Summary: Lecture 1

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• International Strategic Management

  "Is a management planning process aimed at developing strategies to allow an organization to expand abroad and compete internationally." (Lassare, 2010)

• What advantages do international firms have?

  CALT
  1. Cost benefits
  2. Arbitrage benefits
  3. Learning benefits
  4. Timing benefits

• what "cost benefits" do international firms have?

  Internationalization allows the firm
  
  1. to achieve economies of scope and scale ( product/process standardisation, and increased bargaining power)
  
  2. and to better structure its organization & logistic networks.
  
  e.g. Ikea can take advantage of low manufacturing costs in China to deliver high priced goods to NL

• What "timing benefits" do international firms have?

  
  Global firms can access markets sequentially and stage global advertising campaigns.
  
  e.g. Global firms can stage global advertising campaigns. IPLC suggests a gradual release of goods.

• What "Arbitrage benefits" do international firms  have?

  
  Price differences implies opportunity: Transfer resources from low value locations to high level locations (labour, capital, or other resources)

• What "Learning benefits" do international firms have?

  These accrue from the coordinated transfer of information, best practices and people across subsidiaries. These eliminate costly duplications.
  
  
  
  e.g. Global firms can centralise their operations, and need not replicate their activities in other markets.   

• Loss of Quick Response Abilities...

  Because the local firm is flexible, and close by, the local firm can respond and supply the market.

• Firm Specific Advantages (three types distinguished by Verbeke)

  1. Resources, 2. Routines 3. Recombination skills

• What are recombination skills?

  Recombination skills are skills that allow the firm to recombine existing resources and routines, to create new combinations of resources that add value to the firm. Recombination can make the stale new.

• FSAs are a combination of..

  Resources + Routines + Recombination skills