Downstream advantage
Interface between firms and customer
This level advantages
Lower prices, superior products, a superior product range, superior reputation
Upstream advantages
Superior firm attributes, activities, assets, skills, dynamic advantages
Reasons for distinction between firm advantages and its advantages in international competition (3)
- Advantages are always relative
- Superiority here doesn’t mean superiority elsewhere
- General factors that grant advantage
Transfer
The process where a fiem draws advantages from its homebase to give its operations in a foreign country a competitive edge
Complementary assets
Assets or capabilities that need to be build or acquired in the target country in order to fully exploit the firm’s advantages in that country
Causes of immobility (2)
- Geographical specificity
- Tacit knowledge
Choices of modes of operations (2)
- The exporting mode: all advantages, assets and national attributes are available to the firm
- Foreign production mode: only those advantages, assets, and factors whose use or exploitation is transferable are available
Liability of foreigness
Costs regarding the unfamiliarity of the environment
Sources of liability of foreigness (4)
- Costs directly associated with spatial distance
- Costa resulting from company’s unfamiliarity
- Costs resulting from the host country environment
- Costs from the home country environment
Ways to deal with liability of foreigness
- Bring its foreign subunit resources or capabilities specific to the firm
- Attempt to mimic the advantages of successful local firms
