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.

1. Theory

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

4. Companies

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

9. Born Global

11. OLI

12. OLI

13. OLI

14. LLL

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

26. Theory
Red Ocean Blue Ocean

29. Five Step Process
1. Find competitors
2. Find areas of competition
3. Chart red ocean
4. ERRC
5. Chart blue ocean

30. 1.
Hamburgers
McD
JW Marriot
EL Coral

31. 2.
Competition
Lo price
Speed
Number of ingredients
Cleanliness

32. 3. Create Red
Ocean
Strategic Canvas

33. 4. ERRC

34. 5. Create Blue
Ocean
Strategic Canvas

35. Theory
Red Ocean Blue Ocean

37. Red Ocean
• Intro band
• Festivals

38. ERRC
• Eliminate: Intro Band
• Reduce:
• Raise: Video, Meeting Band
• Create: Snake Pit, local content

39. Blue Ocean
• E: Intro Band
• R: Video, Meeting Band
• C: Snake Pit, local content

41. Theory
Red Ocean Blue Ocean

43. 43
Porter’s
Competitive
Strategies

44. 44
Porter’s five forces model
4-
44
Market
Competitors
Intensity
of rivalry
New entrants
Suppliers Buyers
Substitutes
Market level
Industry level

45. Factor
conditions
in Porter’s
diamond
Climate
Physical infrastructure
Natural resources
Educational system
Human resources
Technological infrastructure
Capital

46. Demand
conditions
in Porter’s
Diamond
Nature of home demand
Size of home demand
Economies of scale
Transportation costs
Buyer sophistication

47. A Sixth Force
Complementors:
Example:
•Faster CPU chips fuel
sales
of personal computers.
2-
47

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.

50. Porter
Incorrect
Technology
National Policy
Black Swans

51. Collaborative Advantage – Burton’s 5 sources
2-
51
Industry collaborators
Horizontal strategic alliances
Suppliers Buyers
Previously unrelated industries
Substitutes and complements
Prospective diversification
alliances
Related diversification alliances
Relational contracting,
quasi-integration
Partnering w/
channels., buyers

52. Collaborative Strategy
2-
52
Industry environment
Five sources model
The firm
Distinctive competencies
vis-à-vis collaborators
Strategic Choice
Maximize
collaborative advantage

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)

55. Value Innovation
Resources
1
Competencies
2
Competitive
Benchmarking
3
Value
Innovation
4

56. The roots of performance and competitive advantage
Resources
Core competences
competences
Competitive advantage
Performance
Intangible Assets
Tangible Assets

57. 4-57
Illustration of the core competence
P 111

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

59. The Value Net

60. Value Neg

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)

62. The Value Net
Customers
Competitors Complementors
Suppliers
Company
Vertical Alliances
Horizontal Alliances

63. Slide 4.27
Competitive Benchmarking profile
Figure 4.1 Development of a firm’s international competitiveness (Continued)