Podcast
Questions and Answers
According to Verbeke, what are the two key factors that create a balanced perspective of IB activity?
According to Verbeke, what are the two key factors that create a balanced perspective of IB activity?
- Government regulations and consumer preferences.
- Strategic alliances and market diversification.
- Technological innovation and operational efficiency.
- Firm factor and country factor. (correct)
What potential risk do rapidly changing industries pose to core competencies?
What potential risk do rapidly changing industries pose to core competencies?
- They allow companies to diversify their core competencies.
- They can cause core competencies to become core rigidities, hindering adaptation. (correct)
- They have no impact on core competencies if managed effectively.
- They enhance the value and relevance of core competencies over time.
According to Prahalad and Hamel's core competence approach, what role does strategic management play in developing core competencies?
According to Prahalad and Hamel's core competence approach, what role does strategic management play in developing core competencies?
- It prioritizes reacting to immediate competitive threats over long-term innovation.
- It focuses on short-term profit maximization within existing market structures.
- It emphasizes decentralized units acting in their own self-interest for flexibility.
- It develops a strategic architecture or road map to cultivate core competencies and required technologies. (correct)
What erroneous assumption do MNEs make when attempting to access foreign location advantages by setting up specific functional activities such as manufacturing?
What erroneous assumption do MNEs make when attempting to access foreign location advantages by setting up specific functional activities such as manufacturing?
Which of the following is NOT a criterion for assessing the need for co-locating activities instrumental to further recombination?
Which of the following is NOT a criterion for assessing the need for co-locating activities instrumental to further recombination?
What is the role of high levels of pressure in a company's home base, according to Michael Porter?
What is the role of high levels of pressure in a company's home base, according to Michael Porter?
In the context of Porter's Diamond, how do demanding buyers in a domestic market influence a firm's competitiveness?
In the context of Porter's Diamond, how do demanding buyers in a domestic market influence a firm's competitiveness?
What is a key criticism of Michael Porter's diamond framework?
What is a key criticism of Michael Porter's diamond framework?
Why is the recombination capability essential for coordinating and controlling activities in multiple input and output markets?
Why is the recombination capability essential for coordinating and controlling activities in multiple input and output markets?
Prior to successful resource recombination across borders, what should managers consider regarding the proximity of specific external stakeholders to an international expansion project?
Prior to successful resource recombination across borders, what should managers consider regarding the proximity of specific external stakeholders to an international expansion project?
Flashcards
Firm-specific advantages (FSAs)
Firm-specific advantages (FSAs)
Unique strengths a company has that allows it to outperform competitors.
Core competencies
Core competencies
Crucial FSAs that involve vital routines and recombination abilities leading to core products.
Prahalad and Hamel
Prahalad and Hamel
Developers of the core competence theory, focusing on internal strengths over external factors.
Porter's diamond
Porter's diamond
Signup and view all the flashcards
Factor conditions
Factor conditions
Signup and view all the flashcards
Demand conditions
Demand conditions
Signup and view all the flashcards
Recombination capabilities
Recombination capabilities
Signup and view all the flashcards
Strategic architecture
Strategic architecture
Signup and view all the flashcards
Core rigidities
Core rigidities
Signup and view all the flashcards
Location advantages
Location advantages
Signup and view all the flashcards
Study Notes
Chapter 2: The Critical Role of Firm-Specific Advantages
- Verbeke's framework balances firm and country factors in international business activity.
- Two contrasting perspectives form the basis:
- Prahalad and Hamel's core competence approach (focuses on firm characteristics)
- Porter's diamond model (focuses on country characteristics)
- Core competencies are a company's vital routines and recombination abilities, creating core products.
- Core competencies are difficult to imitate, providing access to diverse markets and significant customer value.
- Loss of a core competency severely impacts present and future performance.
- Strategic management plays a crucial role in developing a roadmap of future core competencies and building required technologies.
- This approach promotes company-wide innovation and competitiveness, rejecting the multi-centered approach to foreign operations.
- Core competencies can become rigidities in industries with rapid change, making flexibility and strategy adaptation essential.
- Many multinational enterprises (MNEs) incorrectly assume that location advantages can be accessed by establishing specific functions like manufacturing in foreign nations.
- Manufacturing knowledge isn't a standalone factor; it's part of a larger core competence, requiring the transfer of entire functional activities, not just a single skill.
- Five criteria (complexity, interaction level, expertise, prior relationship, and information concreteness) evaluate the need for co-locating activities for successful cross-border recombination. Geographic proximity is critical.
- International expansion projects must consider the geographic proximity of stakeholders and the scale of the project to be successful.
Chapter 3: The Nature of Home Country Location Advantages
- Michael Porter emphasizes that a company's international competitiveness is driven by interconnected location advantages in its home country.
- Strong domestic pressures drive innovation, upgrading capabilities, and creating firm-specific advantages (FSAs) crucial for foreign expansion.
- Building on natural resources or protected domestic markets can hinder innovation and growth.
- Porter's Diamond model describes four key country attributes:
- Factor conditions (capital, labor, technology, and skills)
- Demand conditions (sophisticated customers driving innovation)
- Related and supporting industries (high-quality suppliers, universities)
- Firm strategy, structure, and rivalry (intense competition driving efficiency)
- Industries have unique characteristics impacting patterns of international competitiveness. Porter's FSAs are fundamentally home-based.
- Firms expand internationally by aligning their FSAs with host country location advantages, focusing on input and output markets.
- Extensive international experience is needed to coordinate and control activities in diverse input and output markets.
- Expansion in foreign markets must be selective and piecemeal for building international experience.
Studying That Suits You
Use AI to generate personalized quizzes and flashcards to suit your learning preferences.
Description
Explore firm-specific advantages, balancing firm and country factors using Verbeke's framework. Understand core competencies, their impact, and strategic management's role in developing future capabilities. Discover how core competencies can create company-wide innovation and competitiveness and their potential rigidities in changing industries.
