Philips vs Haier free essay sample

In contemporary societies, strategy has become a prevalent terminology among modern management discipline. However, the definition of strategy is quite vague among previous literatures. These abundant definitions of strategy force us to rethink the strategies implemented in modern firms. In fact, strategy per se is a flowing and dynamic process, with or without intentions, to obtain and sustain competitive advantages. This paper will analyse a particular strategic change of each firm, namely Philips and Haier, to understand their dynamics in strategies, and to demonstrate why they made strategic changes and how these changes could effectively strengthen their competitive advantages and increase their value creations. The paper will be divided into four sections: section one will briefly review the theories of FDI; section two will discuss the cases of both firms‘ strategic changes; section three will discuss the dynamics of strategies in both firms to demonstrate their utilisation in obtain and sustain competitive advantages; in last section, managerial implications will be presented. We will write a custom essay sample on Philips vs Haier or any similar topic specifically for you Do Not WasteYour Time HIRE WRITER Only 13.90 / page number of literatures have been developed to analyse the motivations behind MNEs to invest abroad, as summarised. Firms which invest abroad must have some specific ownership advantages outweigh the disadvantages in offshore markets. Ownership advantages include: access to raw materials; economies of scale; intangible assets such as brands, patents, management, etc. Disadvantages include: unfamiliar with offshore market; cost of searching information, negotiation and learning, etc. Technological advantages of firm lead to competitive advantages, and thus give it an edge in exports. Dimensions in determining the locational advantages: geographical features, labour costs; transport costs; and market size. ? Much intangible company specific assets are tacit knowledge, which cannot be easily codified and stolen, and therefore, not easily be transferred to other agencies (Kogut and Zander, 1993). ? N/A In 1977, Dunning developed Ownership-Location-Internalisation (OLI) theory by combining previous studies (Ietto-Gillies, 2005: 112). Ownership advantages are those that are specific to a particular firm which can enable the company to take competitive advantage of investment (Dunning, 2000:164). Locational advantages are those advantages specific to a country which are likely to make it attractive for foreign investors (ibid. ). Internalisation advantages refer to the benefits that derive from producing internally rather than use the market transaction (ibid. ). Therefore, in case of FDI taking places, the enterprises must possess net ownership advantages, and must have benefits from internlising the use of resources, and the country must offer special locational advantages (Ietto-Gillies, 2005: 114). However, Guisinger (2001: 121) argues that internalization (I) only focuses on one entry mode—control of a subsidiary—when many forms of international involvement are possible. Moreover, OLI theory only pays limited attention to international business environment, which may also strongly influence the investment decisions of MNEs (ibid. ). Regarding to the OLI theory, four types of FDIs, notably resource-seeking, market-seeking, efficiency-seeking, and strategic asset-seeking, have been indicated. It is argued that most of the FDIs from developed countries to developing countries are resource-seeking, marketseeking and efficiency seeking FDIs (Cohen, 2007: 66). The abundant natural resources, the potential emerging markets, as well as the low production costs, are the main factors of attracting FDIs from developed countries to developing countries.