202402173_Principles_of_international_competitive_strategy.pptx

competitive strategy

1. Principles of International Competitive Strategy Yugandhar Sanapala 202402173

2. SECTION 1 Introduction to International Competitive Strategy "International competitive strategy is the integrated set of actions and decisions a firm takes to create and sustain competitive advantage when operating across national borders." What is International Competitive Strategy? The pursuit of competitive advantage in global markets Positions firms to leverage resources across borders Balances global integration and local responsiveness Coordinates activities across diverse markets Why It Matters Expands market potential beyond domestic boundaries Provides access to critical resources and capabilities Creates economies of scale and learning opportunities Enhances innovation through global knowledge networks Strategic Dimensions Geographic Scope Where to compete in global markets Competitive Advantage How to win in international competition Organizational Design Structure for global operations

3. SECTION 2 Theoretical Foundations: RBV, MBV, and Core Competencies Resource- Based View (RBV) "Competitive advantage stems from a firm's unique internal resources and capabilities that are valuable, rare, inimitable, and non- substitutable." Focus on internal unique resources Resources must be VRIN : Valuable, Rare, Inimitable, Non- substitutable Advantages created through resource heterogeneity and immobility International application: Leveraging unique resources across borders Market- Based View (MBV) "Competitive advantage is determined primarily by external market factors and industry structure that shape a firm's strategic positioning." Focus on external market factors Based on industrial organization economics (SCP paradigm) Industry structure determines conduct and performance International application: Adapting to diverse market conditions Core Competencies "Distinct, hard- to- replicate knowledge, skills and technologies that create unique customer value and differentiate a firm from competitors." Developed by Prahalad & Hamel (1990) Must provide access to multiple markets Contribute to customer benefits of end product International application: Global competence deployment Integration in International Competitive Strategy RBV Perspective Focus on transferring, leveraging, and developing valuable resources across borders MBV Perspective Adapt strategies to different market structures and competitive environments globally Core Competencies Build and leverage distinctive capabilities across worldwide operations

4. Major Strategy Frameworks Exploring the key models that guide international competitive strategy formulation and implementation Porter's Diamond Bartlett & Ghoshal OLI Paradigm

5. FRAMEWORK 1 Porter's Diamond Model of National Advantage "The Diamond Model explains why certain industries within a nation become internationally competitive while others might not, focusing on four interrelated determinants that shape the environment for competition." Real- World Examples Japan: Automotive Industry Intense domestic rivalry (Toyota, Honda, Nissan) Demanding home consumers Strong supplier networks Italy: Fashion Industry Specialized factor conditions (craftsmanship) Sophisticated local demand Clusters of related industries Silicon Valley: Tech Industry Advanced talent pool (Stanford, Berkeley) Fierce competition between startups Venture capital ecosystem Additional Elements: Porter also recognized the roles of Government as a catalyst and challenger, and Chance events (technological breakthroughs, wars, external political developments) in influencing the diamond. Firm Strategy, Structure, and Rivalry National context and domestic competition Factor Conditions Nation's position in factors of production Related & Supporting Industries Presence of supplier industries Demand Conditions Nature of home market demand

6. FRAMEWORK International Strategy Frameworks: Bartlett & Ghoshal "The Bartlett & Ghoshal Matrix categorizes MNC strategies based on the pressures for global integration and local responsiveness, resulting in four distinct approaches to international strategy." Pressure for Local Responsiveness International Low integration, Low responsiveness Home- centered knowledge transfer to foreign markets French/Italian Wine Exporters Low integration, High responsiveness Decentralized federation with local autonomy Nestlé Global High integration, Low responsiveness Centralized hub with global efficiency focus Intel, Pfizer Multidomestic Transnational High integration, High responsiveness Integrated network with distributed capabilities Unilever Key Characteristics Global Integration: Cost efficiency, standardization, and economies of scale Local Responsiveness: Adaptation to local tastes, regulations, and market conditions Strategic Implications Organizational Design: Structure follows strategy - different designs for each quadrant Knowledge Management: Different approaches to knowledge creation and transfer Innovation Strategy: Centralized vs. distributed innovation models Subsidiary Roles: Implementers, contributors, strategic leaders, or black holes Pressure for Global Integration

7. ORGANIZATIONAL MODELS MNE Archetypes and Organizational Structures Verbeke (2013) identified four distinct archetypes of Multinational Enterprises (MNEs) based on their administrative heritage and organizational approach to international business. 1. Centralized Exporter Home- country managed firm selling products internationally Production facilities primarily in home country Standardized products with minimal adaptation Similar to International/Global strategy French/Italian Wine Producers 2. International Projector Transfers proprietary knowledge from home country Foreign subsidiaries are clones of home operations Business model "copied and pasted" abroad Replication of successful domestic formula Ford (early 1900s) Disney Theme Parks 3. International Coordinator Manages global value chain across borders Taps into location advantages from multiple countries Flexible logistics and integrated operations Optimizes global efficiencies while maintaining quality Apple 4. Multi- centred MNE Set of entrepreneurial subsidiaries abroad Local responsiveness is foundation of strategy Unified by shared financial governance Similar to Multidomestic strategy Philips (early years) Organizational Implications Control Structure Varies from centralized to distributed authority Knowledge Flows Center- to-subsidiary vs. network- based exchanges Resource Allocation Impacts investment patterns and strategic priorities

8. MARKET ENTRY FRAMEWORKS Market Entry Strategies: OLI Paradigm, Uppsala Model "Strategic market entry frameworks provide structured approaches to evaluating international expansion opportunities and determining the optimal modes of entry based on firm capabilities and market conditions." OLI Paradigm (Eclectic Paradigm) Developed by John Dunning to explain Foreign Direct Investment (FDI) decisions Three key advantages determine entry mode selection: Example Apple: Leverages proprietary technology (O), manufactures in low- cost regions (L), and maintains control over core processes (I) Uppsala Model Developed at Uppsala University; explains incremental internationalization Firms expand gradually as they gain knowledge and reduce perceived risk Example IKEA: Initial Nordic expansion, then Western Europe, followed by North America, and finally developing markets OLI Framework Focus on psychic distance Stage 1: No regular export activities Stage 2: Export via independent representatives Stage 3: Establish foreign sales subsidiary Stage 4: Foreign production/manufacturing FDI Location Ownersh I p in ternalization Decision

9. GLOBAL COMPETITION Competitive Strategy in International Markets "Applying Porter's generic strategies across borders requires balancing standardization with local adaptation to match varying competitive landscapes and market conditions." Cultural Adaptation Balancing standardization with local preferences Competitive Response Varying intensity of rivalry across markets Resource Allocation Optimal distribution across global operations Regulatory Environment Navigating diverse policies and restrictions Global Cost Leadership Leveraging economies of scale across countries Standardizing products to minimize costs Example: Xiaomi Global Differentiation Creating unique features valued worldwide Building global brand recognition Example: Apple International Focus (Cost) Targeting specific segments across markets Efficiency within narrow global segments Example: Aldi Global Strategy Implementation Challenges International Focus (Differentiation) Serving specialized needs in multiple markets Premium positioning for global niche Example: Montblanc

10. IMPLEMENTATION Strategic Implementation: VRIO Analysis VRIO Analysis is a framework that assesses resources and capabilities to determine if they can be sources of sustained competitive advantage in international markets. The VRIO Framework V Valuable Does the resource enable the firm to exploit opportunities or neutralize threats? R Rare Is the resource controlled by only a small number of competing firms? I Inimitable Is it difficult for other firms to imitate or substitute the resource? O Organization Is the firm organized to exploit the full competitive potential of its resources? Competitive Implications V R I O Competitive Implication No - - - Competitive Disadvantage Yes No - - Competitive Parity Yes Yes No - Temporary Advantage Yes Yes Yes Yes Sustained Advantage VRIO Assessment: Valuable (creates premium ecosystem), Rare (unique integration), Inimitable (complex integration), Organized (systematic exploitation) = Sustained Advantage International VRIO Application Examples Apple Toyota Resource: Integrated ecosystem Resource: Production system (TPS) VRIO Assessment: Valuable (efficiency), Rare (unique implementation), Initially inimitable (now partially imitated), Organized (embedded in culture) = Temporary → Competitive Parity LVMH Resource: Brand portfolio VRIO Assessment: Valuable (premium pricing), Rare (historic heritage), Inimitable (history cannot be duplicated), Organized (brand management expertise) = Sustained Advantage Made with Genspark

11. Challenges and Applications Addressing modern obstacles in global competition and examining real- world strategic implementations Contemporary Challenges Case Studies Decision- Making Tools

12. SECTION 2 Contemporary Challenges in International Strategy Digital Transformation Accelerated pace of technological change Digital disruption of traditional business models Varying digital infrastructure across markets Data governance and cybersecurity concerns Strategic Response Digital- first strategies with market- specific adaptation ESG Considerations Carbon footprint across global operations Supply chain ethics and transparency Diverse regulatory standards by country Stakeholder pressure for sustainable practices Strategic Response Integrated ESG frameworks with localized implementation Geopolitical Risks Trade tensions and protectionist policies Shifting regional power dynamics Political instability in key markets Disruption of global supply chains Strategic Response Diversified operational footprint and scenario planning Strategic Implications These challenges require firms to balance global integration with increased flexibility, develop dynamic capabilities, and adopt multi- local strategies that can respond to rapidly changing conditions across different markets. Made with Genspark

13. FINAL INSIGHTS Decision- Making Tools & Concluding Insights Key Takeaways 1 Successful international strategy requires balancing global integration with local responsiveness - selecting the appropriate approach based on industry dynamics and firm capabilities 2 Competitive advantage internationally stems from leveraging unique resources and capabilities (RBV) while positioning effectively within the industry structure (MBV) 3 Strategic market entry decisions should consider ownership, location and internalization advantages (OLI), while potentially adopting an incremental approach to knowledge acquisition (Uppsala) Final Perspective In today's dynamic global environment, international competitive strategy must be responsive yet consistent , globally integrated yet locally adaptive , and structured yet flexible . The frameworks presented provide essential tools for navigating these complex tensions and developing sustainable competitive advantage across borders. SWOT Analysis Assess internal Strengths/Weaknesses against external Opportunities/Threats across markets PESTEL Analysis Evaluate Political, Economic, Social, Technological, Environmental, and Legal factors by country Five Forces Analyze competitive intensity and market attractiveness in each geographic region Strategy Diamond Align Arenas, Vehicles, Differentiators, Staging, and Economic Logic globally Ansoff Matrix Guide growth decisions across markets (Market Penetration, Development, Diversification) Made with Genspark