National units become world sources for particular products, components, and activities. Corporate center involved in orchestrating collaboration through creating the right organizational context. Tight complex controls and coordination and a shared strategic decision process. Heavy flows of technology, finances, people, and materials between interdependent units.
QUIZ QUIZ Microsoft Coca-Cola Pfizer McDonald Google Personal computers Dry soup mixes & canned soups Basic work tools Which strategy would you use for: Companies Pfizer Coca cola Microsoft Google McDonald Businesses PCs Dry/canned Soups Basic work tools Washing Machines Washing Machines
COMPETITIVE ADVANTAGE THE INDUSTRY ENVIRONMENT Key Success Factors FIRM RESOURCES & CAPABILITIES -- Financial resources -- Physical resources -- Technology -- Reputation -- Functional capabilities -- General management capabilities THE NATIONAL ENVIRONMENT A country has a relative efficiency advantage in those products that make intensive use of resources that are relatively abundant within the country. e.g. Philippines relatively more efficient in the production of footwear, apparel, and assembled electronic products than in the production of chemicals and automobiles. U.S. is relatively more efficient in the production of semiconductors and pharmaceuticals than shoes or shirts. Competitive Advantage within an International Competitive Advantage within an International Context: Context: The Basic Framework The Basic Framework
Factor Endowments Local Demand Conditions Related & Supporting Industries Intensity of Rivalry Determinants of National Advantage Determinants of National Advantage Porter’s Diamond Porter’s Diamond : : 1. 1. Companies from given nation likely to succeed in industries with Companies from given nation likely to succeed in industries with four favorable attributes. four favorable attributes. 2. 2. Attributes form a mutually reinforcing system with the effect of one Attributes form a mutually reinforcing system with the effect of one attribute dependent on state of others attribute dependent on state of others . Cost & Quality of factors of production Labour, Land, Natural resources Capital, Infrastructure Technology Advanced factors Digital communication systems and an educated workforce The nature and size of buyers’ needs in the home market : Size of the market segment can lead to scale-efficient facilities. Efficiency can lead to domination of the industry in other countries. If consumers are demanding, they will push firms to innovate, improve & upgrade their products Support in design Support in distribution Related industries as suppliers and buyers -Methodological product and process improvement -Cooperative and competitive systems -Ex. Japanese success in autos, consumer electronics, office equipment
Porter’s Diamond helps in 1. Identifying locations from where the most significant global competitors are likely to come 2.
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- Globalization, Subsidiary