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Schedule. Today Fax Global Industry 7-31 Philips and Matsushita 8-1 EuroDisney 8-5 P&G 8-6 P&G Cont. Summary Evaluations 8-7 ClipIt! discussion 8-8 Presentations 8-12 Final in Class. Competitive Advantage of Nations. James Oldroyd Kellogg Graduate School of Management

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Schedule

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  1. Schedule • Today Fax Global Industry • 7-31 Philips and Matsushita • 8-1 EuroDisney • 8-5 P&G • 8-6 P&G Cont. Summary Evaluations • 8-7 ClipIt! discussion • 8-8 Presentations • 8-12 Final in Class

  2. CH-ZWA645-005jsmGB Competitive Advantage of Nations James Oldroyd Kellogg Graduate School of Management Northwestern University j-oldroyd@northwestern.edu 801-422-7888 650 TNRB

  3. Industry globalization potential Assessing Industry Globalization Potential Customer Drivers • Common customer needs • Global customers • Global channels • Transferable marketing know-how • and global brands • Location of strategic resources • Differences in country costs • Potential for economies of • scale, innovation, flexibility • Cost of shipping (value/bulk) Cost Drivers Government Drivers • Trade policies • Technical standards • Regulations • Global competitors • Competitors leveraging • global position (i.e. cross • subsidizing). Competitive Drivers Source: Jeff Dyer BYU 2001

  4. Porter’s Diamond Model Firm strategy, structure, and rivalry Factor Conditions Demand Conditions Related and supporting industries Government

  5. Competitive Advantage of Nations(National Perspective) JAPANESE FACSIMILE INDUSTRY Strong rivalry Innovation focus Firm strategy, structure, and rivalry Fax demand - language - lack substitutes - control subs Skilled designers, engineers Factor Conditions Demand Conditions Related and supporting industries - NTT promotion - “legal” docs Government Copier companies Semiconductor companies Thermal print components Laser printers Thermal paper Source: M. Porter

  6. Location-Specific Advantage • Issue: Competitive vs Comparative advantage • Competitive advantage is a firm’s ability to transform inputs into goods and services at a maximum profit on a sustained basis, better than competitors • Comparative advantage • What sources of potential advantage reside in geographic locations (factor endowments)? • How can firms derive advantage based on the created endowments within a particular country (created endowments)? • Traditional view • Focus on national factor endowments • Countries differ in factor endowments and countries should produce goods in which their factor endowments offer a comparative advantage.

  7. Globalizing for Competitive Advantage(Utilizing country comparative advantages) Created Endowments Factor Endowments • Land: supply, usability, location (geography) • Natural resources: abundance, type • Labor : plentiful (cheap) • Size of local population: size of home market • Skilled labor: effective education systems and productive workforce • Technology/knowledge base • Government support: Financial, stable economic and political environment • Culture: costs of transacting, demanding users, inventiveness of human resources

  8. Selected Top Export Industries • United States • Pop: 250mm • Automobiles • Aerospace/aircraft • Computer equip./ • software • Pharmaceuticals • Medical Equipment • Entertainment • (motion pictures) • Food Processing/ • consumer pdts. • Waste management • Germany • Pop: 61mm • Automobiles • (Performance) • Machine Tools • Printing presses • Chemicals • Surgical Instruments • Cutlery • Pens & pencils • Optical instruments • Italy • Pop: 57mm • Ceramic tiles • Knitwear/textiles • Leather goods • and footwear • Ski Boots • Jewelry • Lighting/glass • Furniture • Japan • Pop: 125mm • Automobiles & • motorcycles • Consumer • electronics • Computer equip./ • semiconductors • Robotics • Cameras/watches • Musical instruments • Machine tools • Shipbuilding/steel

  9. Sources of Competitive AdvantageImplication of Location/Country • Efficiency • Firm’s ability to perform activities at lowest cost or highest efficiency • Optimize where individual tasks are located • Flexibility • Firm’s ability to respond to substantial, uncertain, and rapid changes in its environment • Optimize location and flows of products or components • Innovation/Learning • Firm’s ability to sense and respond to market, technological opportunities • Optimize flows of information and/or technology and tap into leading edge resources to determine how a task should be performed (e.g., best practices)

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