Core concepts - Foundations of international strategy

5 important questions on Core concepts - Foundations of international strategy

What is complementary resources of external actors?

MNEs need complementary resources of external actors (technology providers, licensees, local distributors, partners, etc.) to be successful abroad. You cannot do everything on your own beacause of cultural, economic, institutioanl and spatial distance.

What is liability of Foreignness (LoF)

A foreign firm has an a-priori disadvantage vis-a-vis a local firm because of:
  • Geographic
  • Linguistic
  • Economic
  • Political
  • Educational
  • Institutional
  • Cultural
Distances

What is bounded reliability?

"Scarcity of effort" - imperfect effort towards pre-specified goal achievement, thereby leading to incomplete fulfillment of promises. (Trust issue)
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What is the advantage of a foreign firm?

  • Cultural attractiveness (US fastfood, french wine, italian styling)
  • The possibility of arbitraging between different regimes (cost of input, taxes, environmental and labor standards)

What are the four types of non-transferable/ location bounded FSAs?

  • Stand-alone / ommobile resource linked to location advantages
  • Local marketing knowledge and reputational resources
  • Local best practices
  • Domestic recombination capability

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