International marketing theories

Why I am successful, will I be successful?

n    Basis of success at home – strengths, resources and competences

                          applicable abroad?

§    Weaknesses at home?

§    Opportunities and threats at home and abroad?



   what are the sources of the success…and competitive advantage of firm?



COUNTRY- SPECFIC ADVANTAGES       FIRM- SPECIFIC ADVANTAGES

      COUNTRY-SPECIFIC ADVANTAGES theories

n    Austria,Czech Republic, Hungary, Italy, Poland, Spain – which comparative (or absolute)
advantage?

n    Comparative advantage – free trade between two countries yields economic pay-offs to the
countries (different endowments of resources, country production involves less sacrifice in the
output compared to other country – specialization

n    The international product life cycle (IPLC) – Raymond Vernon, 1966

n    National competitive advantage – Michael Porter – „diamond of national advantage“ - 4 factors
determining CA/disadvantage:





        Diamond of national advantage
    (more possibilities to stay competitive)
          1990 The Competitive Advantage of Nations

n    Factor conditions – nation´s position in factor of production (skilled labour,
infrastructure…..)- degree of mobility = (climate      physical infrastructure     natural
resources       educational system      human resources       technological infrastructure –
software, com. network…     capital)

n    Demand conditions – nature of the home demand

n    Related and supporting industries – iternationally competitive suppliers and supporters
existence or absence

n    Firm strategy, structure and rivalry – the conditions in the nation governing how companies
are created, organized and managed and the nature of home rivalry



n    The new trade theory – what are the differences among German, Italian, French, Japanees,
Korean…cars?

    - differences in knowledge, skills, abilities, competences – REGIONAL CLUSTERS

§    Country-of origin effects – quality perception of products – differ by product category
(cosmetics, wine, fashion…)

§    Internalization perspective (Buckley and Casson, 1976) – internalization vs externalization

FIRM-SPECIFIC ADVANTAGES theories

n    Unique to a particular enterprise („monopolistic“)

n    Patent, brand, control of raw-materials, know-how, control of distribution outlets, process
technology, managerial capacity, marketing skills…(can have their source in country-specific
variables but a particular company can use them)

n    Resource-based theory/view (Barney) – resources and capabilities of a firm

n    Value chain

RBV Concepts:

n    Resource

¡   Stocks

¡   Flows

n    Capability

n    Capacity

n    Durability

n    Specificity



Competencies, Core  Competencies, and  Distinctive  Competencies

n   Competencies:  Internal capabilities that a company performs better than other capabilities.

n   Core competencies:  Competencies that are central, not peripheral, to a company’s strategy and
operations.

n   Distinctive competencies:  Competencies that are sources of sustainable competitive advantage.



Daft, 1983, Barney, J., 1991

n    Resource = assets, capabilities, organizational processes, firm attributes, information,
knowledge, controlled by a firm that enable it to conceive of and to implement strategies that
improve its efficiency and effectiveness

n    Strengths that a  firm can use to conceive of and implement its strategies



Wernerfelt, B., 1984, Hafeez, K., Malak, N. and Zhang, Y., 2002

n    Resource = anything that could be thought as a strength or a weakness for a firm. Tangible and
intangible assets tied permanently or semi-permanently to the firm

n     an input into the production process

n     the basic unit for analysis

n     anything tangible or intangible that can be owned or acquired

Typology of Resources

n    Barney, J., 1991

n    1- Physical capital

n    Technology, plant, equipment, location, access to raw material

n    2- Human capital

n    Training, expertise, judgment, intelligence, relationships and insights of managers and
workers

n    3- Organizational capital

n    Organizational structure, planning, controlling and coordinating systems, informal relations
among groups within the firm and with outside groups



n    Hofer and Schendel, 1978, Grant, R., 1991

n    Mahoney, J. and Pandian, R., 1992

n    1- Physical resources

n    2- Financial resources

n    3- Human Resources

n    4- Organizational resources

n    5- Technological resources

n    6- Legal resources

n    7- Experience

n    8- Intangible resources



Porter’s Generic Value Chain



§    Internalization perspective (Buckley and Casson, 1976) – internalization (within own
boundaries – szbsidiary aroad) = FIRM-BASED SOLUTION vs externalization (some form of collaboration
with foreign partner – e.g. licence, joint-ventures…)= MARKET-BASED SOLUTION

§    OLI eclectic framework – Ownership – Location internalization – Dunning, 1988 – 3 conditions:
ownership advantages, locational advantages, internalization advantages





Uppsala internationalization model – Johanson and Wiedersheim-Paul, 1975

The transaction costs analysis model
Coase, 1937, Williamson, 1985)

n    Organization of international activities and the choice of international market entry mode

n    „If the transaction costs through externalization (e.g. through and importer or  agent) are
higher than the control cost through an internal hierarchical system, then the firm should seek
internalization (hierarchies)  of activities, i.e. implementing the global market strategy in
wholly –owned subsidiaries. Or… if the friction between buyer and seller is  too high then the firm
should rather internalize, in the form of its own suubsidiaries.“(Hollensen, S., 2007)