Strategic Management Chapter 10

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In Porter's Diamond of National Competitive Advantage, which 4 things lead to national competitive advantage?
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Terms in this set (19)
In Porter's Diamond of National Competitive Advantage, which 4 things lead to national competitive advantage?
Factor conditions, demand conditions, competitive intensity, and related and supporting industries
factor conditions (In Porter's Diamond of National Competitive Advantage)
refers to a country's endowments:
- natural, human, and other resources
demand conditions (In Porter's Diamond of National Competitive Advantage)
characteristics of demand in a firm's domestic market. customers often hold companies to standards of value creation like:
- development in research
- cost containment
- new commercial applications for the market
Competition Intensity in Focal Industry (In Porter's Diamond of National Competitive Advantage)
competitive environments lead to better performance
Related and Supporting Industries/Complementors (In Porter's Diamond of National Competitive Advantage)
leadership on related and supporting industries fosters complementors in downstream industries:
- when firms provide an additional good or service combined with its primary product, it leads customers to value the firm's offering more and further strengthens their national competitive advantage
what are the 3 ways that firms grow?
- adding value chain activities
- product diversification
- international expansion
globalization
the process of shifting away from self-contained national economies towards a more integrated and interdependent world economy
what is the economic concept of globalization
globalization is made possible through falling trade and investment barriers, advancement in telecommunications, and reductions in transportation costs
what is the cultural concept of globalization
ideas and traditions traded and assimilated
what are the 2 facets of globalization
globalization of markets and globalization of production
why do firms go global?resource seeking, market seeking, efficiency seeking, and asset seekingwhat are the 3 difficulties in going global?liabilities of foreignness, reputation, and intellectual propertywhat are liabilities of foreignness?the additional costs of doing business in an unfamiliar cultural and economic environment and the difficulties of coordinating across geographic distancesownership advantagesallows company to overcome liabilities of foreignness (brand name, tech, economies of scale)what is CAGE framework?cultural differences, administrative and political, geographic, and economicinternational strategyLOW cost pressure and LOW local responsiveness pressure takes products first produced for the domestic market and sells them internationally with minimal local customization ex: luxury goodsglobal standardization strategyHIGH cost pressure and LOW responsiveness pressure goal is to produce a low-cost strategy on a global scale. They achieve this through cost reductions that come with economies of scale, learning effects, and location economiesmultidomestic strategyLOW cost pressure, HIGH local responsiveness pressure focuses on increasing profitability by customizing the firm's goods or services so they match the tastes and preferences of different national markets. low cost pressuretransnational strategyHIGH cost pressure and HIGH local responsiveness pressure try to simultaneously achieve low costs and differentiation of product offerings to account for local differences achieve this strategy by centralizing certain value chain activities and de centralizing others that need to be adopted .