NAME: Nadira Ananda Putri
STUDENT NUMBER: S2713454
International Business Tutorial 1 Exercise:
1. A firm specific advantage (FSA) is stand-alone resources + routines + recombination skills combined. In another words, it is firm’s ability to put higher effort or quality in their assets rather than their competitors.
2. Honda’s FSAs are;
-They used much less presswork
-More integrated welding process
-Delivered better real cost-performance
3. Verbeke’s theory states that firms and multinationals should develop their unique resources which are; physical resources like natural resources, buildings and plant equipment, financial resources such as equity and loan capital, human resource like the individuals and teams, entrepreneurial and operational skills, upstream and downstream knowledge, administrative and reputational resources. Another two things that would make a firm specific advantage are routines and recombination.
Routines are the distinct ability to combine further the firm’s resources in unique ways valued by the firm’s stakeholders and they are also stable patterns of decisions and actions that coordinate the productive use of resources, and thereby generate value, domestically or internationally.
4. Some FSAs are location bound because:
-A firm uses stand-alone
-A firm has a very deep knowledge of local marketing or reputation
-A firm has developed a unique way of working that is local
-A firm has an entrepreneurial potential which is difficult to transfer across borders to a different context
5. Location bound means that the FSAs stay at the home country. Some of the reasons might be because of the resources are immobile.
6. The English department store, “Harvey Nichols”, which originally came from Knightsbridge, London decided to open a branch in Jakarta, Indonesia back in 2008. They thought Indonesia would have the best market and be a stepping stone into the rest of Southeast Asia. Unfortunately, all they sold were premium brands and most local people in Indonesia buy premium brands overseas due to the higher price in Indonesia. However, it was simply a bad timing case because the economy at the end of 2008 was not stable.
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8. IB is concerned with the relation between a firm and its new host country environment. Where do you locate what type of activity in which way, and what effect does this have on firm and environment
9. Unique resources that Verbeke stated mean that all resources a firm has to efficiently use it.
10. a. Physical resources; natural resources, buildings, plant equipment b. Financial resources; equity and loan capital c. Human resources; individuals and teams, entrepreneurial and operational skills d. Upstream knowledge; product and process-related technological knowledge e. Downstream knowledge; marketing, sales, distribution after-sales service f. Administrative knowledge; organizational structure, culture and systems g. Reputational resources; brand names, reputation for honest business dealings
11. a. Physical resources; natural resources, buildings and plant equipment b. Financial resources; equity, investment and loan capital c. Human resources; individuals and teams, entrepreneurial and operational skills d. Upstream knowledge; product and process-related technological knowledge e. Downstream knowledge; marketing, sales, distribution and after service sales f. Administrative knowledge; organizational structure, culture and system g. Reputational resources; brand names, reputation for honest business dealings
12. A unique resource that is mentioned by Verbeke is compared to the other firm as competitors. So a firm has to have unique resources to stay competitive in the market
13. Routines are stable patterns of decisions and actions that coordinate the productive use of resources and thereby generate value, whether domestically or internationally.
14. A firm needs a routine to maintain its products quality and keep its unique resources
15. In order to get the employees refreshed and build their senses of teamwork, CIMB Niaga Bank Indonesia hold an annual gathering for employees. This event is usually held outside of town. They have 2 days of the event; the first day is usually filled with seminars from famous people. The second day, the employees usually take parts in trainings.
16. Recombination skills are the ability that the firm needs to maximize its resources and knowledge in order to stay in foreign environment.
17. A firm needs recombination skills to effectively working on its business in across broader country.
18. One of the most successful and most profitable junk food in the world, McDonalds, is doing good in most countries they have branches in. They combined localization strategy (adapting their menus to the host countries) and their quick service. For example, in Indonesia, they have rice on their menu. As well as in India, they do not serve beef because it is forbidden to eat beef there.
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20. Transferable FSAs can easily be imitated by other firms, but those who can be transferred consist of easily codifiable knowledge and can be written down in a handbook.
21. Location advantages that will benefit the host country are related to the reason of business activity that a firm will do.
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23. The transferrable FSAs become location bound in the host country because they match between the FSAs themselves and the location advantages.
24. There are several types of location advantages for the host country:
a. Natural resources seeking
b. Market seeking
c. Efficiency seeking
d. Strategic resources seeking
e. Export platform MNE activity
25. Some of the firms’ resources are limited and might not be transferred to other location because of the location advantages in specific places.
26. Because there are some boundaries regarding developing FSAs such as cultural, economic, institutional and geographic distance between home and host country that might complicate location bound FSAs in the host country.
27. Bounded rationality problem for Honda was the postponed of automobile manufacture due to the lack of manufacturing experience when they first entered US auto market.
28. Bounded reliability problem for Honda was when Honda interfered its operation, from inspecting manufacturing processes, to developing quality circles, to hiring new managers, instead of completely assigned its suppliers for those activities.