...Subsidiaries’ role and contribution in the creation of new firm-‐specific advantages (FSAs) Carlotta Assetta – Student Number: 11112980 ABSTRACT This paper attempts to more precisely delineate the MNEs subsidiaries’ role and contribution to new firm-‐specific advantages development. I present a new framework, which ranks foreign subsidiaries contribution to FSAs creation according to two criteria: Subsidiary’s embeddedness in the host-‐country environment and strategic importance of the local environment. ...
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...produce firms with sustained competitive advantages in some industries more than others? Answer with reference to examples from at least two different industrial sectors. Answer. Porter’s diamond model is a model that can help understand competitive position of location in global competition that suggest a inherent reason why some firm within location are more competitive that other on a global scale. The argument is that the local are provided organization by specific factor, which created more potential competitive advantage for country or region. The Porter's model includes 4 drivers of local advantage, which are shortly described below: 1. Local factor conditions A company in local is exploited by factor conditions. Factor conditions can be seen as advantage factors such as workforce shortage, as a factor potentially strengthening competitiveness, this factor may heighten companies' focus on automation and zero defects. For example, in analyzing of film production industry in the Hollywood, has pointed out the local skilled labor, in the area. Also, resource constraints may encourage development of substitute capabilities; Japan's relative lack of raw materials has reduced and zero defect manufacturing. 2. Local demand conditions Focusing on the domestic market provide the primary driver of growth, innovation and quality improvement. The strong domestic market is stimulates by stat up the to a slightly expanded then became bigger organization. The firm potential...
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...How well does strategy fit the firm’s situation? 2) Competitive advantage test: does strategy lead to sustainable competitive advantage? 3) Performance test: does strategy boost firm performance?Testing a winning strategy: 1) Goodness of fit test: How well does strategy fit the firm’s situation? 2) Competitive advantage test: does strategy lead to sustainable competitive advantage? 3) Performance test: does strategy boost firm performance?Testing a winning strategy: 1) Goodness of fit test: How well does strategy fit the firm’s situation? 2) Competitive advantage test: does strategy lead to sustainable competitive advantage? 3) Performance test: does strategy boost firm performance?Testing a winning strategy: 1) Goodness of fit test: How well does strategy fit the firm’s situation? 2) Competitive advantage test: does strategy lead to sustainable competitive advantage? 3) Performance test: does strategy boost firm performance?Testing a winning strategy: 1) Goodness of fit test: How well does strategy fit the firm’s situation? 2) Competitive advantage test: does strategy lead to sustainable competitive advantage? 3) Performance test: does strategy boost firm performance?Testing a winning strategy: 1) Goodness of fit test: How well does strategy fit the firm’s situation? 2) Competitive advantage test: does strategy lead to sustainable competitive advantage? 3) Performance test: does strategy boost firm performance?Testing a winning strategy: 1) Goodness of fit test:...
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...Introduction Kotler (1996:284) describes brand equity as the value of a brand based on the extent to which it has high brand loyalty, name awareness, perceived quality, strong brand associations, patents and trademarks and The Wall Street Journal (2010:1) ranked the top five brands as Coca cola, IBM, Microsoft, Google and General Electric. Coca cola Bilaras (2012:1) maintains that Coca cola built its brand equity by adapting a global marketing strategy, which considered the whole world as a single market. The reason behind this global focus was that they viewed their product as one that can be used by everyone irrespective of age and gender. To achieve this, Coca cola created an efficient and extensive distribution system throughout the world. According to the company’s 2010 review, it managed to build its brand equity by establishing a close relationship with its bottling partners who work closely with customers to execute localized strategies developed in partnership with them. Through effective collaboration, they are able to sell Coca cola products to consumers at a rate of 1.7 billion servings a day. Coca cola’s brand equity growth is also attributed to its expanded brand variety of products like diet coke, sprite, Fanta, Minute Maid and others to appeal to a wider demographic, asserts Bilaras (2012:1). This resulted in consumers viewing coke as a part of life, leading to a high degree of brand loyalty, and growth. Growth in brand equity was also realised through...
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...Evaluating Firm Strengths and Weaknesses What Does Internal Analysis Tell Us? Internal analysis provides a comparative look at a firm’s capabilities • what are the firm’s strengths? • what are the firm’s weaknesses? • how do these strengths & weaknesses compare to competitors? Why Does Internal Analysis Matter? Internal analysis helps a firm: • determine if its resources and capabilities are likely sources of competitive advantage • establish strategies that will exploit any sources of competitive advantage Traditional research on firm strengths and weaknesses • Theories of distinctive competence – General managers as distinctive competencies – Institutional leadership as a distinctive competence • Ricardian economics • Penrose’s theory of firm growth Research on the skills of general managers, institutional leaders, economic rents and firm growth have been brought together to develop a rigorous model to analyze a firm’s strengths and weaknesses: the resource-based view of the firm The Theory Behind Internal Analysis The Resource-Based View • developed to answer the question: Why do some firms achieve better economic performance than others? • used to help firms achieve competitive advantage and superior economic performance • assumes that a firm’s resources and capabilities are the primary drivers of competitive advantage and economic performance The Resource-Based View Resources and Capabilities Resources: • tangible and intangible assets of a firm » tangible:...
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...the “competitive advantage”. The authors suggested three tests to determine the source of competitive advantage. Explain. (You may need to do some reference. Use online databases from library). Definition of 'Competitive Advantage is an advantage that a firm has over its competitors, allowing it to generate greater sales or margins and/or retains more customers than its competition. There can be many types of competitive advantages including the firm's cost structure, product offerings, distribution network and customer support. On the other hand, Competitive advantages give a company an edge over its rivals and an ability to generate greater value for the firm and its shareholders. The more sustainable the competitive advantage, the more difficult it is for competitors to neutralize the advantage. There 4 attributes of competitive advantage (value, rarity, inimitability and non-substitutability). There are two main types of competitive advantages: comparative advantage and differential advantage. Comparative advantage, or cost advantage, is a firm's ability to produce a good or service at a lower cost than its competitors, which gives the firm the ability sell its goods or services at a lower price than its competition or to generate a larger margin on sales. A differential advantage is created when a firm's products or services differ from its competitors and are seen as better than a competitor's products by customers. To gain competitive advantage a business strategy...
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...Apple's competitive advantage, which of the following products was introduced by Apple in 2007? A. | iPad | B. | iPhone | C. | iPod | D. | iTunes | | 2. | _____ is best described as an integrative management field that combines analysis, formulation, and implementation in the quest for competitive advantage. A. | Supply chain management | B. | Integrated technology management | C. | Strategic management | D. | Inventory management | | 3. | _____ is best described as a set of goal-directed actions a firm takes to gain and sustain superior performance relative to competitors. A. | Behavior modification | B. | Strategy | C. | Credo | D. | Competency management | | 4. | Which of the following stages of the strategic management process involves an evaluation of a firm's external and internal environments? A. | Strategy analysis | B. | Strategy implementation | C. | Strategy formulation | D. | Strategy control | | 5. | In _____, a firm frames a guiding policy to address the competitive challenge. A. | strategy control | B. | strategy implementation | C. | strategy formulation | D. | strategy analysis | | 6. | Through _____, a firm puts its guiding policy into practice by employing a set of coherent actions. A. | strategy control | B. | strategy implementation | C. | strategy formulation | D. | strategy analysis | | 7. | A firm that achieves superior...
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...Chapter 1 Introduction to Strategy * Strategy: Theory of how to gain competitive advantages. (How competition is going to evolve, and how that evolution can be exploited for competitive advantage.) Based on knowledge of the marketplace and based on the firm’s capabilities and resources. a) Being different from your rivals b) Creating value while containing costs c) Deciding what to do and what NOT to do d) Combining activities to land in a unique market position e) Making long-term commitments that may not be easily reversible f) A constant decision-making process * Theories answer, “If we do X, then we will get Y.” * Strategy management process: a sequential set of analyses and choices that can increase the likelihood that a firm will choose a good strategy. * Why do we exist? (MissionObjectives) Can we compete? (External/ Internal Analysis) How do we succeed? (Strategic ChoiceStrategy Implementation)Competitive Advantage Success = Sustained Competitive Advantage * Strategy and the Strategic Management Process * Mission: long-term purpose, define both what a firm aspires to be in the long run and what it wants to avoid in the meantime. * Mission Statements: written down form; strategic decisions fail when mission statement is not followed * Key question to address: What is our business? What is our reason for being? Whom do we want to serve? * Is it good? An excellent mission statement...
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...a wider scope, is part of a much larger strategic scheme of a firm. The basic strategic process that any firm goes through begins with a vision statement, and continues on through objectives, internal & external analysis, strategic choices (both business-level and corporate-level), and strategic implementation. The firm will hope that this process results in a competitive advantage in the marketplace they operate in. VRIO falls into the internal analysis step of these procedures, but is used as a framework in evaluating just about all resources and capabilities of a firm, regardless of what phase of the strategic model it falls under. VRIO is an acronym for the four question framework you ask about a resource or capability to determine its competitive potential: the question of Value, the question of Rarity, the question of Imitability (Ease/Difficulty to Imitate), and the question of Organization (ability to exploit the resource or capability). * The Question of Value: "Is the firm able to exploit an opportunity or neutralize an external threat with the resource/capability?" * The Question of Rarity: "Is control of the resource/capability in the hands of a relative few?" * The Question of Imitability: "Is it difficult to imitate, and will there be significant cost disadvantage to a firm trying to obtain, develop, or duplicate the resource/capability?" * The Question of Organization: "Is the firm organized, ready, and able to exploit the resource/capability...
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...OF COMPETITIVE ADVANTAGE IS CENTRAL TO THE STUDY OF STRATEGIC MANAGEMENT, AND EXAMINE THE USE OF PORTER’S GENERIC STRATEGEIS BY COMPANIES TO COMPETE. KEY TERMS Competitive advantage. This is the favourable position an organization seeks in order to be more profitable than its competitors. Strategic management. It is the systematic analysis of the factors associated with customers and competitors (the external environment) and the organization itself (the internal environment) to provide the basis for maintaining optimum management practices. The objective of strategic management is to achieve better alignment of corporate policies and strategic priorities. Porter’s generic strategies. These are three general types of strategies developed by Michael Porter that are commonly used by businesses to achieve and maintain competitive advantage. Company. It is a voluntary association formed and organized to carry on a business. Types of companies include sole proprietorship, partnership, limited liability, corporation, and public limited company. INTRODUCTION The concept of competitive advantage is central to the study of strategic management, since a company or an organization must follow an aligned strategy to outperform their rivals in the industry. Michael Porter introduces three generic strategies that a firm may apply in order to do so they include; overall cost leadership, Differentiation and Focus. In order to create and sustain competitive advantage, companies should...
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...of sustained competitive advantage of a firm. To develop the strategy we need to analyze the firm’s internal strength and weaknesses (resource based model) as well as the external opportunities and the threat(environmental models). Environmental model is based on heterogeneity and mobility of the resources and assumes that all firms have the same strategy and the resources are heterogenic and mobile so the competitive advantage are not long lasting. Where as resource based model states that resources are immobile as well as heterogenic and can have long lasting competitive advantage. Firm resources are categorized into three types – physical capital resources, human capital resources and organizational capital resources. Some of the attributes of this resources can be used for developing strategies for increasing the effectiveness and efficiency of a firm. We need to specify conditions under which we can select resources which can be used as an competitive advantage. Competitive advantage means that a firm as a value added strategy over others and competitive advantage can only be sustainable if the other firms cannot duplicate that strategy. Once the strategy is being duplicate depending upon the strategy of the competitors or due to change in economic condition it is not longer sustainable. In an industry where firms have similar resources I,e resources are homogenous and mobile, it is not possible to have sustainable competitive advantage as they apply the same strategy...
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...VIEWPOINT Core Competence, Distinctive Competence, and Competitive Advantage: What Is the Difference? ANN MOONEY STEVENS INSTITUTE OF TECHNOLOGY HOBOKEN, NEW JERSEY ABSTRACT. Core competence, distinctive competence, and competitive advantage ABSTRACT. are 3 of the most important business concepts that managers, researchers, and educators rely on for decision making, pedagogy, and research. However, little attention has been paid to defining these concepts. As a result, they have become buzzwords that are used so frequently that their meanings are often taken for granted but are not fully understood. In this article, the author reviews the evolution of these concepts in business literature and provides comprehensive definitions, conceptual models, and examples to help clarify and distinguish the concepts so that failures of communication can be avoided. Keywords: competencies, competitive advantage, strategy Copyright © 2007 Heldref Publications 110 Journal of Education for Business S R ince its genesis in the mid-20th century, the study of business disciplines has become an established academic discipline. The proliferation of business curricula, journals, and academic and professional associations is evidence of a dramatic growth in business education. Although the growth has improved the understanding of business and informed business practices, with growth comes various problems. For example, business practitioners, researchers...
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...Cost leadership strategy Definition : | A firm pursuing a cost-leadership strategy attempts to gain a competitive advantage primarily by reducing its economic costs below its competitors. If cost-leadership strategies can be implemented by numerous firms in an industry, or if no firms face a cost disadvantage in imitating a cost-leadership strategy, then being a cost leader does not generate a sustained competitive advantage for a firm. The ability of a valuable cost-leadership competitive strategy to generate a sustainted competitive advantage depends on that strategy being rare and costly to imitate. Sources of cost advantage * Economies of scale Economies of scale One of the most cited sources of cost advantage for a firm is its SIZE.There is a relationship between firm size measured in terms of volume of production - and costs - measured in terms of average costs per unit of production. The optimal volume of production is reached when the average costs per unit of production is minimum. Sources of economies of scale : volume of production and specialized machines : Acompany with a high level of production, it is able to purchase and use specoalized manufacturing tools that cannot be kept in operation in small companies. volume of production and cost of plant and equipement : Ahigh volume of production may allow a firm to build larger manufacturing operations. Large-volume firms will be able to build lower per unit cost manufacturing operations and will have...
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...the emergence of a growing body of work collectively labelled the resource and capability-based view of the firm (RBV). In reality, Resource Competence View (RCV) first adopted an “economic” orientation. Pioneer studies (Wernerfelt, 1984) , Barney, 1986, 1991, Dierickx and Cool, 1989, Peteraf, 1993) focused on the type of resources and competencies that could offer to its owner a sustainable competitive advantage. Therefore, resources and competencies approach first appeared as a theory of competitive advantage or a theory of “performance of the firm” (Argyres & Zenger, 2007). It is only recently, in the last 20 years that organizations have started using the resource based view approach on strategy. Nowadays, they view it as the most important key development in international business research and strategic management, an approach that gives a coherent vision based on a firm's capabilities to help determine the strategic resources necessary for the firm's survival and growth within a particular market place. As Hitt et al (2001) stated, “the resource based model assumes that each organization is a collection of unique resources and capabilities that provides the basis for its strategy and that is the primary source of return.”. It suggests that in order for a firm to sustain competitive advantage, it must not only have resources and capabilities but also have a firm control over it and they must meet certain basic criteria such as being: valuable, rare, inimitable and non...
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...Foundations CHAPTER OVERVIEW As more firms enter the international marketplace, the competitive environment is more complex than ever. How can firms determine their level of competitiveness in a marketplace of expanded and increasingly intense rivalry? This chapter seeks to answer that question in a multi-faceted manner. First, the concepts of country-specific and firm-specific advantages are presented from the theories of international trade and the multinational firm. Firms must be aware of which advantages they can utilize in operationalizing their competitive advantages. The extent to which these advantages are transferable to other markets and not bound only to the markets in which a firm already operates will determine how successful that firm may be in new foreign markets. Then the Porter's Five Forces model is adapted as a systematic framework for analyzing the competitive environment in any market of the world. Finally, market-based and resource-based marketing strategies are compared. By skillful application of both perspectives, an organization may be well on its way to a profitable multinational presence. QUICK REFERENCE CHAPTER OUTLINE A. Introduction B. Country-Specific Advantages (CSAs) 1. Comparative Advantage & Absolute Advantage 2. International Product Cycle 3. National Competitive Advantages 4. The New Trade Theory 5. CSAs and Country-of-Origin Effects C. Firm-Specific Advantages (FSAs) 1. Knowledge-based FSAs ...
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