Summary
International
Business Strategy -
Verbeke (1st Edition)
554MAINA
www.stuvia.com/554MAINA
,Chapter 1: the 7 concepts of the unifying framework
Chapter 2: Prahalad & Hamel’s core competencies
Chapter 3: Porter’s diamond of national competitive advantage
Chapter 4: Ghemawat’s Distance Theory
Extra: Hofstede’s Measurement of Cultural Distance
Chapter 5: Bartlett and Ghoshal’s subsidiaries theory
Chapter 6: Kuemmerle’s exploiting R&D subsidiaries
Chapter 7: Ferdows’ framework of foreign manufacturing plants
Chapter 8: International finance
Chapter 9 : International Marketing
Chapter 10 : International Managing
Chapter 11: Foreign Distributor Relationships
Chapter 12: Strategic Alliances
Chapter 13 : Mergers and Acquisitions
Chapter 14: Emerging economies
Chapter 16: International strategies
This summary contains brief summaries
to chapters 1 t/m 14 and 16.
,Chapter 1: the 7 concepts of the unifying
framework
Most complex issues in international business strategy revolve around seven concepts:
SEE PAGE 5, FIGURE 1.1
MNEs (Multinational Enterprises) need certain internal strengths to overcome additional costs of doing
business abroad, those are called: internationally transferable, or non-location bound FSAs (Firm Specific
Advantages)
1. Internationally transferable FSAs/Non-Location-Bound FSAs
These FSAs will keep their value when an MNE is crossing borders.
There is a paradox of an internationally transferable FSA. When a FSA exists of easily codifiable
knowledge, it is cheap and easily to transfer, but it can also be easily imitated by other firms. This makes
the transfer costs low, but also the value that can be derived from it, may also be low. On the other
hand, when a FSA exists of tacit knowledge, which requires person-to-person communication and
sending human resources abroad to build up experience over time by learning, it will be expensive and
time-consuming, but also difficult to imitate and thus a valuable FSA.
, The most important bundle of tacit knowledge is contained in the MNEs heritage (the key routines
developed by the firm since its inception). There are four archetypes of administrative heritage:
Centralized exporter = standardized products manufactured at home, embody the firm’s
FSAs and make the exporting firm successful in international markets. This all happens without
doing any activity in the host country, so no development of new FSAs in the host country. So
this is only exporting the product.
International projector = FSAs from home country are copied. Only the internationally
transferable FSAs are taken to the host country. No development of location bound FSAs in the
host country.
International coordinator = efficiency seeking MNE which is specialized in specific value-
added activities and forming vertical value chains abroad. Is doing different parts of the
production process in different countries.
Multi-centred MNE = does everything (produce, sell, etc) in the host country. Adapts to the
host country, so local responsiveness is its foundation. Transfers only the key routines from the
home country and builds up new Location-Bound FSAs in the host country.
See page 36 and 37, figure 1.3, 1.4, 1.5 and 1.6 for the visualization of the four archetypes.
The above set of archetypes actually is not complete. There are two other types;
International
Business Strategy -
Verbeke (1st Edition)
554MAINA
www.stuvia.com/554MAINA
,Chapter 1: the 7 concepts of the unifying framework
Chapter 2: Prahalad & Hamel’s core competencies
Chapter 3: Porter’s diamond of national competitive advantage
Chapter 4: Ghemawat’s Distance Theory
Extra: Hofstede’s Measurement of Cultural Distance
Chapter 5: Bartlett and Ghoshal’s subsidiaries theory
Chapter 6: Kuemmerle’s exploiting R&D subsidiaries
Chapter 7: Ferdows’ framework of foreign manufacturing plants
Chapter 8: International finance
Chapter 9 : International Marketing
Chapter 10 : International Managing
Chapter 11: Foreign Distributor Relationships
Chapter 12: Strategic Alliances
Chapter 13 : Mergers and Acquisitions
Chapter 14: Emerging economies
Chapter 16: International strategies
This summary contains brief summaries
to chapters 1 t/m 14 and 16.
,Chapter 1: the 7 concepts of the unifying
framework
Most complex issues in international business strategy revolve around seven concepts:
SEE PAGE 5, FIGURE 1.1
MNEs (Multinational Enterprises) need certain internal strengths to overcome additional costs of doing
business abroad, those are called: internationally transferable, or non-location bound FSAs (Firm Specific
Advantages)
1. Internationally transferable FSAs/Non-Location-Bound FSAs
These FSAs will keep their value when an MNE is crossing borders.
There is a paradox of an internationally transferable FSA. When a FSA exists of easily codifiable
knowledge, it is cheap and easily to transfer, but it can also be easily imitated by other firms. This makes
the transfer costs low, but also the value that can be derived from it, may also be low. On the other
hand, when a FSA exists of tacit knowledge, which requires person-to-person communication and
sending human resources abroad to build up experience over time by learning, it will be expensive and
time-consuming, but also difficult to imitate and thus a valuable FSA.
, The most important bundle of tacit knowledge is contained in the MNEs heritage (the key routines
developed by the firm since its inception). There are four archetypes of administrative heritage:
Centralized exporter = standardized products manufactured at home, embody the firm’s
FSAs and make the exporting firm successful in international markets. This all happens without
doing any activity in the host country, so no development of new FSAs in the host country. So
this is only exporting the product.
International projector = FSAs from home country are copied. Only the internationally
transferable FSAs are taken to the host country. No development of location bound FSAs in the
host country.
International coordinator = efficiency seeking MNE which is specialized in specific value-
added activities and forming vertical value chains abroad. Is doing different parts of the
production process in different countries.
Multi-centred MNE = does everything (produce, sell, etc) in the host country. Adapts to the
host country, so local responsiveness is its foundation. Transfers only the key routines from the
home country and builds up new Location-Bound FSAs in the host country.
See page 36 and 37, figure 1.3, 1.4, 1.5 and 1.6 for the visualization of the four archetypes.
The above set of archetypes actually is not complete. There are two other types;
