Question 1
- Strategy as a plan is viewed as a long-term approach that will be used in adopting and solving a problem, in order to determine the future direction of the enterprise, it is important to understand its current situation and all the possible means by which it can use to attain particular goals, planning is a fundamental part of the strategy formulation process. Strategy as an action is the action plan by which firms develop to build, improve, and safeguard their competitive advantage at every operational stage. It also gives a version for using competitive uncertainty; to enable the firm grow in the desired direction, a firm can also exploit market levels. International business industry defines strategy as a plan that guides commercial transactions which is taking place internationally between different countries, which aims at making profit.
- A) The industry-view argues that the state within an industry will to a large degree determine the firm’s strategy and performance.
B) This view, helps mangers to identify threats and opportunities, it describes to a large extent the performance of the firm because it determines the overall industry profitability and attractiveness in the market structure, it usually highlights the forces that affect the entry of the new firm into an international market and thus will show if the firm has the ability to overcome these forces or not so as to become market efficient.
- Value, rarity, imitability, and organization are normally wider frameworks that are much larger strategic schemes in a firm. The question of rarity is all about being able to compete effectively by possessing valuable resources which will give competitive advantage to the firm. For example, most of the IT firms rely on patents, intellectual property and license their patents to others as a competitive advantage, which makes them survive in the tough competitive international market. The question of imitability explains that most rare and valuable resources and sustain their competitive advantage in the market only if stiff competitors are facing challenges of imitating them. For this reason, most firms within the international market invest in tacit knowledge which is not easy to imitate. They also invest in superior management, motivation, and managerial talents which gives them advantage since they are not easily imitated. Japan for example has been a country which has flourished in technical innovations since their innovations are not easily imitated. For this reason, a multinational company like Toyota has managed to dominate despite many scholars conducting lots of research regarding its prominence. Even though it may be hard to imitate resources and maintain a greater competitive advantage in the market, it may be extremely difficult for an organization to succeed without proper organization. A firm should therefore be organized in such a way that it is possible for it to exploit all the available resources and maintain a greater competitive advantage through proper organization. This requires constant communication and good leadership skills. Because many multinational companies are scattered all over the world a good manager should be able to have good social complexity, which helps in overcoming social and cultural differences within the firm.
According to the table above a firm will perform poorly if it is not well organized. Consumers and customers will have low value with such companies even though they possess a greater competitive advantage. It therefore means that management is an integral part of the success of a business and therefore most companies should strive to be organized.
A firm will also perform averagely if it is valuable and organized but it is competitively not stable. However, firms that have a temporary competitive advantage are those firms that are considered valuable by their consumers. Such firms are also rare and well organized. Such firms will enjoy success for certain duration of time when their resources have not been imitated. However, the moment other investors begin to imitate their resources; such firms suffer from competition and perform poorly.
Consequently, there are firms in the international business that manage to stay consistently above advantage. Such firms enjoy a greater competitive advantage since their resources are not imitable. In addition to this, such firms are well organized and have good brand names hence are highly valued. Such firms command larger shares in the market due to loyal customers and good customer care services that they have.
- Generally a hierarchy exists in the different modes of entry into foreign markets; modes of entry are classified into, equity and non-equity modes according to the amount of resources available to establish operations in the foreign market. Equity modes need large resources from the firm consisting of joint ventures, acquisition and Greenfield investments, non-equity modes require lesser amounts of resources from the firms and include exporting and contractual agreements. The joint ventures consider the majority, minority and strategic alliances, between two firms, acquisition on the other hand will consider the hostile and friendly foreign markets that an enterprise can enter, in the non-equity modes the firm will consider direct and indirect exporting operations and see which one will work well for them, the contractual agreements looks at the licensing and franchising factors to make the enterprise legal and operational in the new foreign market.
- An entrepreneurial start-up company will overcome these liabilities by; developing experiences and resources, from different geographical regions, international business knowledge and services, obtaining information about potential foreign partners and grow complementary resources that will be needed to compete in the new environment, both internally and externally and to develop knowledge of how to operate in the new international market.
II. 1. It is applied to help the industry reduce risks that may occur during its operational period.
2. Japanese keiretsus can be termed as monopoly since large companies are family owned, these companies used to buy politicians in exchange for contracts, and capital markets. Industry based view on the other hand unites all industries considering the same pricing system and market operations; it tries to mitigate monopoly and influence the growth of small firms in the industry.
3. A company can pursue both the cost leadership strategy and a differentiation strategy at the same time, to achieve economy of scale, cutting costs while operating in a big market.
4. This may be due to social complexity of the resources, unique historical conditions and patents made by the other companies. The resources may also be rare and thus hard to obtain.
5. When a manager concentrates resources and capabilities in one competitive area and leaving another area, when the competition shifts to the neglected area the company will face a case of disarrangement of resources. And thus lose their competitive advantage.
6. It is important to incorporate aspects of the institutional environment of the home and host countries, MNEs will benefit from the inputs of the entire networks between their home and host countries.
7. Collective countries have a much higher bargaining power than individual countries, which on the other hand will have a much higher return than their counterparts.
8. The informal relationship-based exchange cannot replace the formal rule-based exchange, because it takes a longer time to realize the costs and benefits of a particular venture when using the informal relationship-based exchange.
9. When the risks are high, it will increase the tendency of the firm to enter the foreign market with lower use of resources to obtain greater flexibility in adapting to different conditions.
10. Born globals seek superior international business performance from the use of knowledge based resources in the sale of products in a number of countries.
11. Informal institutions influence the type of human resource a business will obtain; they also influence the structure of incentives and rewards that people will obtain from entrepreneurial activities.
