Competition in Global Industries: A Conceptual Framework

Executive summary
First and primary, the important aspect to note and to discuss is the creation and
sustainability of competitive advantage of multinational competition in the Global
world and how strategies formed by each firm contributes to competitive advantage.
Patterns of international competition1.Analysis in setting international strategy are
the industry. Multidomestic industries are essentially independent of competition in
other countries. A firm can and should manage its international activities like a
portfolio. Country-centered strategy, Global industry is an industry in which a firms
competitive position in one country is significantly affected by its position in other
countries or vice versa. A firm must in some way integrate its activities on a
worldwide basis to capture the linkages among countries.
Causes of Globalization an industry can be defined as global if there is some
competitive advantage to integrating activities on a worldwide basis. A firm may
possess two types of competitive advantages; low costs and differentiation. Value
Chain Theory the activities performed by a firm in any industry is grouped into the
nine categories and the nine group is divided by support activities and primary
activities. Prime activities: involves physical creation of the product or service.

Competitive Scope breaths of activities the firm employs together in competing in

an industry. There are four basic dimensions of competitive scope:
a. Segment scope (ange of segments a firm serves, e.g. product varieties).
b. Industry scope (range of industries the firm competes in)
c. Vertical scope (activities performed versus suppliers & channels)
d. Geographic scope (geographic region the firm operates in)
International Configuration and Coordination of activities are the significant
component of the firm. It must indicate how to spread the activities in the value chain
among countries. There are two key dimensions of how a firm competes. One is
configuration which is where each activity is performed, concentration (one location
serving world) and dispersion (every activity in each country). Another one is
coordination which is how activities are performed and options rage from none to

high. In the point, market presence in many countries and some exports and import of
components end products are characteristic of most global industries.

Configuration or Coordination and Competitive Advantage is the factor for

concentrating an activity in one or a few locations as follow:
Economies of scale in the activity
A proprietary learning curve in the activity
Comparative advantage in where activity is performed
Coordination advantages of co-locating linked activities such as R& D and
production
Structural characteristics since the costs are concentrated.
Local product needs differ since there are no advantages of scale or learning
from onsite operation.
Greater responsiveness
Cheaper transport, communication and storage costs
Governments (support)
Minimizing exchange risk, political risk (Dispersion of risk)
Coordination allows sharing of know-how among dispersed activities,
reinforce a firms brand reputation with buyers through ensuring a consistent
image and approach to doing business worldwide
Coordination allows to serve products in a consistent way & enhance
leverage with local governments
Increase Transaction costs of coordination -> long distances, language
problems & cultural barriers to communication

 Country subsidiaries often view each other more as competitors than

collaborators
Configuration/Coordination and the Pattern of International Competition discuss
about the competitive advantage from a global strategy differs among industry. Firm's
choice of international strategy involves a search for competitive advantage from
configuration/coordination throughout the value chain. The firm may standardize
concentration some activities.
Global strategy and comparative advantage is traditional view of competitive
advantage grows out of where a firm performs activities, and location of activities is
clearly one source of potential advantage in a global firm. It not only involves
production activities, but also applies to other activities in the value chain. Moreover,
comparative advantage is specific to the activity and not to the location of the value
chain as a whole. Hence, global firm can spread activities among locations to reflect
different preferred locations for different activities.
Global Platforms is the interaction of the country which is a desirable global
platform in an industry if it provides an environment yielding firms domiciles in that
country an advantage in competing globally. In global competition, a country must be
viewed as a platform and not as the place where all a firm's activities are performed.
Comparative advantage is the platform particular activities in the industry such as
skilled workers, advanced infrastructure and so on.
Strategic Implications of Globalization is global industries are overall system
matters as much or more than country