Content area
Full Text
Tung-lung Chang: New Jersey Institute of Technology, Newark, New Jersey, USA
Introduction
Global expansion provides good opportunities for firms to leverage the value of their assets (Bartlett and Ghoshal, 1992; Caves, 1971; Dunning, 1973; Prahalad and Doz, 1987; Teece, 1980). However, such an expansion does not always result in desired outcomes. The management of a firm may find difficulties in implementing organizational changes or co-ordinating business operations across national borders. Organizational rigidity (Luostarinen, 1980), organizational inertia (Hannan and Freeman, 1984), organizational resistance (Darling and Taylor, 1989; Taylor, 1988), and national differences (Hofstede, 1980; Kogut and Singh, 1988) are the main causes of such difficulties. A firm can benefit from its global expansion if the management overcomes these difficulties and effectively co-ordinates its global business operations. In order to assure global success, Bartlett and Ghoshal (1992) suggest that multinationals develop an experience curve advantage through global learning.
Experience curve advantage results from a firm's cumulative knowledge in learning to improve its business operations. If a firm manages such a learning process well, it may enjoy a price competitiveness by creating a learning curve effect that reduces overheads as well as average unit cost with each doubling of the accumulated volume of production. In the global commercial aircraft industry, for instance, firms have to reach a certain amount of sales volume in order to develop experience curve advantage for generating more business in the future. As accumulated output grows, a firm gradually obtains experience to manage its business efficiently and effectively. Such an advantage can determine a firm's success significantly in a highly competitive global industry. Microsoft, Intel, Toyota and Panasonic, just to name a few, have all developed experience curve advantages to strengthen global competitiveness in their own industries.
A firm's success in international markets results from the competitive edge it develops. Companies can create competitive edges by making the right choice among competing strategies, guided by the nature of the market opportunity, the firm's resources and its adaptive ability. A firm that develops a competitive edge by formulating relevant adaptive marketing strategy will be able to create customer value and generate good profits globally. Multinationals, however, should not limit their visions to the marketing function but should try to explore possibilities of gaining competitive advantage...