Using examples, critically evaluate how the four determinants of national competitive advantage can help to explain how companies can maintain their economic competitiveness
The four determinate of national competitive advantage is proposed by the theory of Porter Diamond. This theory is designed to stimulate the understanding of nation’s competitive advantage. It provides information to the government to act as a catalyst in order to improve the position of a country in a competitive economic environment. Hence, Porters theorizes the four determinates that help nations to achieve the competitive advantage. However, the four factors are:
- Firm strategy, Structure, and Rivalry
- Related supporting Industries
- Demand conditions
- Factor conditions
The firm’s strategy, structure, and rivalry refer to the fact that provides a competition to lead the business to find out new ways to the technological development and innovation to increase the production. Related supporting industries determinate refer to the industries upstream and downstream to facilitate innovation in the industry by means of supporting and exchanging ideas. Diamond conditions support the customer nature and size that also drives innovation and improvement in products. At last, the most significant one is the factor conditions that enable the economy to cater for itself such as capital, infrastructure, technological innovation and a large pool of skilled labor.
Considering a case of Japan as it has gained and developed a competitive economic presence globally which goes beyond the inherent resources of a country? Such resources have been in part as a result of having a high figure of engineers. The engineers have helped the nation to drive technological innovation in the circumstances of the industries of Japanese.
Companies can maintain their economic competitiveness in the nation by employing different strategies. These enable companies to work in the context of the international eldership that helps a nation to achieve the competitive advantage. However, the competitive advantage can be achieved by the act of innovation and technological advancement that enables a nation to achieve the better economic conditions. The emergence of new technologies will support companies to work in a unique and better prospect in order to achieve the economic competitiveness (Kiragu, 2014).
Multinational enterprises do not formulate worldwide strategies but rather regional strategies. Using appropriate examples, models and theories critically evaluate what this statement means and how does it help to better understand international business?
Multinational enterprises do not formulate worldwide strategies but rather regional strategies. It is due to the fact that it enables enterprises to think and act according to the culture of the prospective country. Therefore, the focus of the multinational enterprises is to formulate the regional strategies. The regional strategies help organization to achieve its results in effective and profound manner. The advantage of formulating regional strategies will lead in the multinational enterprises into the great achievements and success because they have been working according to the need and demands of the people lives in the nation. It helps multinational enterprises to fit into the climate of the nation by providing goods and services in the market as demand. This concept is further clarified by the stated example of McDonald:
McDonald Perspective of Focusing Regional Strategies:
McDonald is one the leading multination corporation. It focuses on the implementation of the regional strategies as it helps them to thinks according to the perception of the consumers. The strategies of McDonald vary nation to nation like in India the followed strategies is based according to the taste and demand of the Indians as they only prefer to have the veg meal. So, due to this reason emphasize of McDonald’s is on the regional strategies instead of formulating worldwide strategies. The regional strategies help McDonald’s to achieve it results in effective and profound manner. The advantage of formulating regional strategies will lead in the multinational enterprise like McDonald into the great achievements and success because they have been working according to the need and demands of the consumers.
Hence, the multinational enterprises focus on the sourcing strategy in host region in order to support the home region sales. It helps the multinational corporation to achieve the sales target in the prospective region. It enables multinational organization to fit into the culture of the nation by providing goods and services in the market as demand (Verbeke, 2016).
Critically identify and explain using case examples the five basic steps in the international strategic management process
Strategic management process is a set of rules to follow to complete the business activities. It is identified as the philosophical approach to business. It enables the top management to think statistically first before the implementation of any process. It is implemented best when everyone can gain the proper and full strategy understanding (Theriou, 2015). In addition to this, the five stages of strategic management process are:
- The goal setting
- Strategy formation
- Strategy implementation
- Strategy monitoring
In order to have the more precise understanding of strategic management process; let’s consider the example that how Nestle focuses on the strategic management process in order to think statistically first before the implementation of any process. Hence, the strategic management process of nestle is comprised of the following understanding
- The main aim of goal-setting of Nestle is to clarify the vision. Hence, this stage is completed by identifying the short and long-term objectives, by identifying the process of accomplishing the objectives and finally it ends with the objective customization.
- Then, the next focus of Nestle is on the information gathering and analysis in order to identify the data relevancy to accomplish the vision
- Then, the strategies have been formulated by gathering the information. It is completed by determining the all possible resources
- The focus of Nestle is the successful implementation of the strategy as it is very critical to the business venture. Thus, it is one of the main action stages of the strategic management process.
- At last, Nestle has adopted a proper evaluation and control system that enables them to evaluate the implemented strategy in order to monitor the performance and make the relevant changes on the timely basis.
Why do MNEs use an international division structure? Are there any drawbacks to the organisational arrangement? Using real-life examples, critically answer these questions.
The multinational enterprises use an international division structure in order to accommodate the foreign operations. The international division is done without disrupting the home market organization. This structure is being focused by the multinational corporation for the establishment of home market and for rapid growth of business on the international perspective. It allows the organization to stay free in order to keep the full focus on the home market and it leaves the international division free to adapt the foreign market activities in effective and smooth manner. The multinational ventures utilize a global division structure keeping in mind the end goal to oblige the remote tasks. The worldwide division is managed without disturbing the home market association (Cavusgil, 2014). This structure is being engaged by the multinational enterprise for the foundation of home market and for fast development of business on the global viewpoint. It enables the association to remain free with a specific end goal to maintain the full spotlight on the home market and it leaves the worldwide division allowed to adjust the remote market exercises in viable and smooth way.
Let consider the case of MacDonald, they keep its keen emphasize on the international division structure in order to accommodate the foreign operations. They focus on the international division for the establishment of home market and for rapid growth of business on the international perspective. This structure is being engaged by the multinational enterprise for the foundation of home market and for fast development of business on the global prospect.
However, the disadvantages of international division structure are that there have been a number redundant effort required for the completion of the international division and it also increase the rate of competition between the divisions.
Consider the cultural difficulties that may face a British or American company that has acquired an existing company in Asia.
The culture difficulties that have been faced by Nike by acquiring it position in Asia is defined in this section. Any type of organization acquiring its position in to the new market especially in the new region faces a lot of issues. Thus, one of such issue is based on the cultural dimension. It is due to the reason that the culture of the organization varies from nation to nation because of having its own norms, values and beliefs. So, considering this in mind an analysis on the culture aspect of Nike is being discussed to know about cultural difficulties they faces. By operating in the Asian countries like Pakistan and India Nike has faced the serious culture issue of child Labor as the rate of child labor is very high in these countries. In addition to this, another cultural issue they face is the poor working condition. However, the main cultural issue being faced by the Nike is the issue of child labor as the number of soccer balls have been produced by child labor in Asia (Coombs, 2018). The culture difficulties that have been looked by Nike by getting it position in Asia is characterized in this area. Any sort of association obtaining its situation in to the new market particularly in the new area faces a considerable measure of issues. In this manner, one of such issue depends on the social measurement. It is because of the reason that the way of life of the association shifts from country to country as a result of having its own standards, qualities and convictions.
Investing in emerging market economies can involve greater risks than making a similar investment in a developed economy.
Investing in emerging market economies can involve greater risks than making a similar investment in a developed economy. It is due to the fact that there has been a number of potential risk associated with investment in the emerging market, however, the emergence in new market offers the new and unique opportunities of investment because the high expected return as elevated by the economic growth rate. Though, there have been a number of risks associated with such emergence by which the investor must aware in order to planting the capital seeds in effective and appropriate manner (Athukorala, 2017). It is because putting resources into developing business sector economies can include more serious dangers than making a comparative interest in a created economy. It is because of the way that there has been various potential hazard related with interest in the developing business sector, in any case, the rise in new market offers the new and novel chances of speculation in light of the fact that the high expected return as hoisted by the financial development rate. However, there have been various dangers related with such rise by which the financial specialist must mindful so as to planting the capital seeds in compelling and fitting way. Hence, some of the major potential risk faced by the Adidas at the time of investing in emerging market has been stated as follows:
- Increased chance of bankruptcy is the main issue Adidas faces because of the weaker accounting procedures. It is due to the reason that bankruptcy is common things to be consider in the economy but the chance of such risks increases if the investment is done outside the developed world,
- The weaker corporate governance is another main issue Adidas faces because of the highly significant role the government plays in the market that is greater than the firm shareholders.
- Moreover, the greater risk Adidas faces in the emergence market is the risk of the foreign exchange rate risk. It is because the foreign stocks and bonds will typically provide the return in the local currency.
Expatriate managers can play a key role in a MNE’s international growth.
Expatriate manager is who lives in another county for the sake of work having a citizenship of that country. An expatriate works temporarily in a new country by occupying the citizenship. The role of the expatriate manager is to perform its duties in the other countries in order to signify the potential growth of the business (Cecchi, 2016). The role of expatriate manager is to lives in another area for work having a citizenship of that nation. An ostracize works incidentally in another nation by involving the citizenship. Hence, some of the advantages and disadvantages Nestle face as a result of adopting such a strategy of expatriate manager in Asia have been stated as follows:
- The hiring of the expatriate manager in the international market helps Nestle in terms of delivering quality over quantity as hiring local can become extremely difficult
- The business operation in the international market has confirmed the same standard like the same home market in the target country
- One of the major disadvantages is that hiring of the expatriate manager are identified as problematic and expensive in some nations as the employees are demanding full expense for their families
Policies can a company adopt to maximize the performance of its expatriate managers
Some of such policies are stated as follows
- To develop a policy to check the understanding level and expatriate rumination value internally
- To perform the proper cost calculation
- To examine the competitive environment
- To properly review the terms and conditions of the assignments
Why would a company choose to enter into an international joint venture? Given the high ‘failure’ rate of international joint ventures what can be done to increase the likelihood of a successful outcome?
The company should choose to enter into an international joint venture as it helps organizations to know about the market values and customer perception. It happened because the other company is already working in a market. The international joint venture basically minimizes the risk of that can be higher in the business acquisition (Tong, 2015). However, there have been no high ‘failure’ rates of international joint ventures is identified. Instead of this the international joint venture will deliver a thousand of benefits to the organization. By the emergence of the international joint venture the Oman Arab Bank has obtained a new expertise and capacity that allows banks to enter into the new geographic market. One of the other benefits of having international joint venture is that it allows organization to make the short-term objectives and commitment in order to achieve the high business profit and growth. Therefore, it is essential for the organization to go into the worldwide joint wander as it causes associations to think about the market esteems and client observation. It happened on the grounds that the other organization is as of now working in a market. The global joint wanders essentially limits the danger of that can be higher in the business obtaining. It helps organization to work in the most effective and efficient manner.
Athukorala, P. C. (2017). This paper examines Sri Lanka’s experience with manufacturing exports expansion, placing emphasis on opportunities and policy priorities in a rapidly changing global context in which global production sharing has become the prime mover of cross border production and trade(No. 2017-03).
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