HOST AND HOME COUNTRY FACTORS IN INTERNATIONAL STRATEGY
40 important questions on HOST AND HOME COUNTRY FACTORS IN INTERNATIONAL STRATEGY
What is the nature of home country location advantages according to the text?
- A nation’s competitiveness depends on industry capacity to innovate and upgrade
- Companies gain advantage due to pressure and challenge
- Strong domestic rivals, aggressive suppliers, demanding customers contribute
- Long-term competitiveness from innovation and productivity improvements
How can location advantages impact Foreign-Specific Assets (FSAs)?
- Pivotal for FSAs as they drive company development
- Could be in firm's own or host country
- Essential to assess relative to strengths of other locations
- Play a role in shaping firm-specific advantages
How does Michael Porter’s work influence the competitive performance of firms according to the text?
- Nation influencing international competitive performance of firms
- Proximate environment shaping competitive success over time
- Firm-specific advantages created by external pressure
- Framework for understanding nation competitiveness in industries
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What elements does Porter's Competitive Advantage of Nations framework focus on to enhance a nation's competitiveness?
- Factor conditions, supporting industries, firm strategy and structure, domestic demand
- Understanding industry competitiveness between countries
- Enhancing competitiveness through improving mentioned conditions
- Nations can improve competitiveness by enhancing these factors
What role do external pressures from the home country play in creating Foreign-Specific Assets (FSAs) according to the text?
- External pressures contribute to creating FSAs
- Pressure from home country shapes firm-specific advantages
- FSAs arise from influence of nation on competitive performance
- Firm's competitive success over time influenced by proximate environment
What are the four key attributes that determine a nation's competitive advantage according to Porter's model?
- Factor Conditions: The nation's position in factors of production, such as skilled labor or infrastructure, necessary to compete in a given industry.
- Demand Conditions: The nature of home-market demand for the industry's product or service.
- Related and Supporting Industries: The presence or absence in the nation of supplier industries and related industries that are internationally competitive.
- Firm Strategy, Structure, and Rivalry: The conditions in the nation governing how companies are created, organized, and managed, as well as the nature of domestic rivalry.
What are the indirect influencers on students while studying?
- Chance
- Government
- External environment
What are the direct influencers on students while studying?
- Others
- Peers
- Family
- Teachers
What are advanced factors associated with factor conditions?
- Require significant investment
- Not inherited
- Include modern digital infrastructure and university research institutes in specialized fields
Differentiate between generalized factors and specialized factors in factor conditions as per Porter.
- Generalized factors like highway systems or debt capital do not have a significant impact
- Specialized factors, such as narrowly skilled personnel or specific infrastructure, make a big difference
What three attributes of home demand conditions does Porter emphasize?
- Nature of buyer needs
- Size and growth pattern of domestic demand
- Internationalization of domestic demand
- These factors focus on sophistication of buyer needs to drive competitiveness and FSAs creation
How can a sophisticated domestic market enhance a nation's competitive advantage according to Porter?
- Providing a testing ground for new products and innovations
- Pressuring firms to create FSAs
- Enabling transfer of created advantages to other countries
Explain the concept of related and supporting industries in Porter's theory.
- Industries sharing technology, inputs, distribution channels, skills, or customers
- Critical for a firm's international competitiveness
- Strong and competitive related industries enhance a nation's competitive advantage in a particular industry
How can a highly competitive home-based industry and domestic rivalry contribute to a nation's competitive advantage according to Porter?
- Efficient governance structure and domestic rivals drive firms to be internationally competitive
- Conditions in the nation that govern firm creation, organization, management, and domestic rivalry influence competitiveness
What is the role of government and chance in shaping competitive advantages in a specific industry?
- Government sets playing field parameters, provides incentives to innovate, promotes competition
- Regulations for environmental policies can also drive innovation
- Chance includes external forces like wars, natural disasters, and technological breakthroughs
How does the interaction among the four diamond attributes impact the creation of firm-specific advantages (FSAs)?
- Strong presence of the four diamond factors leads to recombination capability in an industry
- Abundance or strength of these factors enables firms to develop FSAs
- Missing factors can drive firms to be more innovative for FSA creation
What happens when a country or industry has a weak diamond according to Porter's theory?
- Inability to create NLB FSAs
- Unable to expand internationally
- Weaknesses prompt the need for firms to focus on innovation
How does a strong diamond impact the creation of NLB FSAs and the ability to expand?
- Strong diamond stimulates the creation of NLB FSAs
- Firms become able to expand internationally
- Strength in diamond attributes fosters the creation and expansion of NLB FSAs
What is the significance of understanding the dynamics of the diamond concept in industry competitiveness according to Porter?
- Understanding the dynamics helps in predicting industry growth
- Key in assessing firm-specific advantages and international expansion capabilities
- Integral to strategic planning and industry analysis
What influences the creation of advanced factors in the competitive advantage of nations?
- Success hinges on the interplay between linkages in successful industries both vertically and horizontally.
- The proximity of companies within an industry also plays a critical role.
What are the four sets of national influences mentioned that affect competitive advantage?
- Factor conditions: Basic factors of production like natural resources and unskilled labor.
- Investment: Capital equipment investment and technology transfer from overseas.
- Innovation: Interaction of all four determinants to advance technology creation.
- Wealth: Managing existing wealth and the dynamic effects on competitive advantage.
What are some criticisms of Porter’s model when applied in the context of international business?
- No real role for the host country
- Sharp distinction between home base units and other countries
- Tautological nature
- Descriptive rather than predictive framework
- Difficult operationalization of factors
- Limited applicability to certain types of economies
What aspect of Porter’s model is criticized regarding the role of host countries in international business?
- No real role is defined for the host country in Porter's model
- Emphasis placed on home country conditions forcing firm development
- Lack of acknowledgment of host country contributions to firm success
How does Porter's model stand out in terms of predictiveness in the context of international business?
- Framework is more descriptive than predictive
- Difficulty in operationalizing many factors as per the model
- Limited predictive power in anticipating outcomes in international business scenarios
What are three criticisms of Porter's diamond model?
- It does not address fully the complexities of international management, especially for MNEs based in smaller countries with large neighbours.
- Aligning double diamond thinking, like David Teece proposed, inward FDI as a force for upgrading a local economy is neglected.
- It ignores the need for location-bound FSAs in host countries.
How does the criticism of Porter’s diamond model relate to MNEs based in smaller countries with large neighbors?
What does the criticism suggest should be considered instead of Porter’s 'single diamond' approach for MNEs?
According to the criticism, what important aspect for upgrading a local economy is neglected by Porter’s diamond model?
Why is the need for location-bound FSAs in host countries overlooked by Porter’s diamond model?
What issue is highlighted by the criticism that Porter’s diamond model is fundamentally tautological?
How does Porter argue selective factor disadvantages could drive domestic innovation and upgrading according to the criticism?
What are the components of the multilevel analysis of the diamond determinants shown in the figure?
- Factor conditions: Local, State/provincial, National, Foreign, Global; Strengths, Weaknesses, Opportunities, Threats
- Demand conditions: Local, State/provincial, National, Foreign, Global; Strengths, Weaknesses, Opportunities, Threats
- Related and supporting industries: Local, State/provincial, National, Foreign, Global; Strengths, Weaknesses, Opportunities, Threats
- Firm strategy, industry structure and rivalry: Local, State/provincial, National, Foreign, Global; Strengths, Weaknesses, Opportunities, Threats
- Competitive performance: Central to the model, influenced by the aforementioned components
What are the host country location advantages that can push a firm to want to locate somewhere?
- Market Seeking:
- - Market size & growth
- - Consumer wealth & taste
- - Availability of sales channels
- - Availability of marketing and sales professionals
- Efficiency Seeking:
- - Availability of production factors at low cost (labor, energy)
- Resource Seeking:
- - Availability of inputs (natural resources, material inputs, land, infrastructure)
- Strategic Asset Seeking:
- - Availability of knowledge-related assets
- - Availability of specialized intermediaries and service providers
What is the concept of Strategic Asset Seeking Foreign Direct Investment (FDI) in the internationalization of companies?
- FDI involves the allocation of resource bundles by an MNE in a host country
- Purpose is to perform business activities with strategic control
- Focus on building knowledge of host countries
- Involves combinations of physical, financial, human, knowledge, and reputational resources
How do venture capitalists differ from traditional foreign portfolio investors in terms of involvement with companies?
- Venture capitalists provide organizational, managerial, industry, and technological expertise
- Venture capitalists exert more frequent and extensive control over the company compared to traditional portfolio investors
- They invest in companies with high growth potential, offering expertise and control beyond typical investment approaches
What is the key goal of **Export Platform** activities for Multinational Enterprises (MNEs)?
- MNEs aim not only to produce cheaply, but also to ship products to third countries
- Infrastructure plays a crucial role in achieving this goal effectively
How do venture capitalists differ from traditional foreign portfolio investors in terms of their approach to funding companies?
- Venture capitalists invest in opportunities with high risk and high potential returns
- They provide funding in exchange for equity in early-stage or high-growth companies
- Venture capitalists seek strategic assets and offer expertise for growth potential
Why do venture capitalists tend to fund ventures located close to their domicile?
- Venture capitalists prefer investments close to home for easier monitoring and control
- Proximity facilitates effective organizational involvement in the ventures they fund
What does **Venture Capital** entail in terms of the type of companies venture capitalists typically invest in?
What are the characteristics of **Strategic Asset Seeking** activities carried out by Venture Capital Firms (VCFs)?
- VCFs focus on investing abroad to build knowledge of host countries
- They leverage combinations of physical, financial, human, knowledge, and reputational resources to gain strategic control
- VCFs are involved in activities that involve taking over companies, alliances, or becoming insiders in foreign knowledge clusters
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