Firm specific advanatages Essay
Firm specific advanatages
1. What is a firm specific advantage?
An unique strength a firm has that distinguishes him from his rivals, and creates a competitive advantage. 2. What is Honda’s FSA?
Honda has a very wide range of motorized machines, its assortment covers a large group of consumers. 3. What basic but important distinction does Verbeke make?
Non-location-bound FSAs versus Location bound FSAs.
4. Why are some FSAs location bound?
These FSAs are so unique and difficult to imitate that they cannot be transferred abroad. 5. What does that mean “location bound”?
That the FSAs can only be exploited in a specific location
6. Can you give an example?
The Phillips R&D (research & development) centre will never be transferred abroad to a because the researches who have the technical knowledge and creative skills are most of the time western people who don’t want to migrate to a low-income country. 7. What part of Honda’s FSAs are location bound?
The FSAs that are responsible for Honda’s technical superiority like the R&D centres that are located in Japan. 8. What is the broader question that the field of International Business (IB) is concerned with?
How to develop FSAs that can be transferred across borders without stopping creating value. 9. What does Verbeke mean when he talks about unique resources? Resources a firm has that are somehow special and can form a significant strategic advantage for the firm.
10. What unique resources does he list?
Physical resources, financial resources, human resources, upstream knowledge, downstream knowledge, administrative knowledge and reputational resources. 11. Can you think of an example yourself?
Localized resources (resources that are bound to specific locations like
mining sites) 12. Verbeke describes the FSA as a unique resource which gives a firm an advantage, but an advantage compared to what or whom?
An advantage compared towards a rival company.
13. What is a routine?
The distinct ability to combine the firm’s resources in unique ways valued by the firm’s stakeholders. 14. Why does a firm need a routine to use its FSAs?
Without a routine the resources cannot be combined to eventually create a FSA 15. Can you give an example?
Combining the human resources with financial resources which will lead to responsible capital behaviour of the firm. 16. What are recombination skills?
The ability to creatively recombine sets of resources.
17. Why does a firm need recombination skills?
Because it is important that firms respond to differences between national and foreign environments. Also to satisfy new stakeholder demands in these foreign environments. 18. Can you give an example?
Recombining physical resources with downstream knowledge.
19. Draw Verbeke’s conceptual model and explain the components in your own words (tip: try to explain it to your colleague).
20. What is the paradox of transferable FSAs?
If a FSA is easily transferable it means that it is also easy for rival firms to simply copy the FSAs and make profit out of them. 21. What are host country location advantages?
Advantages that are helping the firm.
22. Can you give an example?
The Rotterdam harbour for lots of export orientated firms in the Netherlands. 23. How do FSAs relate to host country location advantages?
Host country advantages are important to make the FSAs work. 24. What type of host country location advantages are there? Abundant natural resources, a superior educational system, presence of a demanding and sophisticated local market , 25. Why do not all firms have FSAs that they can export and take abroad?
Because of bounded rationality and bounded reliability
26. Why is it so difficult to develop FSAs?
You need very specific knowledge to develop a proper FSA.
27. What was the bounded rationality problem for Honda?
Japan has a very different culture from Europe. This can lead to problems when Honda tries to get a bigger share on the European market. 28. What was the bounded reliability problem for Honda?