Lecture 7 Takeaways

• Technical Standard and Format War

• Network Effects
• First-mover Advantages and Disadvantages
• Technological Paradigm Shifts (S-curve)
• Disruptive Innovation
• Strategic Implications of Disruptive Innovation (for established companies
and new entrants)
 Art

Technological Innovation
Engineering and Cars
 Lecture 8
Strategy in the
Global Environment
FIGURE 8.1 - NATIONAL COMPETITIVE ADVANTAGE

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 National Competitive Advantage
• Factor Endowments (e.g. raw materials, skilled labor, technological
knowhow, infrastructures)
• Local Demand Conditions (e.g. camera adoption in Japan)
• Competitiveness of Related and Supporting Industries
• Intensity of Rivalry
 Increasing Profitability through Global Expansion

1. Expanding the Market

2. Realizing Cost Economies from Global Volume
Economies of Scale, Experience and Learning Effects
Bargaining Power of Suppliers
3. Realizing Location Economies
4. Leveraging Skills of Global Subsidiaries
 Pressures on Global Companies

• Cost Pressure
• Pressure for Local Responsiveness

https://www.youtube.com/watch?v=rVYiWnzHORo
 Entry Modes

• Exporting
• Turnkey
• Management Contract
• Licensing
• Franchising
• Joint Ventures
• Strategic Alliances
• Greenfield Investment
 Lecture Takeaways

• National Competitive Advantage (factor endowments, local demand

conditions, competitiveness of related industries, intensity of rivalry)
• Increasing Profitability through Global Expansion
• Cost Pressure and Pressure for Local Responsiveness
• Entry Modes (exporting, turnkey, licensing, franchising, joint venture,
strategic alliance, wholly-owned subsidiary)