Ikea Case Study
IKEA case study 1. What are IKEA 's firm-specific advantages? Country-specific advantage?
Oversea investing is mainly due to that the transnational corporation has the firm-specific advantage, for example, the brand reputation, production tec., scale economy, marketing strategy, and so on. That is why when firm can’t gain big profits by exporting directly or patent authorization, foreign investment is more comparative within those firm-specific advantages. This firm-advantage is referring to intangible assets.
Country specific advantages for the firms can enhance the comparability. These comparative advantages provide the fundamental rational for the existence of international trade. The free trade between two countries results to economic profits to participating countries, so that there are different country specific advantages. There are four factors determine the country-specific advantage. They are factor conditions, demand conditions, related and supporting industries, firm strategy, structure, and rivalry. A. Factor conditions: such as skilled labor, politics policy and so on. B. Demand conditions: depends on the demand of the home country for the industry’s service and products. C. Related and supporting industries: the supplier or related industry of the firm in the home country. D. Firm strategy, structure, and rivalry: the way how companies to establish and manage. And the domestics rivals. * A framework of the evolution of CSA/CSD and FSA/ FSD influenced by home country institutional environment:
(Resource: S Marinova, The evolution of country and Firm specific Advantages and Disadvantages in the process of Chinese firm internationalization, www.ceauk.org.uk/2010-conference-papers/full.../Marin-Marinov.Pdf)
* Role of government policies * Government strategic priorities * Foreign exchange reserves * Government
Oversea investing is mainly due to that the transnational corporation has the firm-specific advantage, for example, the brand reputation, production tec., scale economy, marketing strategy, and so on. That is why when firm can’t gain big profits by exporting directly or patent authorization, foreign investment is more comparative within those firm-specific advantages. This firm-advantage is referring to intangible assets.
Country specific advantages for the firms can enhance the comparability. These comparative advantages provide the fundamental rational for the existence of international trade. The free trade between two countries results to economic profits to participating countries, so that there are different country specific advantages. There are four factors determine the country-specific advantage. They are factor conditions, demand conditions, related and supporting industries, firm strategy, structure, and rivalry. A. Factor conditions: such as skilled labor, politics policy and so on. B. Demand conditions: depends on the demand of the home country for the industry’s service and products. C. Related and supporting industries: the supplier or related industry of the firm in the home country. D. Firm strategy, structure, and rivalry: the way how companies to establish and manage. And the domestics rivals. * A framework of the evolution of CSA/CSD and FSA/ FSD influenced by home country institutional environment:
(Resource: S Marinova, The evolution of country and Firm specific Advantages and Disadvantages in the process of Chinese firm internationalization, www.ceauk.org.uk/2010-conference-papers/full.../Marin-Marinov.Pdf)
* Role of government policies * Government strategic priorities * Foreign exchange reserves * Government