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Multinational Strategies for Competitive Advantage

There are three main ways for multinational companies to gain competitive advantage: 1) Locating activities across countries to lower costs or improve differentiation 2) Efficiently transferring capabilities between domestic and foreign markets 3) Coordinating dispersed activities in ways that domestic competitors cannot. Specifically, companies must determine whether to concentrate or disperse activities across locations based on factors like costs, scale, and resources. They can also build advantage by transferring capabilities across borders or coordinating activities internationally to choose strategies, shift production, and enhance brands consistently. Competing in emerging markets may require tailoring products through changes and local cultural understanding as well as attracting customers with price and quality. Management teams also need a mix of expatriate and local representatives.

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Yousab Kaldas
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91 views2 pages

Multinational Strategies for Competitive Advantage

There are three main ways for multinational companies to gain competitive advantage: 1) Locating activities across countries to lower costs or improve differentiation 2) Efficiently transferring capabilities between domestic and foreign markets 3) Coordinating dispersed activities in ways that domestic competitors cannot. Specifically, companies must determine whether to concentrate or disperse activities across locations based on factors like costs, scale, and resources. They can also build advantage by transferring capabilities across borders or coordinating activities internationally to choose strategies, shift production, and enhance brands consistently. Competing in emerging markets may require tailoring products through changes and local cultural understanding as well as attracting customers with price and quality. Management teams also need a mix of expatriate and local representatives.

Uploaded by

Yousab Kaldas
Copyright
© © All Rights Reserved
We take content rights seriously. If you suspect this is your content, claim it here.
Available Formats
Download as DOC, PDF, TXT or read online on Scribd

Multinational Strategies Pursuing Competitive Advantage by Competing

Multinationally

Three ways to gain competitive advantage


1. Locating activities among nations to lower costs or achieve greater product differentiation
2. Efficient/effective transfer of competitively valuable competencies and capabilities from
domestic to foreign markets
3. Coordinating dispersed activities in ways a domestic-only competitor cannot

1- Locating Activities to Build a Global Competitive Advantage


 Two issues
 Whether to
 Concentrate each activity in a few countries or
 Disperse activities to many different nations
 Where to locate activities -Which country is best
location for which activity?
2- Concentrating Activities to Build a Global Competitive Advantage
 Activities should be concentrated when
 Costs of manufacturing or other value chain activities are meaningful lower in
certain locations than in others
 There are sizable scale economies in performing the activity
 There is a steep learning curve associated with performing an activity in a single
location
 Certain locations have superior resources, allow better coordination of related
activities, or offer other valuable advantages
3- Dispersing Activities to Build a Global Competitive Advantage
 Activities should be dispersed when
 They need to be performed close to buyers
 Transportation costs, scale diseconomies, or trade barriers make centralization
expensive
 Buffers for fluctuating exchange rates, supply interruptions, and adverse politics
are needed
4- Transferring Valuable Competencies to Build a Global Competitive Advantage
 Transferring competencies, capabilities, and resource strengths across borders
contributes to
 Development of broader competencies and capabilities
 Achievement of dominating depth in some competitively valuable area
 Dominating depth in a competitively valuable capability is a strong basis for sustainable
competitive advantage over
 Other multinational or global competitors and
 Small domestic competitors in host countries
5- Coordinating Cross-Border Activities to Build a Global Competitive Advantage
 Aligning activities located in different countries contributes to competitive advantage in
several ways
 Choose where and how to challenge rivals
 Shift production from one location to another to take advantage of most favorable
cost or trade conditions or exchange rates
 Enhance brand reputation by incorporating same differentiating attributes in its
products in all markets where it competes

Characteristics of Competing in Emerging Foreign Markets


 Tailoring products for the big, emerging markets often involves
 Making more than minor product changes and
 Becoming more familiar with the local cultures
 Companies have to attract buyers with bargain prices as well as better products
 Specially designed and/or specially packaged products may be needed to accommodate
local market circumstances
 Management team must usually consist of a mix of expatriate and local managers

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