Week 7

Question 1

Downstream advantage

Answer 1

Interface between firms and customer

Question 2

This level advantages

Answer 2

Lower prices, superior products, a superior product range, superior reputation

Question 3

Upstream advantages

Answer 3

Superior firm attributes, activities, assets, skills, dynamic advantages

Question 4

Reasons for distinction between firm advantages and its advantages in international competition (3)

Answer 4

• Advantages are always relative
• Superiority here doesn’t mean superiority elsewhere
• General factors that grant advantage

Question 5

Transfer

Answer 5

The process where a fiem draws advantages from its homebase to give its operations in a foreign country a competitive edge

Question 6

Complementary assets

Answer 6

Assets or capabilities that need to be build or acquired in the target country in order to fully exploit the firm’s advantages in that country

Question 7

Causes of immobility (2)

Answer 7

• Geographical specificity

- Tacit knowledge

Question 8

Choices of modes of operations (2)

Answer 8

• The exporting mode: all advantages, assets and national attributes are available to the firm
• Foreign production mode: only those advantages, assets, and factors whose use or exploitation is transferable are available

Question 9

Liability of foreigness

Answer 9

Costs regarding the unfamiliarity of the environment

Question 10

Sources of liability of foreigness (4)

Answer 10

1. Costs directly associated with spatial distance
2. Costa resulting from company’s unfamiliarity
3. Costs resulting from the host country environment
4. Costs from the home country environment

Question 11

Ways to deal with liability of foreigness

Answer 11

• Bring its foreign subunit resources or capabilities specific to the firm
• Attempt to mimic the advantages of successful local firms