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Chapter 3: Developing Transnational Strategies: Building Layers of Competitive Advantage by Mind Map: Chapter 3: Developing Transnational
Strategies: Building Layers of Competitive
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Chapter 3: Developing Transnational Strategies: Building Layers of Competitive Advantage

Worldwide Competitive Advantage


Global efficiency, Efficiency is both cost reduction and revenue enhancement, Global Integration - National Responsiveness Framework, Vertical Axis, Efficiency Benefits from global integration, Horizontal Axis, Differentiation benefits from national responsiveness

Multinational Flexibility, Manage Risk and Exploit opportunities from diversity and volatility in global environment, Sources of Diversity and Volatility, Macroeconomic Risks, Political Risks, Competitive Risks, Resource Risk

Worldwide Learning, Key asset of MNEs is diversity of environments in which it operates


Scale Economies, Experience / Learning Effect, more production = more opportunity for learning

National Differences, Inputs, Different nations have different factor levels, Factor, Different functions of MNE have different factor requirements, Locate functions in countries that fit the factor requirements best!, Outputs, Countries have different customer tastes and preferences, Exploit by reshuffling business models

Scope Economies, Diversified firm can share investments and costs across value chains


International Strategy

Strength, Ability to create and leverage information

Weakness, deficiencies of efficiency and flexibility

Multinational Strategy

Companies focus on increasing revenue

Country specific innovations, Requires each subsidiary to use own resources for identifying and responding to specific trends

Inability to exploit knowledge and competencies of other units

Global Strategy

Global efficiency in cost and quality

Compromises flexibility and learning

Inability to capture developments outside of home market

Transnational Strategy

All three traditional strategies are important and should be combined

Needs sophisticated and differentiated configuration of assets and capabilities, Decide which assets and capabilities stay at home, Decide which assets and capabilities need not stay at home - try to keep them centralized, Decentralization, Other resources might have to be decentralized on a local basis

Strategic Tasks


Companies that had dominance by perfectioning one of the old traditional strategies got increased competition from more transnational firms, Tried to reorganize their assets to become more transnational themselves but had issues with their own structure and governments

Follow two principles, Concentrate at least as much on defending and reinforcing your existing assets and capabilities as on developing new ones, Imitate the asset structure and task configuration of competitors instead of just trying to match their source of advantage with what you currently have

Challenging the Global Leader

1. Find and exploit a niche

2. Expand your position on both product and geographic dimensions, Improve cost and quality step-by-step, Focus on products and markets not in the focus of market leader, Build manufacturing volume

3. Become Original Equipment Manufacturer (OEM) manufacturer for competition

4. Move rapidly to convert niche position into global business or use acquisitions

Protecting Domestic Niches

Three approaches, 1. Defend against competitor's global advantage, Tie up distribution channels or change market, 2. Offset competitor's global advantage, Lobby for government help, Become "national champion", 3. Approximate global competitor's advantage, Form alliance with viable global company