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Chapter 4 Leveraging Resources and capabilities

Resource- based view - a leading perspective in global business that posits that firm performance is basically driven by differences in firm-specific resources and capabilities

SWOT analysis:
SW= Strength and weakness
Internal assessment of the org. leading to management decisions OT = Opportunities and Threats
External External assessment of the business environment to identify the uncontrollable events that might impact management decisions

Resources / capability:
Tangible – assets that are observable and easily quantified e.g. Financial, Physical, Technological, Organizational Intangible – assets that are hard to observe and difficult to quantify e.g. Human, Innovation, Reputational

Value chain: In-house vs. Outsource

Value chain is a chain of vertical activities used in the production of goods and services that add value 1. Examine whether the firm has resources and capabilities to perform a particular activity , a process known as Benchmarking in SWOT analysis SWOT analysis the value chain to decide whether keep activity in-house or outsource

Outsourcing: turning over and organizational activity to an outside supplier that will perform it on behalf of the focal firm Offshoring: outsourcing to an international or foreign firm
Inshoring: outsourcing to a domestic firm
Captive sourcing: setting up subsidiaries abroad – the work done is in-house but the location is foreign

VRIO FRAMEWORK:
Value – only value-adding resources can possibly lead to competitive advantages Rarity – only valuable and rare resources and capabilities have the potential to provide some temporary competitive advantage Imitability – source of competitive advantage only if competitors’ have a difficult time imitating them. Imitation is difficult: - causal ambiguity: the difficult of identifying the causal determinants of successful firm performance Organizational – how can a firm be organized to develop and leverage the full potential of its resources and capabilities? * Complementary assets: the combination of numerous resources and assets that enable a firm to gain a competitive advantages * Social complexity : refers to the socially complex ways of organizing typical of many firms

Chapter 5 International Trade

Theories of international trade

Classical trade theories:
1) Mercantilism: a theory that holds the wealth of the world (gold and silver) is fixed and that a action that exports more and import less would enjoy the net inflows of gold and silver and thus become richer. ( modern-day protectionism, government should protect domestic industries from imports) 2) Absolute advantage: economic advantage one nation enjoys that is absolutely superior to other nations. ( free-trade : market force with little government intervention) 3) Comparative advantage: relative advantage in one economic activity that one nation enjoys in comparison with other nations. ( opportunity cost: given the alternatives the cost of pursuing one activity at the expense of another activity) Heckscher-Ohlin theory ( Factor endowment theory ): a theory that suggests tha nations will develop comparative advantage based on their locally abundant factors (e.g. labor, land and technology ) Modern trade theories:

1) Product life cycle theory: a theory that accounts for changes in the patterns of trade over time by focusing on product life cycle 2) Strategic trade theory: a theory that suggests that strategic intervention by governments in certain industries ( high capital-intensive, high entry barrier and first mover advantage, e.g. aircraft industry) can enhance their odds for international success Strategic trade policy:economic policies that provide companies a strategic advantage through government subsides 3) National competitive advantage( diamond theory):

Realities of international trade

TWO type of trade...
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