (brownfield, greenfield)
What are the WHERE, HOW, and WHAT issues?
Key location factors, key internationalization factors and typical sectors and industries, exemplar activities and key performance indicators
What are the WHERE, HOW, and WHAT factors of market-seeking?
Size, purchasing power, level of development, proximity; brands, consumer goods, services; marketing and sales, market share, volume sold, sales growth
What are the WHERE, HOW, and WHAT factors of efficiency-seeking?
Cost level, infrastructure, proximity; specialized investments, production of goods, back-office services; manufacturing, productivity, cost margin, profitability
What are the WHERE, HOW, and WHAT factors of resource-seeking?
Resource availability, economic and political stability; supply security/stability, primary sectors, vertical supply chains; extraction and production, input cost, supply reliability, price-cost margin
What are the WHERE, HOW, and WHAT factors of strategic asset-seeking?
Dynamic clusters, level of development, urban centers; pre-emption of competition, high-tech; research and development, innovations, patents, new product introductions
What are the 7 (+ 1) conceptual foundations of international business strategy?
Internationally transferable (non-location bound) firm-specific advantages (FSAs), non-transferable (location-bound) FSAs, location advantages, investment in - and value creation through - resource recombination, complementary resources of external actors, bounded rationality, bounded reliability, + advantages of foreignness (cultural attraction and arbitraging)
What are examples of FSAs (transferable and non-transferable)?
Physical resources, financial resources, human resources, upstream knowledge, downstream knowledge, administrative knowledge, reputational resources
What are examples of transferable (non-location bound) FSAs?
Patents/IPs, money, brand image/name, machinery/technology, (advanced) knowledge
What are examples of non-transferable (location-bound) FSAs?
Location (facility), network (e.g. suppliers), local brand names/awareness (e.g. Swapfiets –> needs to be developed abroad)
Evaluate how location and non-location bound FSAs affect Swapfiets’ internationalization
Transferable: business model, technology
Non-transferable: brand name
What should (according to Prahalad and Hamel) a core competency (FSAs) of companies do/have?
Provide access to a wide variety of markets, contribute significantly to the end-product benefits, be difficult for competitors to imitate
What are location advantages?
Factors that make a particular location attractive (e.g. knowledge in Silicon Valley, market/population size, purchasing power, Netherlands: position in Europe, infrastructure, transportation system, Germany’s suppliers and knowledge in the automotive industry)
What are (resource) recombination capabilities?
The artful orchestration of resources, especially knowledge bundles (e.g. Honda’s knowledge-sharing between US and Japan to excel), which - in the international arena - are built up through international experience (host-country specific experience, general internationalization experience)
What are complementary resources of external actors and why are they important?
Market knowledge/access, government connections, complementary technology
Reason: cultural, economic, institutional and spatial ‘distance’ (meaning: missing success ingredients)
What is bounded rationality and bounded reliability often referred to as?
Liability of foreignness
