Global Strategic Management

Session 3

Country Comparative Advantages (Japanese Facs Industry)

Professor Jeff Dyer

Global Strategic Management 1
 Competitive Advantage of Nations
(National Perspective)
JAPANESE Strong rivalry
Innovation focus
FACSIMILE
Firm strategy,
INDUSTRY structure, and
rivalry

Fax demand
Skilled designers, Factor Demand - language
engineers Conditions Conditions - lack substitutes
- control subs

Related and
supporting Government - NTT promotion
industries - “legal” docs

Source: M. Porter
Copier companies
Semiconductor companies
Thermal print components
Laser printers
Thermal paper
Professor Jeff Dyer
Global Strategic Management 2
 Location-Specific Advantage

• Issue: Competitive vs Comparative advantage

– Competitive advantage is a firm’s ability to transform inputs into goods
and services as 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.

Professor Jeff Dyer

Global Strategic Management 3
 Globalizing for Competitive Advantage
(Utilizing country comparative advantages)

Factor Endowments Created Endowments

• Land: supply, usability, location • Skilled labor: effective education
(geography) systems and productive
• Natural resources: abundance, workforce
type • Technology/knowledge base

• Labor : plentiful (cheap) • Government support: Financial,

• Size of local population: size of stable economic and political

home market environment
• Culture: costs of transacting,

demanding users,
inventiveness of human
resources

Professor Jeff Dyer

Global Strategic Management 4
 Selected Top Export Industries
United States Japan Germany Italy
Pop: 250mm Pop: 125mm Pop: 61mm Pop: 57mm

• Automobiles • Automobiles & • Automobiles • Ceramic tiles

motorcycles (Performance)
• Machine Tools Knitwear/textiles
• Aerospace/aircraft • Consumer
•

electronics
• Computer equip./ • Computer equip./ • Printing presses Leather goods
•

software semiconductors and footwear

• Pharmaceuticals • Chemicals • Ski Boots
• Robotics

• Medical Equipment • Cameras/watches • Surgical Instruments • Jewelry

• Entertainment • Lighting/glass
• Musical instruments • Cutlery

(motion pictures)
• Food Processing/
• Machine tools • Pens & pencils • Furniture
consumer pdts.
• Waste management
• Shipbuilding/steel • Optical instruments

Professor Jeff Dyer

Global Strategic Management 5
 Sources of Competitive Advantage
Implication 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)

Professor Jeff Dyer

Global Strategic Management 6