PGBM135 GLOBAL STRATEGY AND FORESIGHT

ASSIGNMENT

Title: CRITICALLY REVIEW THE THEORIES OF COMPETITIVE ADVANTAGE

AND DISCUSS HOW INNOVATION IS A PART OF DRIVING
INTERNATIONALISATION STRATEGIES

Introduction

There is an evident concern for poorly performing companies to effectively review and build
upon her capabilities as a crucial determinant of internationalization and innovation. This
translates to how business seeks to exert some competitive advantage over her rivals by been
innovative in driving her organizational operational effectiveness in handling opportunities
and threats daily while attempting to enter new market or achieve some level of growth.
Innovation, as strategically positioning the company’s capabilities, is considered one of the
key aspects for organizations' performance and sustainability (Sinha & Srivastava, 2016),
related to the ability to use their existing knowledge base, in addition to acquiring knowledge
from external sources (Kyläheiko et al., 2011). Innovations can be different, either by driving
product innovations, which involve the creation and launch of new products or services, and
process innovations, which change operations, tasks, and ways of working in organizations
(Salter & Alexy, 2014). Constant innovation on a company’s corporate procedures that is
tailored towards satisfying customer’s needs is the first strategic approach in breaking into
new market. The essence of strategic innovation is choosing to perform activities differently
than rivals do. Consumers are becoming homogenous and seeing the opportunities provided
by features of evolving macroeconomic developments such as media, ease of travels,
technology, information transfer and the likes in satisfying their continuous needs, by this
emergence, producers and retailers must embrace this strategic perspective of innovative
productivity for global rate services. Seeing that firms keep prospering and spreading their
presence and successes in their territory and across nations, as in the case study of Toyota
motor Corporation, Japan, with over 1000 subsidiaries and affiliates firms established in
various countries as a strategy of breaking into the international space, we see how
organization benefits from Internationalization. They launched into a new market through
engaging a strategy of building on her organizational capabilities and resources by using their
existing knowledge base, in addition to acquiring knowledge from external sources in
creating a ‘global rated’ products to beat her rivals. The new market strategy involved
launching new products by carefully studying American automobile manufacturers perceived
as competitors. Love and Roper (2015, p. 34) explain that research has made advances in our
knowledge of the enablers of innovation and export, hence, managers must embrace the
evolving macroeconomic developments so they can favourably compete in a global scale and
provide timely services.

Literature Review

Competitive Advantage:

To understand how competitive advantage emerges, it is imperative to know what

competitive advantage is. When two or more organizations compete within the same market,
one organization possesses a competitive advantage over its rivals when it earns (or has the
potential to earn) a persistently higher rate of profit than its rivals. However, competitive
advantage may not be revealed in higher profitability as an organization may forgo current
profit in favour of investment in market share, technology, customer loyalty, or executive
perks as it pursues future strategies. Competitive advantage emerges when change occurs
within either the organization or industry environment (Musebe Edward, 2012).

Innovation and Internalization Strategies

We aim at ascertaining how a company corporate culture of routinized innovation will

definitely impact on their business internationalization A study by Kyläheiko et al. (2011)
checked the role of a firm's technological capabilities and its appropriability regime, proxied
by the available intellectual property rights (IPRs), in driving internationalization and
innovation as two 'growth-seeking strategies' with a view to examining the impact of such
strategies on realized growth and profitability as performance indicators.

To grow and prosper, companies with organizational capabilities of providing services in a

global scale need innovative and internationalised strategies. Such firms can be main value
added providers with significant economic growth to her parent nation and new market. In
UK, strategies such as partnership between an external firm to establish internally, has proven
to be a successful innovative strategy of achieving internalization. In 2021, the UK due to
some few factors such as the Brexit and Covid experienced a decline to 12% of business
partnership with external firms both still shown a significant contribution to
internationalization. Firms also grow through product-based strategies. Product
diversification is the entry of firms into new businesses, or introduction of innovative new
products or services (Kyläheiko et al., 2011).

THE ORGANIZATION AND ITS ENVIRONMENT

It is needful to adapt to the changing and competitive environment, with global business
strategies on sustaining the business and redirecting her to a direction of better performance
and profitability in the coming years. Salem Alanzi (2018) in his study asserts that the
environment (macroeconomic dimension) has actually proved itself to be a source of both
opportunities and threats for any company on the market, regardless of their industry sector.
Therefore, a confirmed anticipation of the lambda macroeconomic phenomenon will soon
provide a direct competitive advantage for the executive if this allows them to react
efficiently before their competitors.

Discussion

Competitive strategy is about being different. It means deliberately choosing a different set of
activities to deliver a unique mix of value. In its reality, organizations must embrace global
strategic market technologies, information and skill. Strategic innovation in productivity and
customer reliability fosters the development of a self-sustainable product innovation. For an
organization to achieve its sales growth either within its territory or internalization market,
such organization must perpetually innovate by strategically positioning her operations in
delivering high quality and reliability product without raising price, and be seen to have
advantage over rivals in her territory. This involves targeting a segment of customers. It
arises when there are groups of customers with differing needs, and when a tailored set of
activities can serve those needs best. Management must innovate in their productivity through
continuous search for need oriented-product, and a new market with favourable production
opportunities. OE competition shifts the productivity frontier outward, effectively raising the
bar for everyone. But although such competition produces absolute improvement in
operational effectiveness, it leads to relative improvement for no one. Consider the $5 hillion-
plus U.S. commercial-printing industry. The major players-R.R. Donnelley Sk Sons
Company, Quehecor, World Color Press, and Big Flower Press-are competing head to head,
serving all types of customers, offering the same array of printing technologies (gravure and
weh offset}, investing heavily in the same new equipment, running their presses faster, and
reducing crew sizes. But the resulting major productivity gains are being captured by
customers and equipment suppliers, not retained in superior profitability.

In internalization, an organization can strategically position itself for partnership; this

improves process innovations, through the adoption of new methods, and by so expanding the
innovation capacity of both companies, as well as enabling access to new markets,
information of the needs of the targeted customers. We identified examples that characterize
the collaborative process through the sharing of complementary resources, in line with the
vision of networks as structures that favour innovation creation (Dias et al., 2019), in which
companies can access external resources and knowledge (Dodgson et al., 2014; Kyläheiko et
al., 2011).

Constant improvement in operational effectiveness is necessary in achieving superior

profitability. Internationalisation provides organization the opportunity of increasing their
reach and their turnovers. Access to external financing is also improved through export
activities, access to experts, information in terms of current and potential customers
‘expectations and skills, providing convenient access to favourable economic policies, tools
and technologies, new networks of prospects in form of partners and investors more willing
to participate in innovation efforts. Nevertheless, the complexity of implementing mixed
strategies can result into loss of organization corporate visions since they seek to satisfy wide
range of customers and wide range of opportunities that innovation and internationalization
provides. Organizational capacity can limit innovation or internationalisation strategies, as
they require significant financial, technological, commercial and human resources.

In Conclusion, the driving demands and expected development despite possible challenges,
by the co-existence of both innovation and internationalisation is limited by the constant low
transferability of resources and uncertainty by political policies that may affect economic
development (in the case of Brexit, UK). In business marketing, new ideas in productivity,
reliability and customer value separate winners (Kate Bertrand, 1991). It is clearly certain
that products and institutional differences directly have effect on a company’s strategy of
entering new market, but the strategically routinized innovation engagement that involves
their ability to use their existing knowledge base, in addition to acquiring knowledge from
external sources, in creating products and structures, will make them compete on global scale,
improve the organization performance and keep her competitively advantaged over her rivals.
Leading service marketers perpetually innovate by redesigning their tools and technologies
and training employees to work more efficiently (Service marketing, second edition, prentice
international Editions Christopher H lovelock, 1991, pg 399).

Reference

Dias, C., Hoffmann, V. E., & Martínez-Fernández, M. T. (2019). Resource complementarities

in R&D network for innovation performance: Evidence from the agricultural sector in Brazil
and Spain. International Food and Agribusiness Management Review, 22(2), 193–213.

Edward Musebe Achieng (2012). Resources, Capabilities, and Competitive Advantage:

Abstract, pg vi
Kate Bertrand, Christopher H. L. (1991). Services marketing second edition, prentice-Hall
International Editions (pp 398) ISBN: 0-13-807017-2
Kyläheiko, K., Jantunen, A., Puumalainen, K., Saarenketo, S., & Tuppura, A. (2011).
Innovation and internationalization as growth strategies: The role of technological
capabilities and appropriability. International Business Review, 20(5), 508–520.
Love, J. H., & Roper, S. (2015). SME Innovation, Exporting & Growth: A Review of
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Marjorie Annick Lecerf Professeur d'économie, (February 12, 2019). PSB Paris School of
Business Innovation and internationalisation: A competitive advantage for small- and
medium-sized enterprises
Salter, A., & Alexy, O. (2014). The nature of innovation. In Dodgson, M., Gann, D. M., &
Phillips, N. (Eds.), The Oxford handbook of innovation management (pp. 26–49). OUP
Oxford.Sampson, R. C. (2007).

Sinha, N., & Srivastava, K. B. (2016). Perceived innovation championing strategies and
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