Competitive International Strategy

Key Implementation Issues

Anders Pehrsson

• Publisher: Routledge
• Year: 2020
• Print ISBN: 9780367479824
• eBook ISBN: 9781000225532
• Topic: Business
• Subtopic: Business General
• Index: Business

Contemporary businesses are exposed to global competition enhanced by new information technology and liberalized cross-border transactions in many industries. This introduces a new competitive dynamic, influenced by actors in developed and emerging markets. The dynamic puts major demands on executives as they consider future moves that support strategic initiatives. The context of intensified global competition requires attention from practicing (and aspiring) leaders in international business organizations.

Drawing on contemporary research, Competitive International Strategy: Key Implementation Issues addresses international business strategy formulation and implementation in the global competitive market. It captures the essential strategy components by elaborating on the implementation of corporate integration and local responsiveness. This is considered a vital dichotomy in the development of international business strategies. Essential components include competition context, firm's resources, strategy directions and competence, implementation issues, and competitiveness. The book includes several detailed company cases.

Bridging the strategy formulation and implementation is crucial for the ultimate success of international business firms. This book will be of great value to students at an advanced level, academics, and reflective practitioners in the fields of strategic management, leadership, and international business.

1
Content of This Volume

Anders Pehrsson

This volume builds on topical research and develops a model for firm’s competitive international strategy representing the firm’s long-term direction for its business activities across national borders. Following the specification made by Tallman and Pedersen (2015), the international dimension extensively changes the nature of the firm’s activities in comparison with a domestic strategy. Thus, international strategy generally involves a greater amount of uncertainty and risks because the firm has to face varying institutional settings and competition landscapes.

In particular, the volume illuminates key implementation issues that may hamper sustainability of a firm’s international competitiveness. For example, it is decisive that implementation activities consistently follow strategic intentions. A strategic intention of a firm may include a desire to offer competitive prices on customized products. However, the firm may not possess enough capabilities in order to efficiently exploit an appropriate production technology leading to cost reduction (Erro-Garcés, 2019), or the firm may not possess enough knowledge to balance online and offline sales necessary for customization (Schneider and Zielke, 2020). A lack of knowledge may also be apparent when the firm tries to cope with informal social structures that often hampers the firm’s efforts to implement a strategy aligned with changing competition (Pehrsson, 2020). Implementation issues may also appear when the firm assesses relatedness among its international operations in order to realize a potential for corporate synergy (Pehrsson, 2019), or when the firm tries to support a foreign subsidiary when implementing a strategy of local responsiveness (Pehrsson, 2017).

The focus of the volume is highly relevant because international competition is changing. Therefore, firms need to build competitiveness based on sound understanding of what drives complexity of competition landscapes. Technology development is a major driving force. For example, integrated applications of the Internet and related technologies reduce costs for manufacturing and design because digital techniques utilize resources more efficiently provided the strategy implementation works well. Furthermore, applications of the Internet enable online services that, in turn, heavily influence a firm’s ways of approaching target customers and implementing a competitive strategy. Both examples indicate what may imply changing international competition and complexity.

A need for greater efficiency and sustainability of international competitiveness is also triggered by shifting customer demands with regard to, for example, updated products and services, preferences for customized offerings, and requirements regarding quick deliveries. Furthermore, changing international competition due to government policies encourages international establishments and firms’ capabilities of sensing opportunities that open up avenues for foreign direct investments in different host countries. Thus, firms find their ways to foreign markets and establish themselves in various ways, and start competing with other international and domestic firms. The changed competition generally affects international and domestic firms, no matter how they assess the competitive context or what resources they possess in order to formulate and implement a competitive international strategy. The global liberalization of markets for telecommunications initiated by governments in several countries is an example of how changing policies encourage internationalization and market entries of international firms.

The following sections presents details of the referred changes to international competition. The core message and structure of the volume then follow.

Changing International Competition

This section discusses more deeply why landscapes of international competition may change. In particular, the discussion focuses on the impact of digitalized production in terms of Industry 4.0 and the introduction of combinations of online and offline services, demand changes, and changing international establishments of firms. More precisely, changing patterns of foreign direct investments, and foreign market entries of firms operating in the telecommunications industry facilitated by liberalizations exemplify shifting international establishments.

Digitalization and Demand Changes

Developments of technology is a major force that creates opportunities both for firms already established in a market and market entrants. Resulting from firms’ exploitation of the opportunities, patterns of competition and landscapes change. Digitalized production and design constitutes an example of how an individual firm can make its resource base more efficient. Thus, simultaneous use of the Internet and related technologies is a way of utilizing a firm’s resources, in terms of physical assets and knowledge, in more cost-efficient ways. In turn, this opens up for further strategy alternatives because prices may be lower. Furthermore, application of the Internet facilitates efforts of established firms and newcomers to implement competitive international strategies by getting smooth access to target customers and finding ways of balancing the offering of online and offline services.

The two examples show how development of information technology to a high degree makes earlier business models obsolete. Previous business models primarily relied on physical activities, but they are surpassed largely by models that also incorporate virtual activities (Büyüközkan and Göçer, 2018). As a result, well-known grounds for competition change character and new landscapes emerge.

Industry 4.0

The introduction of steam engines started the first industrial revolution in the 19th century and implied a significant increase in productivity. Production lines, conveyor belts, and division of labor then characterized the second revolution and facilitated standardization of products. Industrial evolution took the third step when digital programming entered the scene, facilitating automation of discrete systems.

Contemporary technology makes it easier for a manufacturing firm to handle customers’ demand for updated and customized products and services, and their need for quick deliveries. At the same time, technology drives development of customers’ demand patterns and competition among firms. The contemporary technology of Industry 4.0 (Erro-Garcés, 2019) refers to the fourth industrial revolution, including the “smart factory” concept, and means new relationships between a firm’s personnel, technology components, and systems. For example, application of the technology implies that well-known production planning is replaced by decentralized manufacturing with multiple manufacturing locations, and from large scale to micro scale (Srai et al., 2016). Thus, Industry 4.0 embraces “intelligent” production processes used to make a firm’s resources more efficient and increase productivity.

Components of Industry 4.0 include connections between virtual and physical realities and include the “Internet of Things” (connection of various products and systems over the Internet), the Internet of Services (connection of various services over the Internet), and the so-called smart factory (Greengard, 2015). Developments of Industry 4.0 are frequently supported by governments. For example, the governments of China, Germany, and the United States support refinements of the technology in comprehensive ways (Kagermann et al., 2013; Keqiang, 2016).

Erro-Garcés (2019) reviews research on Industry 4.0 and identifies needs for further studies. These are some major topics that need further attention: (1) the need for a common terminology for this quickly growing field, (2) specification of stages and levels for implementation of Industry 4.0, (3) developments of aspects, such as lean production and sustainability, (4) need to develop skills of the staff, and (5) impact on ways to organize the firm. Findings of further studies would help the individual firm to effectively align Industry 4.0 with its competitive international strategy and facilitate implementation of the technology in order to increase productivity and reduce costs.

Digitalization also becomes more important to supply chains and, therefore, firms need to develop digital capabilities in cooperation with other firms. Queiroz et al. (2019) note that there is just limited literature on the topic and much work remains in order to develop relevant frameworks and models. Queiroz et al. contribute by proposing a framework for development of digital supply chain capabilities that integrate elements of Industry 4.0. The framework consists of capabilities necessary to improve supply chain performance (development of a firm’s policies, integration of customers and suppliers, warehousing, transportation, and smart production), and technologies enabling refining of the capabilities (big data analytics, transaction techniques, artificial intelligence, cloud computing, systems to connect virtual and physical activities, and the Internet of Things).

Online and Offline Services

The issue of balancing online and offline channels for a firm’s international sales and other services is driven largely by technology developments that change the character of competition. A firm that is able to find an optimum mix of channels not just builds an efficient resource base for its competitive international strategy, but also creates additional ways to implement the strategy. When searching for the optimum mix, the firm may assess several combinations of informational websites, websites for e-commerce, and offline channels (e.g., Pauwels et al., 2011; Bang et al., 2013; Zhang et al., 2019). However, no matter the numb...

Table of contents

• Cover
• Half Title
• Series Page
• Title Page
• Copyright Page
• Contents
• List of Figures
• List of Tables
• Preface
• 1 Content of This Volume
• Part I The Model for Competitive International Strategy
• Part II Key Issues When Implementing a Competitive International Strategy
• Part III Coping With Changing International Competition
• List of Contributors
• Index