Summary lecture 1 and 2, introduction to IB

Lecture 1:

Video 1:

ib deals with the relation between a firm and its new host country environment, how abroad a succes. Choose export or invest abroad.

Key question: Where do you locate what type of activity in which way and what effect does this have on the firm and environment.

Starting point: competitive strength, something where they are very good in. Make in one country, but van go to another country.

Verbeke firm specific advantage step 1:

Develop unique resources, physical, financial or human resources.

Upstream knowledge, start of the process, like product and process related things

Downstream: at the end of the process

Step 2: routines, creates a specific advantage.

Fsa’s reflect the firm’s distinct strengths across rivals, source of competitive advantages in the market place. You need step 1 and 2,3

Step 3: recombination of existing resources in new ones (entrepreneurial skills, continuously develop your products

Fsa’s are location bound, for example local reputation, unique local way to do things that does not work in another country, stay in home country(immobile) or non-location bound.

Video 2:

Home country-firm-fsa’s inside the firm-host country

The triangle represenst the fsa’s that can be used international and the ones that can’t, works both ways, (see slide)

Fsa’s are developed in a home country.

Paradox, if a fsa cosist of easily codifiable knowledge (and can be written down in a handbook), the it can be easily transeferred, but can also be easily intimated by other firm. Which are more difficult to imitate, are more important for a company.

Host country location advantages are related to the reason for firms going to the countries like, natural resource seeking, market seeking or efficiency seeking
 

But just having fsa’s is not always enough. Sometimes a local partner is needed, they can learn from you and steal your ideas (complementory resources).

Why do not all firms do it like this, these influences whether a fsa’s can be transferred across the border to the host country?
1. Bounded rationality, information is partial an incomplete, limited mental capaticity

2. bounded reliability, opportunistic behavior, imperfect effort.

(3. exogenous factors)

Lecture 2:

4 archetypes (There is not one best model, depends on FSAs and host country :

1. Centralized exporter, exports one final product. Standaridized products manufactured at home, host country locationa  factors=customers. FSA is in body of service or products, like motion picture studios
2. International projector, clones home operations, like dinsey. Only the internationally transfarable fsa’s are taken to the host-country
3. International coordinator, main transferable advantages to countries, efficiency seeking. Example, nike
4. Multi-centered MNE, each host country develops own location bound FSAs, only transfer of core routines. Like local adaption. Like a kroketburger.

Extreme perspectives:

1. Prahalad and hamels’s core competences approach, too much focused on firm characteristics
2. Porters diamond of country/industry competitiveness, ‘’ on country characteristics

Characteristic of core competences,

1. Difficult to imitate
2. Be broadly used in variety of markets
3. Make a contribution to customer needs
4. Loses core competence it will effect a firms performance negatively

Key is fit between industry demands and FSAs types

Porter five elements

1. Factor conditions, related to example labor, shows the inputs
2. Demand conditions, if buyers are very demanding, external pressure increases on firms
3. Related and supporting industreis, high quality firms etc.
4. Firm strategy, structure and rivalry,
5. Government and chance, difficult to control, but have an impact. Like innovations processes or COVID-19

 When diamond is weak, firms will not create non-location bound FSAs

But Porter misses one key point, to much home country driven and deterministic.