Name of Institution

Global Environment Gaining Competitive Advantage

Name of Institution

Three ways in companies can offset domestic disadvantage or gain competitive advantage.

Three approaches

Name of Institution

1. Using Location to build competitive advantage. 2. Using cross Border Transfers of competencies and capabilities to build competitive advantage. 3. Using cross Border coordination to build competitive advantage.

Using Location as competitive advantage Name of Institution

Using locational advantage company must consider two issues; 1. Whether to concentrate each activity it performs in few selected countries or disperse performance of activities to many countries. 2. In which country to locate particular activity.

Using Location as competitive advantage-contd..

Name of Institution

Companies tend to concentrate their activities in limited no. of locations in following circumstances, 1. Cost of manufacturing is less in other countries 2. When there are significant scale of economies. - Gives cost leadership - Better cost advantage for global dominance - Company has to be largest Manufacturing share - Production concentrated to few plants
5

Location as advantage..contd.

Name of Institution

3. When there is a steep learning curve associated with performing an activity in a single location. 4. When certain locations have superior resources ,better coordination of related activities or offer other advantages

Dispersing of activities

Name of Institution

1. There are instances where dispersing activities is more

advantageous than concentrating them., e.g distribution to dealers, sales and advertising, after sales service, service industry( E&Y, PWC), 2. Dispersing is advantageous - when tpt cost, traveling, trade barriers make is too expensive to operate from central location. - Fluctuating exchange rates hedging Mostly Buyer related activities are dispersed while manufacturing/assembly /operation activities are clubbed to save on cost.
7

2. Using Cross Border Transfer of

competencies and Capabilities

Name of Institution

Transfer capabilities, competencies and resource strengths from country to country. Helps the company to achieve depth in valuable area. Dominating depth in value chain is strong basis for sustainable competitive advantage over MNCs , especially over domestic suppliers. E.g Wal-Mart- Discount retailing Whirlpool- technology transfer

Using Cross Border Coordination to build competitive advantage Name of Institution

Coordination of activities across different countries contributes to sustainable competitive advantage. Price cutting strategy against weak rivals in home markets ..capturing bigger market share while subsidizing profit shares in other countries. Using internet application, companies collect ideas for new and improved products. Incorporation of different attributes in products worldwide.
9

Profit sanctuaries ,Cross Market Name of Institution Subsidization

Profit Sanctuary: Market in which company derives substantial profits because of its strong or protected market position. Japan is profit sanctuary for Japanese companies as Govt. Policies are in favour . In Most cases crucial profit sanctuary in home market, but global cos may also enjoy the same with high profit margins. Companies that compete globally have more profit sanctuaries. Companies with large profit sanctuaries derive substantial profit as compared to Cos with single sanctuary.
10

Cross Market Subsidization to wage a strategic Name of Institution offensive

Supporting competitive offensives in one market with resources and profits diverted from operations in other market. Global country can subsidize a particular market by lowering price ..paying on thin margins, even lose the healthy margins, a practice called cross market subsidization. The global co. can capture substantial market share , make market roads. If Domestic co. is a leader, it can erode its profits, squeeze margins and competitive strength can be sapped.
11

Strategic Alliances with foreign partners

Name of Institution

Risks, 1. Conflicting Objectives 2. Language, cultural barriers, coordination, cost function 3. Decision making in respond to rapidly advancement in technology 4. Agreements 5. Over dependent on other company for essential expertise/capabilities
12

Making the most of strategic Alliances

Name of Institution

Picking a good partner Being sensitive to cultural differences Recognizing that alliance must work bith sides Ensuring that both parties live up to their commitments Structuring the decision making process Managing the learning process in order to fit into new circumstances.
13

Alliance are long lasting when..

Name of Institution

They involve collaboration with suppliers/distribution allies and each parties contribution towards value chain Both parties conclude that collaboration is in their mutual interest.

14