College

2. Discuss the statement: 'Competitive positioning frameworks do not necessarily offer the best tools for arriving at international business strategy.'

a) Describe the following frameworks:
- Porter's Five Forces
- Porter's Generic Strategies
- Ghemawat's AAA Strategies
(9 marks)

b) Critically evaluate these three frameworks, using examples to discuss the advantages and challenges of using them.
(9 marks)

c) Using examples, describe the resource-based perspective on competing and discuss whether it complements or substitutes these competitive positioning frameworks.
(7 marks)

Answer :

Final answer:

Porter's five forces, Porter's generic strategies, and Ghemawat's AAA strategies are key frameworks in strategic management but have their limitations. A resource-based perspective, focusing on leveraging internal company strengths, can complement these external-oriented frameworks.

Explanation:

2. a) Porter's five forces framework includes: industry rivalry, threat of new entrants, bargaining power of customers, threat of substitute products, and bargaining power of suppliers. Porter's generic strategies encompass cost leadership, differentiation, and focus(niche) strategies. Ghemawat's AAA strategies framework consists of adaptation (adjusting to differences), aggregation (overcoming differences), and arbitrage (exploiting differences).

b) These frameworks, while useful, are not without challenges. For instance, Porter's five forces can be too static for dynamic markets and his generic strategies might oversimplify the complexity of strategy formation. Ghemawat's AAA strategies might be too abstract for practical application.

c) The resource-based perspective focuses on exploiting a firm's internal strengths. It is complementary to the competitive positioning frameworks as it offers another perspective focusing on the internal environment, while Porter and Ghemawat's frameworks primarily consider the external environment. For instance, a company with a unique technology (a resource) might form a differentiation strategy (Porter's generic strategies) to compete internationally.

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