1. Analytical Frameworks
© Professor Daniel F. Spulber

2. First key framework The global competitive strategy “Star Analysis”
Will use in our case discussions and in our case analysis
The “Star Analysis” provides a way to organize our thoughts and knowledge about geography and international business
The “Star Analysis” provides information for the international business manager to develop a competitive strategy

3. Global Competitive Strategy
The international business firm’s competitive advantage depends on five major drivers:
Home country
Supplier countries
Customer countries
Partner countries
Competitor countries

4. The global competitive strategy star
Home
country
Supplier
countries
Customer
countries
International
business
Partner countries
Competitor
countries

5. The international business “Star Analysis”
Gather country
data from
global mosaic
Information needed
to design
competitive
strategy
Star
Analysis

6. Global Competitive Strategy
Home country features – headquarters
Company globalization – Launching pad
Company history and culture
Managers’ background
Brand nationality
Corporate governance
Home market
Political, legal, regulatory climate

7. Global Competitive Strategy
Supplier country features – production and procurement
Worker wages and productivity
Technology
Finance capital
Factor supplies
Supplier firms
Political, legal, regulatory climate
Operating costs/risks

8. Global Competitive Strategy
Customer country features – distribution and sales
Customer preferences
Elasticity of demand
Income per capita and income distribution
Customer knowledge
Distribution infrastructure
Society and culture
Political, legal and regulatory climate

9. Global Competitive Strategy
Partner countries – Demand-side and supply-side complements
Complementary products
Complementary technology
Complementary capabilities
Market knowledge
Political, legal, regulatory climate

10. Global Competitive Strategy
Competitor countries
Home, supplier, customer, and partner countries of competitors
Global and local competitors
Customer and supplier bypass competition
Political, legal and regulatory climate – trade agreements, home-country policies

11. Second key framework: Global added value
Global value created by global business:
Gains from trade minus Costs of trade
Global added value is competitive advantage of a global business
Global competitive strategy is means to create and capture global added value

12. Five major gains from trade:
Global added value
Five major gains from trade:
Preference for product variety and production economies of scale
Comparative advantage: Productivity and wages
Comparative availability of factors of production
Differences in preferences and endowments
Differences in innovation and technology

13. International business profits from gains from trade:
Best target countries to serve customers
Best countries to deal with suppliers and partners
Best combination of international transactions

14. Costs of trade Global business cannot just maximize gains from trade
Must adjust strategy to optimize gains minus costs
Adjust to sticky borders

15. Global business creates value
U.S. multinational corporations home country
added value (contribution to GDP) $ 2 tr.
U.S. multinational corporations’ foreign affiliates
added value to host country $ tr.
Total $ tr.
bea.gov international economic accounts

16. Third key framework “G5” competitive strategies:
Global platform strategy
Global network strategy
Global intermediary strategy
Global entrepreneur strategy
Global investment strategy

17. Global Competitive Strategy
Location, location, location – key role of geography
Where to produce and find suppliers?
Where to target customer markets?
Where to find best partners
Where are competitors coming from, serving and seeking suppliers
Global competitive strategy – integrate economic and geographic forces for competitive advantage