International Business Strategy - Verbeke – BulletPoints Chapter 1: The conceptual foundations of international business strategy International business strategy: effectively and efficiently matching an MNE's internal strengths, relative to competitors, with the opportunities and challenges found in geographically dispersed environments that cross international borders. Most complex issues in international business strategy revolve around seven concepts. (1) Internationally transferable firm-specific advantages (FSAs) / Non-location-bound FSAs. The MNE operates across national borders to create value and satisfy the stakeholder. The scope of the business across borders of the MNE depends on the set of internal strengths, which are called the non-location-bound FSAs. There are four archetypes of administrative heritage associated with international FSA transfer: o Centralized exporter: a home-country-managed firm. Standardized products manufactured at home embody the firm’s FSAs and make the exporting firm successful in international markets. o International projector: FSAs from the home country are copied and transferred to subsidiaries in host countries. o International coordinator: an efficiency seeking MNE which is specialized in specific value-added activities and forming vertical value chains across borders. o Multi-centred MNE : consists of a set of entrepreneurial subsidiaries abroad and does all its activities (produce, sell, etc.) in the host country. o Although the four architypes describe most large MNEs, there are two other types; freestanding companies and emerging economy MNEs (EMNEs). (2) Non-transferable FSAs / Location-bound FSAs; are not easily transferred, deployed and exploited in foreign markets. There are four main types: o Stand-alone resources : are linked to location advantages. o Other resources : do not have the same value abroad, because they are not applicable to the host country or they are not as valuable as in the home country. o Local best practices : routines which are highly effective and efficient in the home country, but which might not be the same across borders. o Domestic recombination capability : taking the FSAs and/or product from the home country and recombine it to adapt to the host country. (3) Location advantages; represent the set of strengths of a specific location, useable for all the firms operation in that location, the reasons why an MNE would go there. FDI (Foreign Direct Investment): the allocation of resource bundles by an MNE in a host country. There are 4 motivations to perform activities abroad: Natural resource seeking, market seeking, strategic resource seeking and efficiency seeking. (4)Investment in – and value creation through – recombination; being able to grow by innovating and diversifying; means combining existing resources with newly accessed resources.
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- Fall '19