Professional Documents
Culture Documents
Donald Lessard
Epoch Foundation Professor of International Management
MIT Sloan School of Management
HKU
February 16, 2012
Why do firms internationalize?
Because
x they are out of space at home
x
Because foreign markets are growing faster
Because everybody else is doing it ?
g firms are threatening
Because foreign g them at
home ?
Because they are good at something that
travels probably
Because the industry/game is global in scope
probably
Capabilities and Competitive Advantage
In order for capabilities to matter
matter , they must provide a
competitive advantage.
To do this
this, they must satisfy four criteria (VRIO):
they must create value in the form of greater
willingness to pay by customers for the product or
service and/or reduce the cost of producing/supplying
that product or service,
they must be rare,
theyy must be hard to imitate.
The organization must be able to employ them
effectively.
Source Barney (1997), Barney and Clark (2007).
Capability Exploiting Internationalization
What capabilities do we have that we seeking to
exploit
l it internationally?
i t ti ll ?
Do they pass the RATs test wrt target country:
Are
A they
th Relevant?
R l t?
Are they Appropriable?
Are they
h Transferable?
f bl
Exploit
Foreign
Home-based
market
resources//
Position/
capabilities
customer v. p.
Capability Enhancing Internationalization
Internationally-
Augmented derived
capabilities Resources/
Capabilities
Enhance
The Full Cycle
Exploit
Enhance
Examples
Shimano
Cemex
Global Clean Tech
Company founded
Major external events
1930s
WWII
W
1940s
Company reesttablished
after war
PRC
P
Founders death
1950s
3 speed hub, C
Company
1960s
Euuropeans reinve
ent
Euro racing biccycling
Doownhill emergess
1980s
in
n US
SPD
S
SRAM suit
S
Shimano timeline
1990s
Keizo S. dies
K
Recall
R
Rise of China, In
R ndia
2000s
2010s
Capability Exploiting
Exploiting Episodes
Exploit
Foreign
F i
Home-based
market
resources/
Position/
capabilities
customer v. p.
Expansion
pa s o to aall Japa
Japan
Expansion throughout Asia in 1930s
Expansion to US in 50s,
50s Europe in 60s
To new economies in 1980s
Competency Enhancing Episodes
Internationally-
y Rats No Yes
Home-based
Home based Platform
derived
resources/
Resources/
capabilities Yes
Capabilities
Enhance No
Cold Forging
g g from MA
Off shoring to Singapore, China
pp g road racing
Tapping g demand conditions in Europe
p
Tapping mountain biking demand conditions in US
Virtual diamond: Shimano
Demand
Factor conditions
Conditions
TOLTECA, MX (1989)
90US Anti Dumping
1990s
SPAIN (1992)
PANAMA (1994) VENEZUELA (1994) TEXAS (1994)
DOMINICAN REPUBLIC (1995)
COLOMBIA (1996)
PHILIPPINES (1997)
INDONESIA (1998)
99 NYSE Listing
COSTA RICA (1999) EGYPT (1999)
00 S&P Investment Grade
SOUTHDOWN, USA (2000) BANGLADESH (2000)
2000s FRANCE (2001) THAILAND (2001)
RMC, UK (2005)
Stepping
pp g Out
Operations Expertise
Exploit
Internationally-
Home-based
derived
resources/
Resources/
capabilities
C
Capabilities
biliti
Enhance
Cost of Capital,
PMI Process
Pet Coke
Growing
g up
p
Operations Expertise
PMI
d d bags
Branded b
Exploit
Internationally
Internationally-
Home-based
H b d
derived
resources/
Resources/
capabilities
Capabilities
Enhance
Pooling
PMI on Mexico
Th CEMEX Way
The W
Stepping
pp g Up
p
Operations Expertise
PMI
GPS
CEMEX Way
Exploit
Internationally-
Home-based
derived
resources/
Resources/
capabilities
Capabilities
E h
Enhance
Concrete
Slump meter
How RATs and CATs Multiply!
nal*
etanation
e/capabiility base
e
ased HB+ Me
Resource
Home ba
H
R
Home Global
Footprint
Lessard, Lucea, and Vives, Global Strategy for the 21st Century The
RAT/CAT Capabilities Perspective
Perspective, unpublished working paper,
paper February,
February
2012
dlessard@mit.edu
dl d@ it d
http://dlessard.scripts.mit.edu