1. The Uppsala internationalization model proposes that firms gradually increase their international involvement through incremental steps of no regular exporting, using independent representatives, establishing sales subsidiaries, and finally production subsidiaries in foreign markets. This allows firms to take a gradual approach and manage risk.
2. Transaction cost analysis theory suggests that firms should internalize activities through wholly owned subsidiaries when the transaction costs of using external organizations are too high.
3. Porter's diamond framework analyzes the national environment using factors of demand conditions, related and supporting industries, firm strategy/rivalry, and factor conditions that influence the competitiveness of industries within that nation.
3. Uppsala internationalization model
Johanson and Wiedersheim-Paul, 1975
No regular
export
(sporadic)
Independent
representatives
(export modes)
Foreign sales
subsidiary
Foreign
production
and sales
subsidiary
Market A
Market B
-
Market N
Increasing market commitment
Increasinggeographic
diversification
5. The transaction costs analysis model
Coase, 1937, Williamson, 1985)
Organization of international activities
and the choice of international market
entry mode
1
„If the transaction costs through externalization (e.g.
through and importer or agent) are higher than the
control cost through an internal hierarchical system, then
the firm should seek internalization (hierarchies) of
activities, i.e. implementing the global market strategy in
wholly –owned subsidiaries. Or… if the friction between
buyer and seller is too high then the firm should rather
internalize, in the form of its own
suubsidiaries.“(Hollensen, S., 2007)
2
25. National Competitiveness “policy clusters”
External
Competitiveness
•Openness to
international trade
Regulatory
Competitiveness
•Attractiveness of
the domestic
business
environment
•Regulation
supportive of
efficient markets
Public sector
Competitiveness
Investment in
infrastructure
Security
Education
Dangers: ideological bias (“liberalisation”) lack of economic analysis
Source: Weymouth and Feinberg
48. Complementor
A player is a complementor if
customers value your product
more when they have the
other player’s product than
when they have your product
alone.
A player is your complementor
if it’s more attractive for a
supplier to provide resources
to you when it’s also supplying
the other player than when it’s
supplying you alone.
49. Competitor
A player is your competitor
(substitutor) if customers
value your product less when
they have the other player’s
product than when they have
your product alone.
A player is your competitor if
it’s less attractive for a
supplier to provide resources
to you when it’s also supplying
the other player than when it’s
supplying you alone.
53. Five forces of competition Five sources of collaboration
Firm’s distinctive competencies
Sustainable competitive
advantage
Sustainable collaborative
advantage
Composite strategy
Maximize overall sustainable advantage
PORTER BURTON
54. Slide 4.16
Figure 4.2 Illustration of customer value (perceived value)
Source: adapted from Anderson et al. (2007, 2008); McGrath and Keil (2007); Smith and Nagle (2005)
58. Game Theory & Strategy
Game theory is a tool for understanding
how decisions/actions by players in the
value net affect each other.
• - Play out all the actions/reactions into the
future and then reason backward to determine
appropriate actions today (assumes rational
behavior).
1
The main practical use of game theory is
to help a firm decide when to compete
and when to co-operate.
2
61. Changing
PARTS of the
“Game” to
Add/Capture
Value
• Players: customers, suppliers, substitutors (competitors),
complementors, you (e.g., HSC asking for pmt to play)
• Added Values: what each player brings to the game—
raise your value added (e.g., TWA Comfort Class)
• Rules: give structure to the game. Laws, customs,
practicality, contracts. Using and revising rules to
enhance the game. (e.g., MCC clauses)
• Tactics: moves used to shape the way players perceive
the game and hence how they play. (e.g., IB fee structure)
• Scope: the boundaries of the game. It is possible to
expand or shrink the those boundaries. (e.g., multi-
market competition)