Week 1 Flashcards
Liability of Foreignness
The vulnerability facing organizations that venture outside of their familiar territory.
- Regulations
- Caps on foreign ownership
- Cost of communication
- Cost of adaptation
- Learning curve
Paradox of Consistency
The forces that make it possible for an organization to compete successfully in their home market are not necessarily transferrable to other markets. NFL example
Sun Tzu
a Chinese general, military strategist, and philosopher who lived in the Spring and Autumn period of ancient China. Sun Tzu is traditionally credited as the author of The Art of War, a widely influential work of military strategy that has affected both Western and Eastern philosophy.
Military Strategy
- Grand Strategy
- Strategy
- Tactics
Grand Strategy (Military)
Advancing goals through war and peace. E.g.: containment of the USSR in the Cold War
Strategy (Military)
Art of winning a war. E.g.: “Europe first” strategy by US during WWII (Pacific theater not the priority)
Tactics (Military)
Art of winning a battle, e.g., which hill to take.
Grand Strategy (Business)
Choosing which advantage to build and where to deploy this advantage
Strategy (Business)
Positioning the firm with respect to what and to whom you sell and its value chain.
Tactics (Business)
Winning a client, selecting a supplier, pricing a product
What is Strategy?
- Create and sustain an competitive position
- Creating superior value (i.e., having a competitive advantage) permits attracting and retain customers while turning a profit.
- How superior value is created matters for the sustainability of the advantage.
Value Capture
Competitive advantage definition
A company has a competitive advantage when it
adds greater value to the marketplace than its direct competitors.
Types of Competitive Advantage
Business Strategy Definition
What is the source of a company’s competitive advantage?
Corporate Strategy Definition
What is the scale and scope of a company’s activities?
Three Generic International Strategies
- Deploy
- Develop
- Deepen
Deploy (Three Generic International Strategies)
Companies seek to aggregate demand across multiple markets.
The focus is on similarities across markets. Companies typically identify a market segment that is consistent across markets (e.g., luxury).
Develop (Three Generic International Strategies)
Companies seek arbitrage knowledge across countries.
Companies create and capture value by identifying where a potential new capability resides and integrating those capabilities to improve
products or reduce costs.
Deepen (Three Generic International Strategies)
- Companies use their international presence to make their core competitive advantage more sustainable.
- Most commonly, this involves arbitraging labor costs.
- But it can also involve aggregating production in order to create economies of scale and scope.
