Location, Internationalization, and Global Strategy

Competition is increasingly crossing borders. However, location still matters, with the most successful competitors in an industry often based in the same few geographic areas. Companies must harness the advantages of locations but compete with a regional or global strategy.

 
“Global Competition and the Localization of Competitive Advantage”
     Michael E. Porter and R.E. Wayland
     Advances in Strategic Management, Vol. 11, part A
     Greenwich, CT: JAI Press, c1995

Competition in Global Industries
     Edited by Michael E. Porter
     Harvard Business School Press, 1986
Including:

"Competition in Global Industries: A Conceptual Framework" by Michael E. Porter

"Three Roles of International Marketing in Global Strategy" by Hirotaka Takeuchi and Michael E. Porter

"Coalitions and Global Strategy" by Michael E. Porter and Mark B. Fuller

"Changing Global Industry Leadership" by Dong Sung Cho and Michael E. Porter

Available through Harvard Business Online:

Volvo Trucks: Penetrating the U.S. Market
Volvo Trucks has worked on a global strategy for several decades. Beginning in the mid-1970s, the company decided to enter the largest market for trucks--the United States. Over time, the company has struggled to get a significant share of the U.S. market and at the same time integrate operations around the world into a truly global strategy. However, the competitive structure (five-force model) differs significantly between Europe and the United States, and in spite of heavy investments, the global synergies seem far-fetched. This case illustrates clearly that entry and penetration of a market is a learning process for Volvo, where the initial strategic logic and underlying assumptions have to be changed several times. Teaching Purpose: 1) Examines in detail the problems and issues related to entry strategies and global strategies. 2) Looks specifically at the evolution, however slow, toward global competition in an industry. Answers such questions as "Why is this industry so slow in globalizing?" "What are the main cost drivers behind globalization?" and "Why is there so little global trade in this industry?"

  

Robert Mondavi: Competitive Strategy
Describes the competitive situation facing Robert Mondavi, the leading premium California winery. Mondavi has been an industry innovator and has recently taken steps to become more international. Mondavi has to cope with growing domestic competition as well as market share growth by wineries from Chile and Australia. Teaching Purpose: Designed to explore competitive strategy in an evolving industry with a special focus on international strategy.

Atlas Electrica: International Strategy
Atlas must decide whether to acquire La Indeca, increasing its Central American presence, or to focus on larger Latin American markets where higher growth is possible. In the year 2000, Jorge Rodriguez was in charge of Atlas Electrica, the largest home appliance firm in Central America. Although it had almost doubled its sales in the 1990s, by the end of the decade Atlas was experiencing a declining market share in its home region and facing increasing competition from outside the region, especially from Mexican and Korean multinationals. At the time, Atlas' main competitor in Central America, El Salvador-based Indeca, was up for sale. Atlas Electrica, based in Costa Rica, served more than a dozen Latin American countries. Since its establishment in 1961, it had served Central American markets with different types of home appliances, later focusing on white-goods for middle-income segments of Central American consumers. In the mid-1990s, through a strategic alliance with Sweden's AG Electrolux, Atlas had expanded to Latin American markets beyond Central America.

"How Global Companies Win Out"
     On Competition, Chapter 8
     Thomas M. Hout, Michael E. Porter and Eileen Rudden
Describes some of the basic characteristics of a global company and why a truly global company is more than just a company operating in many nations.  The article outlines a number of ways in which coordination across nations enhances competitive advantage, illustrated with three case studies of prominent global competitors.

"Competing Across Locations: Enhancing Competitive Advantage through a Global Strategy"
     On Competition, Chapter 9
     Michael E. Porter
This new article brings together two dimensions of international strategy - location and global networks.  The concept of activities, so important to understanding competitive advantage in general terms, provides the basic framework for international strategy as well.  When competing across borders, firms can spread activities multiple locations to harness their locational advantages, while coordinating among dispersed activities in a variety of ways to harness network advantages.

"Competing Across Locations" develops the implications of this framework for global strategy in a particular business.