Business Strategy and Its Importance

Entering a new market with no existing infrastructure or partnerships. Think building from scratch.

Leveraging existing infrastructure, assets, or partnerships to enter a new market. Think utilizing what's already there.

A company's long-term goals and the resources used to achieve them, focusing on competitive advantage and long-term sustainability.

Methods for creating and capturing value, focusing on internal processes, customer needs, and revenue models.

Internal strengths that give a company a competitive advantage.

Internal weaknesses that need to be addressed.

External opportunities to grow and expand.

External threats that could harm a company's success.

Outsourcing can lead to short-term gains but carries serious strategic risks, including the loss of valuable internal knowledge and potentially transferring competitive advantages to rivals.

Companies that outsource critical processes might lose the opportunity to learn and develop internal skills through hands-on experience.

Sharing knowledge with external partners can unintentionally reveal valuable secrets to competitors, weakening a company's unique advantages.

The Diamond model identifies factors within a nation that influence a company's competitiveness and its development of unique strengths.

These factors include resources like skilled labor, infrastructure, and technology, providing a competitive edge.

The sophistication and size of a country's domestic market drive innovation by demanding higher quality and performance from businesses.

Strong networks of suppliers and partners within a nation create synergies and foster innovation.

Intense competition within a country pushes businesses to innovate and constantly enhance their offerings.

Government policies that can encourage innovation through economic measures, investment in research and development (R&D), and regulations.

Unpredictable events like technological breakthroughs or economic crises that can significantly impact competition.

The ability of a company to use its strengths and resources to compete in a global market successfully. This depends on the competitive landscape within its home country.

The interconnectedness of industries, companies, and resources within a country. This creates mutually beneficial relationships that support innovation and growth.

A company's competitive advantages that are specific to its operations and capabilities.

A situation where multiple business models interact with each other, potentially creating synergy and value.

A type of administrative heritage where a company's overseas operations are tightly controlled from its headquarters, focusing on standardized products or services.

The interconnectedness of industries, companies, and resources within a country. It creates mutually beneficial relationships that support innovation and growth. Think of the network of different actors within a country all contributing to a thriving ecosystem.

A company's success is based on exporting products directly from the home country, minimizing adaptation to local markets.

This model involves replicating a company's core competencies in foreign markets through subsidiaries. It prioritizes leveraging existing strengths rather than developing new ones.

This model focuses on managing international operations as a unified network, leveraging location-specific advantages and specialized expertise.

This model is characterized by decentralized subsidiaries, each developing unique capabilities to meet local market needs. Subsidiaries have significant autonomy and a weak connection to the parent company.

Advantages offered by specific locations, such as low labor costs, access to natural resources, or a favorable regulatory environment. These factors can influence where companies choose to operate.

This refers to adapting products or services to meet the specific needs and preferences of a particular market. It involves tailoring offerings to local customs, regulations, or consumer tastes.

The process of expanding a company's operations to new international markets.

Companies from emerging markets with increasingly global operations, leveraging cost advantages, local resources, and innovation to compete in international markets.

Challenges faced by EMNEs due to limited or underdeveloped institutions like recruitment agencies, financial systems, reliable distribution channels, and intellectual property protection in their home markets.

Strategies EMNEs use to overcome institutional voids, such as adjusting their business model to fit local conditions (like Dell in China) or creating new institutions within their network (like Suzuki in India).

A framework outlining the key drivers for EMNEs' success, including cost-efficient labor and resources, strong local networks, and tailored innovations for local consumers (e.g., Huawei's affordable ICT products).

An alternative framework to the traditional OLI (Ownership, Location, Internalization) framework, emphasizing EMNEs' focus on building relationships with external partners (Linkage), leveraging acquired resources (Leverage), and continuously learning and improving their capabilities (Learning).

The ability to attract and retain customers by having a product or service that is perceived as superior to the competition.

Achieving the lowest production costs while maintaining acceptable product quality, making your product more accessible to a wider audience.

Understanding how much a customer is willing to pay for a product or service. This helps determine pricing strategies and value propositions.

Comparing your offering to competitors to understand how customers perceive your product or service. This helps refine your value proposition and identify areas for improvement.

Internal processes that directly contribute to the creation and delivery of a product or service to customers.

Internal processes that support the primary activities, ensuring efficiency and effectiveness across the entire organization.

Imitation represents a threat to a company's competitive advantage as competitors try to replicate its successful strategy. It can lead to intense competition and erode unique positioning (e.g., fast fashion copying high-end designs).

This threat arises when alternative products or services satisfy the same customer need. Innovation and diversification can help mitigate this threat by adapting to evolving needs (e.g., streaming services replacing traditional cable TV).