Lecture 1

Question 1

What is international strategy?

Answer 1

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

Question 2

What is Swapfiets’ (international) strategy?

Answer 2

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

Question 3

What is Apple’s (international) strategy?

Answer 3

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

Question 4

What is IKEA’s (international) strategy?

Answer 4

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)

Question 5

What are the 4 elements of international strategy according to Benito (2015)?

Answer 5

Why, where, what, how

Question 6

What does the WHY of internationalization refer to?

Answer 6

Internationalization motives (market seeking, efficiency seeking, resource seeking, strategic asset seeking)

Question 7

What does the WHERE of internationalization refer to?

Answer 7

Location choice (attractiveness of country, “distance” to home country

Question 8

What does the WHAT of internationalization refer to?

Answer 8

Marketing & sales, manufacturing, purchasing, extraction, R&D

Question 9

What does the HOW of internationalization refer to?

Answer 9

Export, licensing, franchising, joint venture/alliance, FDI (brownfield, greenfield)

Question 10

What are the WHERE, HOW, and WHAT issues?

Answer 10

Key location factors, key internationalization factors and typical sectors and industries, exemplar activities and key performance indicators

Question 11

What are the WHERE, HOW, and WHAT factors of market-seeking?

Answer 11

Size, purchasing power, level of development, proximity; brands, consumer goods, services; marketing and sales, market share, volume sold, sales growth

Question 12

What are the WHERE, HOW, and WHAT factors of efficiency-seeking?

Answer 12

Cost level, infrastructure, proximity; specialized investments, production of goods, back-office services; manufacturing, productivity, cost margin, profitability

Question 13

What are the WHERE, HOW, and WHAT factors of resource-seeking?

Answer 13

Resource availability, economic and political stability; supply security/stability, primary sectors, vertical supply chains; extraction and production, input cost, supply reliability, price-cost margin

Question 14

What are the WHERE, HOW, and WHAT factors of strategic asset-seeking?

Answer 14

Dynamic clusters, level of development, urban centers; pre-emption of competition, high-tech; research and development, innovations, patents, new product introductions

Question 15

What are the 7 (+ 1) conceptual foundations of international business strategy?

Answer 15

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)

Question 16

What are examples of FSAs (transferable and non-transferable)?

Answer 16

Physical resources, financial resources, human resources, upstream knowledge, downstream knowledge, administrative knowledge, reputational resources

Question 17

What are examples of transferable (non-location bound) FSAs?

Answer 17

Patents/IPs, money, brand image/name, machinery/technology, (advanced) knowledge

Question 18

What are examples of non-transferable (location-bound) FSAs?

Answer 18

Location (facility), network (e.g. suppliers), local brand names/awareness (e.g. Swapfiets –> needs to be developed abroad)

Question 19

Evaluate how location and non-location bound FSAs affect Swapfiets’ internationalization

Answer 19

Transferable: business model, technology
Non-transferable: brand name

Question 20

What should (according to Prahalad and Hamel) a core competency (FSAs) of companies do/have?

Answer 20

Provide access to a wide variety of markets, contribute significantly to the end-product benefits, be difficult for competitors to imitate

Question 21

What are location advantages?

Answer 21

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)

Question 22

What are (resource) recombination capabilities?

Answer 22

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)

Question 23

What are complementary resources of external actors and why are they important?

Answer 23

Market knowledge/access, government connections, complementary technology
Reason: cultural, economic, institutional and spatial ‘distance’ (meaning: missing success ingredients)

Question 24

What is bounded rationality and bounded reliability often referred to as?

Answer 24

Liability of foreignness

Question 25

What is liability of foreignness (bounded rationality and bounded reliability)?

Answer 25

When a firm has an a-priori disadvantage vis-a-vis a local firm, because of geographic, linguistic, economic, political, educational, institutional, cultural, etc., distances

Question 26

What is bounded rationality?

Answer 26

“Scarcity of mind”: imperfect assessment of a present or future state of affairs, thereby leading to incorrect beliefs

Question 27

What is bounded reliability?

Answer 27

“Scarcity of effort”: imperfect effort towards pre-specified goal achievement, thereby leading to incomplete fulfilment of promises

Question 28

What are advantages of foreignness?

Answer 28

When a foreign firm has an a-priori advantage vis-a-vis a local firm, because of cultural attractiveness (e.g. US fastfood, French wine & luxury goods, Italitan styling) and the possibility of arbitraging between different regimes (e.g. costs of inputs, taxes, environmental and labor standards)