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International Business Awareness (IB) samenvatting
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A summary of the book and lectures of International business chapter 4, 6, 11 and 12.
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IB Chapter 4 Summary of book and PowerPoint:Resource-based view: Focuses on a firm’s internal resources and capabilities. Specific resources and
capabilities can lead to leadership of a market. If some companies are verry strong in a certain
environment and others aren’t. These companies have certain resources and capabilities that are not
shared with the competitors.
The primary resources and capabilities add value to the company and achieves competitive
advantage.
Competitive advantage: The ability of a firm to be better than their competitors.
Primary recourses:
Tangible primary recourses Things you can see and touch.
- Financial assets: the financial pocket of a company.
- Physical assets: plants, equipment, land, warehouse…
Intangible primary recourses things you can’t see and touch. But they do add value to the
company. Patent, brand, reputation.
- Technological resources: Patents, licenses and copyrights.
- Reputational resources: Reflects the value of the reputation of the firm. Does it provide
quality goods and services? Do they have good employees and do they treat their
customers well? Good will: the extra worth of a company. The worth for the reputation.
Human recourses The value that the employees add to a company.
- Skills, talent and know-how of the employees. (Learnt in school or by experience)
- Communication and collaboration skills.
- The organizational culture of a company. The shared values, traditions and norms.
Capabilities: The abilities of a company to use the resources to achieve organizational goals.
Examples of capabilities:
Innovation: skills of research and development of new/ better products, services and ways of
organization.
Operations: The ability to effectively perform the activities of the firm. So being good and
effective at producing their products and services.
Marketing: The skills of a firm to develop and sustain brands and get customers to buy their
brands. Recognize potential customers demands, develop products to fit the demands and
communicate these products.
Logistics and services: The ability of firms to manage interactions with customers and
bringing the products to the right customer.
Corporate coordination: The planning skills and control system of a firm.
Value chain: The chain of how the different primary activities of a firm come together and add value
to the production of goods and services.
,VIRO framework: A model to check if a resource adds value. The bigger the value, the more profit.
Does the resource create value? Is it rare? Is it hard to copy? Is it hard to organize?
- Value creation: Does the resource add value? If we do not keep improving what we do
today, our performance will go down. Analyze if the resources add value. Only value-
creating resources lead to competitive advantage. Because of changes in the competitive
landscape resources can become non value creating. That is why it is important to keep
checking if something is still value creating and where there room is for improvement.
- Rarity: Are you the only company with a specific resource? How rare is recourse.
Temporary competitive advantage: An exclusive resource that a company has that other
companies don’t have. This way the company outperforms their competitors for a
limited time.
- Imitability: How difficult is it to copy the resource? If it’s easy to copy it will not be
profitable in the long run. How long will it stay rare?
Casual ambiguity: The difficulty of identify the things that make a firm successful. Most
managers of a firm itself don’t even know what makes than successful. This way it is
nearly impossible to know what makes them successful.
- Organization: Is it organizational? Is it hard to organize?
Sustainable competitive advantage: The ability to perform above average performance.
Is everything good organized so that the profit is optimized?
Appropriability: The ability of a firm to receive their made profits.
Benchmarking: Comparing your resources to your competitors to see where you can do better on the
base of 2 questions: 1. Which resources are most important in your industry? 2.How strong are your
strengths and weaknesses compared to your competitors? Benchmarking involves 4 steps:
1. Choose witch organization you are going to use to compare with.
2. Find witch resources are relevant. You can classify them in the categories: primary resources,
the value chain and capabilities.
3. Asses (evalueer) the importance of your resources. What is important and has to be
developed?
4. Asses the strengths of your company and that of your competitor.
The purpose of benchmarking:
Helping managers understand their own organization.
It’s tells you where you have to catchup so you don’t get behind with your competitors. It
doesn’t tell you how to become better than them.
It helps making strategic decisions, such as outsourcing and offshoring.
, Outsourcing: Hiring another company to do certain activities for your company.
Outsourcing can be considered if the service of the potential outsourcer is better than your own
company and can be managed smoothly.
Business process outsourcing: The outsourcing of services such as IT, HR of logistics.
Offshoring: Hiring a company abroad to do certain activities for your company. Offshoring can be
chosen because the prices are cheaper in another country. F.E. Cheaper labor or cheaper production.
Nearshoring: offshoring to a nearby country. This way the travel and transport costs are lower.
Reshoring: Bringing the activities back to the home country of the company. This could be because of
the rising prices or the risks of offshoring.
Domestic outsourcing: outsourcing to a firm in the same country.
Captive offshoring: setting up a subsidiary (dochteronderneming) abroad and staff it with locals.
Ib summary of book + power point Chapter 6 Investing abroad directly
Foreign direct investment (FDI): a company does an investment aboard. They own and control that
operation. That could be mergers (fusies: when two companies go together and form one company)
and acquisitions (overnamens) or by starting a new company yourself.
Multinational enterprise (MNE): A firm that engages (zich bezig houdt) in foreign direct investments
and operates in multiple countries. The main firm who does the investments.
Foreign portfolio investment (FPI): The firms invests in portfolio’s (portfeuille) of foreign financial
assets such as stocks and bonds. They do not participate in the management. So they have nothing to
say.
Joint venture: (gezammelijke onderneming) A shared ownership by several domestic or foreign
companies.
Horizontal FDI: A company copies the activities they do in their home company to a foreign country.
For example Mac Donald’s opens a new Mac Donald’s in a new country with the exact same value
chain ens.
Vertical FDI: A company moves an upstream or downstream of the value chain stages to a foreign
country. Your going to perform a different action in a different country. For example only dealing.
Selling cars in the US but not producing them in the US.
Upstream vertical FDI: When a firm moves the upstream of the value chain abroad. F.E. They buy the
supplier.
Downstream vertical FDI: When a firm moves the downstream of the value chain abroad.
Reasons for a FDI:
Raw materials that the home country doesn’t have.
Low cost for sources for labor, components, parts or finished goods.
Invest in new markets.
To reduce transport costs.
To avoid trade barriers.
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