Lernzettel: Global Strategy and International Business

📋 Course Outline

1. Globalization & Industry Impact
2. Internationalization & Modes
3. Competitive Advantage & National Environment
4. Porter’s Diamond & National Factors
5. Location Strategy & Resource Access
6. Entry Modes & Firm Capabilities
7. Global vs Local Strategy
8. Organizational Structure & Strategy Fit
9. Reconfiguring MNCs & Transnational Model
10. Innovation & Global R&D
11. Cultural Differences & Management

📖 1. Globalization & Industry Impact

🔑 Key Concepts & Definitions

• Globalization: The process by which businesses develop international influence or start operating on an international scale, driven by trade and direct investment, leading to interconnected markets and industries worldwide.

• Internationalization: The expansion of a company's operations across national borders through trade (exports/imports) and direct investment (building or acquiring assets abroad).

• Multinational Corporation (MNC): A company that operates in multiple countries, often with subsidiaries, manufacturing plants, or offices outside its home country, leveraging international resources and markets.

• Comparative Advantage: The economic principle that a country should produce and export goods and services it can produce most efficiently, based on its resource endowments, and import those it produces less efficiently.

• Porter’s National Diamond: A framework explaining how national factors (factor conditions, related industries, demand conditions, strategy/rivalry) influence a country's competitive advantage in specific industries.

• Global Industry Types:

  • Sheltered Industries: Local firms dominate due to regulation or non-transportability.
  • Trading Industries: International trade (exports/imports) is primary.
  • Multidomestic Industries: Internationalization through direct investment; products are locally differentiated.
  • Global Industries: Both trade and direct investment are significant, often in large manufacturing sectors.

📝 Essential Points

• Impact of Internationalization:

  • Expands markets, increases competition, and shifts industry leadership.
  • Leads to more rivals, increased capacity, and lower industry profitability.
  • International trade growth outpaces world output, with rising import penetration ratios.

• Patterns of Industry Internationalization:

  • Industries evolve from sheltered to trading, then to multidomestic or global structures.
  • Internationalization routes differ: services often require subsidiaries; manufacturing may start with exports, then move to overseas production.

• Competitive Dynamics:

  • Lower barriers to entry and increased rivalry intensify competition.
  • Large customers gain bargaining power through global sourcing.
  • International competition can cause significant shifts in industry leaders (e.g., Mittal Steel overtaking US Steel).

• National Environment & Competitive Advantage:

  • Firms’ success depends on internal resources and the national environment (e.g., resource availability, culture).
  • Porter’s framework emphasizes the role of factor conditions, related industries, demand, and strategy/rivalry.
  • Countries develop industry strengths through clusters and specialized resources.

• Location of Production:

  • Strategic decisions on where to produce depend on resource costs, availability, and market proximity.
  • Companies often locate manufacturing in countries with favorable labor costs or resource endowments (e.g., Nike in low-cost Asian countries).

💡 Key Takeaway

Globalization reshapes industry structures by increasing competition and resource flows, requiring firms to adapt their strategies to leverage national advantages, navigate international markets, and optimize global operations for sustained competitive advantage.

📖 2. Internationalization & Modes

🔑 Key Concepts & Definitions

• Internationalization: The process by which firms expand their operations across national borders through trade and direct investment, increasing their global presence.
• Trade: The sale and shipment of goods and services between countries, serving as a primary mode of internationalization.
• Direct Investment: Establishing or acquiring productive assets in foreign countries, such as subsidiaries or manufacturing plants.
• Sheltered Industries: Industries served exclusively by domestic firms, protected from international competition by regulation, barriers, or product nature.
• Trading Industries: Industries where internationalization occurs mainly through exports and imports of transportable, scale-economy products.
• Multidomestic Industries: Industries that internationalize primarily through direct investment, often due to non-tradability or product differentiation.
• Global Industries: Industries where both trade and direct investment are significant, often evolving towards integrated global structures.

📝 Essential Points

• Internationalization occurs via trade (goods/services movement) and direct investment (building/acquiring assets abroad).
• Industry types are classified based on the extent/mode of internationalization:
  • Sheltered: Local, protected industries (e.g., small services, perishables).
  • Trading: Export/import-driven industries (e.g., aircraft, diamonds).
  • Multidomestic: Industries relying on foreign subsidiaries (e.g., banking, consulting).
  • Global: Industries with high trade and investment flows (e.g., automobiles, pharmaceuticals).
• Internationalization typically starts with exports, then moves to establishing subsidiaries, and eventually integrated manufacturing.
• Increased internationalization intensifies competition, lowers industry profitability, and enhances buyer bargaining power.
• Barriers to entry have decreased due to globalization, leading to more competitors in national markets.
• International competition can cause significant shifts in industry leadership, exemplified by changes in steel, PC, and banking sectors.
• Competitive advantage depends on both internal resources and the national environment, including factors like resource availability, culture, and supporting industries.

💡 Key Takeaway

Internationalization transforms industry dynamics by increasing competition and resource access, requiring firms to adapt their strategies to leverage both global opportunities and national advantages for sustained competitive success.

📖 3. Competitive Advantage & National Environment

🔑 Key Concepts & Definitions

• Competitive Advantage: The unique strengths a firm possesses that allow it to outperform competitors, achieved by aligning internal resources and capabilities with industry success factors.
• National Environment: The economic, political, social, and infrastructural conditions within a country that influence a firm's ability to develop and sustain competitive advantage.
• Comparative Advantage: A country's ability to produce certain goods or services more efficiently than others, based on resource endowments, leading to specialization and trade benefits.
• Porter’s National Diamond: A framework explaining how national factors (factor conditions, related industries, demand conditions, firm strategy, and rivalry) influence a country's industry competitiveness.
• Factor Conditions: The nation-specific resources (e.g., skilled labor, infrastructure) that support the development of competitive industries.
• Related and Supporting Industries: Clusters of interconnected industries within a country that enhance innovation, efficiency, and competitiveness through proximity and collaboration.

📝 Essential Points

• Internationalization expands markets and access to diverse resources, but also intensifies competition, often reducing industry profitability.
• Industry internationalization occurs via trade (exports/imports) and foreign direct investment (FDI), with industries classified as sheltered, trading, multidomestic, or global based on their international engagement.
• Competitive advantage in international industries depends on both internal firm resources and the national environment, especially resource availability and industry clusters.
• The theory of comparative advantage explains how countries benefit from specializing in products that utilize their abundant resources, influencing global trade patterns.
• Porter’s national diamond emphasizes that industry competitiveness is shaped by factor conditions, related industries, demand conditions, and firm strategies, all rooted in national context.
• National culture influences management practices and organizational capabilities, impacting how firms develop and sustain competitive advantages.
• Location decisions for production are driven by resource availability, labor costs, infrastructure, and market proximity, affecting global supply chain configurations.

💡 Key Takeaway

A firm's competitive advantage in international markets is deeply rooted in its national environment, where resource endowments, industry clusters, and cultural factors shape its ability to innovate, compete, and succeed globally.

📖 4. Porter’s Diamond & National Factors

🔑 Key Concepts & Definitions

• Porter’s National Diamond: A framework identifying four broad attributes that shape the competitive advantage of industries within a nation—Factor Conditions, Related and Supporting Industries, Demand Conditions, and Strategy, Structure, and Rivalry.

• Factor Conditions: The nation's endowments of resources such as skilled labor, infrastructure, and natural resources that influence industry competitiveness.

• Related and Supporting Industries: Clusters of interconnected industries that provide complementary capabilities, fostering innovation and efficiency.

• Demand Conditions: The nature and size of domestic demand, which drive innovation, quality, and industry development.

• Strategy, Structure, and Rivalry: The conditions governing how companies are organized, managed, and compete domestically, influencing their global competitiveness.

• Comparative Advantage: The ability of a country to produce certain goods or services more efficiently due to its resource endowments, leading to specialization.

📝 Essential Points

• National Influence on Competitiveness: A country's resource endowments and institutional environment significantly impact the competitive advantage of its industries.

• Porter’s Diamond Components:

  • Factor Conditions: Specialized resources and infrastructure are crucial; not just abundance but quality and specialization matter.
  • Related and Supporting Industries: Clusters enhance innovation and productivity through proximity and collaboration.
  • Demand Conditions: Sophisticated domestic markets push firms to innovate and improve quality.
  • Strategy, Structure, and Rivalry: Intense domestic competition fosters efficiency and innovation.

• Resource-Based View: Competitive advantage depends on both national resource endowments and how firms leverage them through strategy and organizational capabilities.

• National Comparative Advantage: Based on resource abundance; for example, Bangladesh's labor-intensive industries versus the US's technology-driven sectors.

• Application of Porter’s Framework:

  • Industry development is influenced by national conditions.
  • Firms should align their strategies with their national environment to sustain competitive advantage.
  • Clusters of related industries are common sources of national strength.

• Location of Production:

  • Decisions depend on resource availability, costs, infrastructure, and market proximity.
  • Internationalization often begins with exports, then moves to establishing subsidiaries for manufacturing or services.

💡 Key Takeaway

Porter’s Diamond illustrates that a nation's unique resources, industries, and competitive environment shape the global success of its firms; aligning corporate strategy with these national factors is essential for sustained international competitiveness.

📖 5. Location Strategy & Resource Access

🔑 Key Concepts & Definitions

• Location Strategy: The process of determining the optimal geographical placement of a firm's production or service activities to achieve competitive advantage.
• Resource Access: The ability of a firm to obtain necessary resources—such as raw materials, skilled labor, technology, and infrastructure—in different geographic locations.
• Comparative Advantage: The economic principle that a country should produce and export goods and services for which it has the most abundant and cost-effective resources.
• Porter’s National Diamond: A framework identifying four broad factors—factor conditions, related and supporting industries, demand conditions, and firm strategy/rivalry—that determine a nation’s competitive advantage.
• Determinants of Geographical Location: Factors influencing where firms decide to locate production, including resource availability, labor costs, infrastructure, and market access.

📝 Essential Points

• Internationalization modes include trade (exports/imports) and foreign direct investment (FDI), with industries classified as sheltered, trading, multidomestic, or global based on their international activity.
• Location decisions are driven by resource availability, cost considerations, and strategic access to markets, often leading firms to offshore manufacturing to countries with favorable conditions.
• Factors influencing location:
  • Resource Availability: Access to raw materials, skilled labor, and technology.
  • Cost Factors: Labor costs, transportation, and infrastructure expenses.
  • Market Proximity: Serving local markets efficiently and reducing shipping costs.
  • Government Policies: Incentives, tariffs, and regulations.
• Porter’s National Diamond emphasizes that national resources, supporting industries, demand conditions, and firm rivalry shape industry competitiveness.
• Comparative advantage guides countries and firms to specialize in industries where they are most efficient, e.g., Bangladesh in labor-intensive goods, the US in high-tech products.
• Strategic location choices often involve separating where to produce from where to sell, enabling firms to optimize resource access and cost efficiency.
• Global resource access can lead to offshoring manufacturing to countries with lower labor costs or better resource endowments, exemplified by electronics manufacturing in China or footwear in Southeast Asia.

💡 Key Takeaway

Effective location strategy leverages national resource advantages and market conditions to optimize production costs and access to key capabilities, enabling firms to sustain competitive advantage in international markets.

📖 6. Entry Modes & Firm Capabilities

🔑 Key Concepts & Definitions

• Entry Modes: The methods by which a firm enters a foreign market, including exporting, licensing, franchising, joint ventures, and wholly owned subsidiaries.
• Firm Capabilities: The internal resources, skills, and competencies that enable a firm to effectively execute its strategies and compete internationally.
• Foreign Direct Investment (FDI): A strategic investment where a firm establishes or acquires a significant stake in a foreign company or plant, allowing control over operations.
• Exporting: Selling domestically produced goods or services to a foreign market, often the initial step in internationalization.
• Licensing & Franchising: Agreements where a firm permits a foreign entity to produce or sell its products under specified conditions, sharing resources and reducing risk.
• Joint Venture: A partnership where two or more firms share ownership, control, and profits of a new enterprise in a foreign market, facilitating local adaptation and resource sharing.

📝 Essential Points

• Choice of Entry Mode: Depends on factors such as resource commitment, risk tolerance, control needs, and market conditions.
• Trade-offs: Exporting involves lower risk and investment but less control; FDI offers greater control and potential profits but entails higher risk and resource commitment.
• Firm Capabilities & Entry Mode: Firms with strong technological, managerial, or brand capabilities may prefer wholly owned subsidiaries to protect intellectual property; firms with limited resources may opt for licensing or joint ventures.
• Internationalization Strategy: Firms often start with exporting and gradually move to FDI as they develop capabilities and understand the market.
• Reconfiguration of Capabilities: Entering foreign markets requires adapting or developing new capabilities, such as local market knowledge, cultural understanding, and regulatory compliance.
• Risks & Benefits: Entry modes involve balancing control, resource commitment, and risk; strategic fit with firm capabilities is crucial for success.

💡 Key Takeaway

Choosing the appropriate entry mode is a strategic decision that hinges on a firm's internal capabilities and risk appetite, with each mode offering different levels of control, resource commitment, and potential reward in the pursuit of international growth.

📖 7. Global vs Local Strategy

🔑 Key Concepts & Definitions

• Global Strategy: An approach where a firm standardizes its products, services, and operations across multiple countries to achieve efficiency, consistency, and global integration.

• Local (or Multidomestic) Strategy: A strategy emphasizing adaptation to local markets, tailoring products, marketing, and operations to meet specific national or regional preferences.

• Globalization: The process of increasing interconnectedness and interdependence of national economies, markets, and businesses, facilitating international trade, investment, and resource flows.

• National Competitive Advantage: The competitive edge a country or firm gains based on its unique resources, capabilities, and environment, often explained through Porter’s Diamond framework.

• Standardization vs. Adaptation: The strategic choice between offering uniform products/services worldwide (standardization) or customizing them for local markets (adaptation).

• Transnational Corporation (TNC): A multinational enterprise that seeks to balance global efficiency with local responsiveness, often integrating global and local strategies.

📝 Essential Points

• Trade-offs Between Strategies: Global strategies maximize efficiency and economies of scale but may overlook local preferences; local strategies enhance relevance but can reduce cost efficiencies.

• Drivers of Global Strategy:

  • Cost reduction through standardization.
  • Access to global markets and resources.
  • Competitive pressure from international rivals.
  • Technological advancements enabling global coordination.

• Drivers of Local (Multidomestic) Strategy:

  • Cultural differences impacting consumer preferences.
  • Regulatory and legal variations.
  • Local market conditions and competitive landscapes.
  • Need for product/service customization.

• Industry Patterns:

  • Sheltered Industries: Operate domestically with minimal international exposure.
  • Trading Industries: Rely mainly on exports/imports.
  • Multidomestic Industries: Use direct investment for local adaptation.
  • Global Industries: Combine trade and investment, with high integration across markets.

• Implications for Multinational Firms:

  • International expansion often begins with exporting, then establishing subsidiaries, and eventually integrating operations.
  • Success depends on aligning strategy with national resources, culture, and market conditions.
  • Firms must decide where to locate production based on resource availability, costs, and market access.

• Reconciling Global and Local Needs:

  • The transnational approach seeks to achieve global efficiency while responding to local differences.
  • Organizational structures and management systems must support both integration and differentiation.

• Key Frameworks:

  • Porter’s National Diamond: Explains how national factors influence industry competitiveness.
  • Resource-Based View: Firms leverage unique resources and capabilities in different countries to sustain competitive advantage.

💡 Key Takeaway

Balancing global integration with local responsiveness is essential for multinational success; effective strategies tailor operations to local conditions while leveraging global efficiencies, creating a competitive advantage in international markets.

📖 8. Organizational Structure & Strategy Fit

🔑 Key Concepts & Definitions

• Organizational Structure: The formal system of task and authority relationships that determine how resources are allocated, coordinated, and supervised within a company.
• Strategy-Structure Fit: The alignment between an organization's strategic objectives and its organizational design to effectively support strategic execution.
• Multinational Corporation (MNC): A company operating in multiple countries, managing a complex structure to coordinate global and local strategies.
• Transnational Structure: An organizational form that seeks to combine global efficiency with local responsiveness, emphasizing integration and differentiation.
• Global Strategy: An approach where a firm standardizes products and practices across markets to achieve economies of scale and consistency.
• Localization Strategy: A strategy emphasizing adaptation to local markets, often requiring decentralized organizational structures.

📝 Essential Points

• Strategy and organizational structure are interdependent; the design must support strategic goals such as global integration or local responsiveness.
• Types of organizational structures include functional, divisional, matrix, and transnational, each suited to different strategic priorities.
• Global strategies often require a balance between standardization (cost efficiency) and adaptation (local responsiveness), influencing structure choice.
• Multinational firms evolve from centralized to more complex structures like the transnational model to reconcile global integration with national differentiation.
• Reconfiguring structures involves shifting decision-making authority, integrating functions across borders, and managing diverse cultural and operational practices.
• Strategy fit involves tailoring the organizational design to the firm's international strategy, resources, and environment to optimize performance.

💡 Key Takeaway

Aligning organizational structure with strategic objectives is crucial for multinational companies to effectively leverage global opportunities while responding to local market needs, ensuring sustainable competitive advantage.

📖 9. Reconfiguring MNCs & Transnational Model

🔑 Key Concepts & Definitions

• Multinational Corporation (MNC): A company that operates in multiple countries, managing production, sales, and services across borders.
• Transnational Corporation (TNC): An evolved form of MNC that integrates global efficiency with local responsiveness, transcending traditional national boundaries.
• Globalization of Business: The process by which companies expand their operations and markets across multiple countries, seeking efficiency, market access, and resource advantages.
• Internationalization: The strategic process of increasing a firm's involvement in foreign markets through trade, investment, or establishing subsidiaries.
• Global Industry: An industry where both trade and foreign direct investment are significant, with integrated worldwide operations.
• Multidomestic Industry: An industry characterized by direct investment and operations tailored to individual national markets, with limited cross-border integration.

📝 Essential Points

• Evolution of MNCs: Traditional MNCs focused on exporting and establishing subsidiaries; modern transnational models aim to balance global integration with local adaptation.
• Internationalization Patterns: Industries are classified based on their mode of internationalization—sheltered, trading, multidomestic, or global—affecting strategy formulation.
• Reconfiguring MNCs: The transnational model emphasizes flexible organizational structures that leverage both global efficiencies and local responsiveness.
• Strategic Drivers: Companies internationalize to exploit market opportunities, access resources, and achieve competitive advantage, often requiring organizational reconfiguration.
• Implications of International Competition: Increased competition from foreign firms reduces barriers, intensifies rivalry, and enhances buyer power, influencing industry profitability.
• National Environment & Competitive Advantage: A firm's success depends on aligning internal resources with national conditions, including resource endowments, culture, and supporting industries.
• Porter’s National Diamond: A framework explaining how factor conditions, related industries, demand conditions, and firm strategy influence national competitiveness.
• Location of Production: Firms choose locations based on resource availability, labor costs, infrastructure, and strategic considerations, often separating production decisions from market entry.

💡 Key Takeaway

The transnational model redefines the multinational corporation as a flexible, integrated entity that simultaneously leverages global efficiencies and adapts to local market conditions, requiring organizational structures that balance standardization with responsiveness.

📖 10. Innovation & Global R&D

🔑 Key Concepts & Definitions

• Global Innovation: The process of developing new products, services, or processes across multiple countries, leveraging international resources, talent, and ideas to enhance competitiveness.

• Research & Development (R&D): Activities undertaken by firms to innovate and improve products, services, or processes, often involving systematic investigation and experimentation.

• Multinational Corporation (MNC): A company operating in multiple countries, conducting R&D, manufacturing, and marketing across borders to capitalize on global opportunities.

• Global R&D Strategy: An approach where firms coordinate research activities worldwide to optimize innovation, access diverse knowledge pools, and reduce costs.

• Innovation Clusters: Geographic concentrations of interconnected companies, specialized suppliers, and institutions that foster innovation through collaboration and knowledge sharing.

• Knowledge Spillovers: The dissemination of technological and innovative knowledge from one firm or region to others, often facilitated by proximity and collaboration.

📝 Essential Points

• Globalization's Impact: Companies now search worldwide for the best talent and ideas, transforming R&D from a domestic activity into a global endeavor.

• Strategic R&D Location: Firms choose R&D sites based on resource availability, talent pools, proximity to markets, and supportive innovation ecosystems.

• Benefits of Global R&D:

  • Access to diverse knowledge and expertise.
  • Cost efficiencies through location choices.
  • Faster innovation cycles by leveraging international collaboration.
  • Enhanced ability to adapt products to local markets.

• Challenges of Global R&D:

  • Managing cross-cultural teams.
  • Protecting intellectual property across jurisdictions.
  • Coordinating dispersed R&D activities to maintain coherence.

• Innovation Clusters & National Advantages:

  • Certain regions excel in specific industries due to specialized talent, institutions, and infrastructure (e.g., Silicon Valley for tech, Switzerland for watches).
  • Porter’s National Diamond emphasizes the importance of related industries and demand conditions in fostering innovation.

• R&D and Competitive Advantage:

  • Sustained innovation is crucial for maintaining a competitive edge in global markets.
  • Firms must align their R&D strategies with their overall global strategy, balancing global integration with local responsiveness.

💡 Key Takeaway

Global R&D enables firms to harness international resources, talent, and knowledge to innovate more effectively, but requires strategic coordination to overcome cultural, legal, and organizational challenges.

📖 11. Cultural Differences & Management

🔑 Key Concepts & Definitions

• Cultural Differences: Variations in values, beliefs, norms, and behaviors across different societies that influence business practices and management styles.
• National Culture: The shared values, customs, and behaviors that characterize a nation and shape organizational practices and decision-making.
• Cultural Dimensions (Hofstede’s Model): Frameworks that describe key aspects of national cultures, such as power distance, individualism vs. collectivism, uncertainty avoidance, masculinity vs. femininity, and long-term vs. short-term orientation.
• Cross-Cultural Management: The practice of managing and leading across different cultural contexts, requiring awareness of cultural sensitivities and adaptation of management styles.
• Cultural Intelligence (CQ): The capability to function effectively in culturally diverse settings, including awareness, knowledge, and behavioral skills.

📝 Essential Points

• Impact on Management: Cultural differences influence leadership styles, communication, decision-making, motivation, and conflict resolution.
• Global Business Challenges: Misunderstandings and misinterpretations due to cultural differences can hinder international negotiations, teamwork, and organizational effectiveness.
• Adapting Strategies: Successful multinational companies adapt their management practices to align with local cultural norms while maintaining core corporate values.
• Cultural Dimensions: Understanding Hofstede’s dimensions helps predict how cultural differences affect organizational behavior and management practices.
• Cultural Sensitivity: Managers must develop cultural intelligence to navigate diverse environments, build trust, and foster effective cross-cultural teams.
• Cultural Integration: Balancing global standardization with local adaptation (glocalization) enhances competitive advantage and organizational cohesion.
• Training and Development: Cross-cultural training programs are essential for preparing managers and employees for international assignments and multicultural teamwork.

💡 Key Takeaway

Cultural differences profoundly influence management practices and organizational success in international contexts; understanding and adapting to these differences is crucial for effective global leadership and competitive advantage.

📊 Synthesis Tables

Aspect	Globalization & Industry Impact	Internationalization & Modes
Definition	Process of worldwide interconnected markets and industries driven by trade and investment	Expansion of firms across borders via trade and direct investment
Industry Types	Sheltered, Trading, Multidomestic, Global	Sheltered (domestic focus), Trading (exports/imports), Multidomestic (subsidiaries), Global (trade + investment)
Key Drivers	Trade growth, resource flows, technological advances	Market demand, resource access, cost advantages
Internationalization Route	Industry evolution from sheltered to global	Export → Subsidiaries → Integrated manufacturing
Impact on Competition	Increased rivalry, market shifts, lower profitability	More competitors, bargaining power shifts, industry restructuring

Aspect	Competitive Advantage & National Environment	Porter’s Diamond & Location Strategy
Focus	Internal resources + national factors	National factors influencing industry competitiveness
Key Components	Resources, related industries, demand, rivalry	Factor conditions, related/supporting industries, demand, strategy/rivalry
Resource Role	Cost, quality, innovation capabilities	Endowments that shape competitive advantage
Location Strategy	Resource access, cost, proximity to markets	Optimal location based on national strengths and resource availability

⚠️ Common Pitfalls & Confusions

1. Confusing globalization with internationalization—globalization is a broader process; internationalization is firm-specific.
2. Overlooking the role of national environment in shaping competitive advantage—resources and clusters matter.
3. Misclassifying industries—failing to distinguish between sheltered, trading, multidomestic, and global industries.
4. Assuming all industries follow the same internationalization pattern—service industries often require subsidiaries, manufacturing may start with exports.
5. Ignoring the impact of industry structure on profitability—more rivalry and entry barriers influence success.
6. Confusing Porter’s national diamond components—factor conditions vs. demand conditions, etc.
7. Overgeneralizing location strategies—cost is not the only factor; proximity to markets and resources also matter.
8. Misunderstanding the difference between global and local strategies—adaptation vs. standardization.
9. Overlooking organizational structure’s role in strategy fit—structure should support strategic objectives.
10. Assuming all MNCs follow the transnational model—different firms adopt different configurations based on their capabilities.
11. Underestimating the importance of innovation and R&D in sustaining competitive advantage globally.
12. Confusing cultural differences with management practices—both influence strategy but require different approaches.

✅ Exam Checklist

• Define globalization and internationalization; distinguish between them.
• Describe the four types of industries based on internationalization modes.
• Explain how industry internationalization affects competition and profitability.
• Outline the key elements of Porter’s national diamond.
• Discuss how national factors influence a firm’s competitive advantage.
• Identify the main location strategies for resource access and cost advantages.
• Differentiate between global and local strategies; when to adapt or standardize.
• Explain the importance of organizational structure in strategy implementation.
• Describe the characteristics of reconfiguring MNCs and the transnational model.
• Highlight the role of innovation and global R&D in maintaining competitive advantage.
• Discuss cultural differences and their impact on management practices.
• List the stages of industry internationalization from sheltered to global.
• Understand the impact of industry structure and rivalry on firm strategy.