International Management I - Master FH Trier (Subject) / The Development of a firm´s global Competitiveness (Lesson)

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• 3 stages model of Hollensen 1.Analysis of national competitiveness2.Competitive analysis in an industry3.Value chain analysis:a)Competitive triangleb)Benchmarking
• Porter's diamond Model (1990) The home base/country shapes a firm`s capacity to innovate in technology and methods. competitive advantage results from an effective combination of national circumstances and corporate strategy. Understanding the home base of foreign competitors is essential in analysing them as their home nation yields them advantages as well as disadvantages – it also shapes their likely future strategies. concentration of firms within a certain industry as industrial clusters. competitive advantages from the presence in its home nation of world-class buyers, suppliers and related industries. insight into future market needs and technological developments. climate for change and improvement
• Porter's Diamond What accounts for the national location of a particular global industry? factor endowments of the country and the needs of the industry
• Porter's Diamond Aspects - Factor Conditions - Firm Strategy, Structure and Rivalry - Demand Conditions - Related and Supporting Industries Chance and Government
• Porter's Diamond - Factor Conditions (in ascending order of mobility) Climate Physical Infrastructure Natural Ressources Educational System HR (movement of labour) Technological Infrastructure Capital
• Porter's Diamond - Demand Conditions - Composition of Home Demand (how firms react to buyer needs) - Size and Pattern of Growth of Home Demand (large markets are advantageous) - Rapid Home Market Growth - Products being pushed or pulled (abroad) (demand the buyers in foreign countries these products or are they heavily marketed there)
• Porter's Diamond - Demand Conditions Characteristics economics of scale <==> transportation costs <==> size of home market strong economics of scale ==> single production location desirable minimize transportation costs ==> location with high demand strong economics of scale ==> few production sites ==> market size important large home market ==> economics of scale and experience advantage early large home markets ==> advantage at global expansion
• Porter's Diamond - Related and Supporting Industries The advantage that a nation gains by being home to internationally competitive industries in fields that are related to, or in direct support of, other industries. Reduction in transportation costs Labour that is attracted to an area to serve the core industry, but works at supporting industries Coordination of technology is also eased by proximity
• Porter's Diamond - Firm Strategy, Structure and Rivalry Domestic rivalry in a single national market is a powerful influence on competitive advantage. Differences in management styles, organizational skills, and strategic perspectives can also create advantages Capital markets and attitudes toward investments are important components of the national environments. When domestic rivalry is vigorous enterprises are forced•to become more efficient,•adopt new cost-saving technologies,•reduce product development time,•learn to motivate and control workers more effectively.
• Porter's Diamond - Government and Chance Governments and chance play an important role in encouraging the development of industries within their own borders. Government can do this by influencing the other diamond aspects. Chance: Entrepreneurs will start in their home markets

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