This document contains a complete summary of the lectures and knowledge clips given in the course. It includes the required chapters from Verbeke's book. Used in the academic year. The required readings/articles for this course have been incorporated into this summary as they were covered in the l...
In international context the value chain is spread in different countries. If you don’t have some type
of strategic advantage, going abroad makes very little sense. You need to have some strength to go
abroad.
International strategy is:
• matching a multinational enterprise’s internal strengths
• With the opportunities and challenges found in cross-border environments
• While overcoming disadvantages of being a foreign company
• and/or capitalizing on the advantages of being a foreign company
• and/or capitalizing on the advantages of having an international network
Foreign direct investment only makes sense if a firm has;
• ownership advantages (firm-specific advantages)
• Location advantages (attractiveness of the host country)
• Internalization advantages (advantages of doing-it-yourself)
Article: The Why, Where, What and How of internationalization (Benito paper).
Why —> Internationalization motives: market seeking, efficiency seeking, recourse seeking and the
strategic asset seeking (knowledge, connectivity).
Where —> location choice: attractiveness of country, “distance” from home. Corruption could be
considered a factor in distance from home and therefore less attractive to internationalize.
What —> marketing & sales, manufacturing, purchasing and R&D. This is linked to why and where
are you.
How —> the entry mode: export, licensing, franchising, Alliance, FDI (acquisition, brownfield,
Greenfield).
Knowledge clip 1.2 – Conceptual foundations
Conceptual foundation of international strategy:
, 1. Internationally transferable and;
2. non-transferable firm specific advantages (FSAs): location bound and non-location bound:
firm specific advantages that are transferable abroad: for example, capital or technology. Firm
specific advantages that are not transferable abroad: location bound. For example, a location in
a particular city or a brand that has a local appeal.
3. Location advantages: home country advantages and host country advantages. If a host country
is rich in minerals, might be a reason to invest in that country. Or China which has a huge
market is attractive for western countries to invest is because they want to have an increasing
market.
4. Recombination capabilities; the ability to adapt and make combinations of resources in such a
way that they maintain firm competitiveness over time and across environments. Combine
the technology in your home country with the cheap labour in you host country. Mix and
match. You replicate what you did in different places. In many cases that is not so easy and
you have to start change things —> recombinations. Maybe different types of sales channels.
Adapt each time you enter a country. A recombination means that some resources used in an
initial combination need to be dropped. It could refer to something as changing the packaging,
or reconfiguring a firm logistics system to meet the requirements of foreign customers. Bring
tools together and satisfy new stakeholders → artful orchestration of resources.
Recombination of capabilities in the international area are built up through international
experience:
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