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Key to International Strategic Advantage International Strategic…

- - - - Financial:
        Ability to generate internal funds
        Ability to raise external capital
      - Physical
        Location of plants, offices and equipment
        Access to raw mateial and distribution channels
      - Technological
        Possesion of patents, trademarks, and copyrights
      - Organisational
        Formal planning, command and control systems
        Integrated management information systems
    - - Human
        Knowledge
        Trust
        Organizational culture
      - Innovation
        A supportive atmosphere for new ideas
        R&D capabilities
        Capabilities for organizational innovation and change
      - Reputational
        Perceptions of product quality, reliability among customers
        Reputation as a good employer
        Reputation as a socially responsible corporate citizen
- - - - There is a low level of differentiation.
      - Competitors are of roughly equal size. This leads to more intense struggles for dominance between the firms.
      - Competitors are aggressive in seeking leadership. The market is mature or declining.
      - There are high fixed costs (e.g. industries requiring high capital equipment costs like the steel industry).
      - The exit barriers are high, for example, due to high costs of redundancy or the decommissioning of capital equipment that is not easily resaleable.
  - - - • Economies of scale/high fixed costs. The steel and semi-conductor industries are just two examples.
      - • Non-scale-based advantages, for example patents, difficult to imitate know-how, superior information about customers.
      - • High experience and learning needed to succeed in the industry.
      - • Difficulty in accessing supply and distribution channels.
      - • High market penetration costs
      - • Difficult government restrictions (e.g. licensing, tax regimes).
      - • Possible revenge by existing firms in the market, for example slashing prices against a new rival.
  - - - the price/performance ratio of the substitute is superior (e.g. aluminium may be more expensive than steel but it is more cost efficient for some car parts)
      - the substitute benefits from an innovation that improves customer satisfaction (e.g. high speed trains can be quicker than airlines from city centre to city centre such as in Europe, London to Paris)
  - - - there are very few of them and they provide a specialist or rare input. For example, for Coca-cola bottlers there is only supplier – Coca-Cola – of Coke Syrup. If Coca-Cola changes the price, there is little the bottlers can do but pay.
      - buyers represent only a small part of sales by the supplier. Thus Boeing will not offer lower prices for new aircraft to small airlines, but may well offer large discounts to Singapore Airlines, Malaysian Airlines or British Airways
      - switching costs are high and it is disruptive or expensive to change suppliers (for example, Microsoft is a powerful supplier in the PC industry because of the high switching costs of moving from one operating system to another)
      - suppliers can integrate forwards (for example, low cost airlines have cut out the use of travel agents).
  - - - buyers are concentrated, where a few buyers account for the majority of sales. Thus hundreds of automobile components suppliers try to sell to a small number of carmakers
      - buyers have low switching costs, meaning they can switch easily between suppliers. Switching costs are low when the item bought is a weakly differentiated commodity and is easily available (e.g. sugar)
      - buyers can supply their own inputs (backward vertical integration). For example, some Chinese steel companies have gained power over their iron ore suppliers by acquiring iron ore sources for themselves, putting them in a strong bargaining position relative to their existing suppliers