In the international entry stage, economy of scale is an important source of competitive advantage. A company often leverages its domestic production base and in this way reduces average unit costs thanks to increasing production volumes. When the company is in the international penetration stage, it expands within the selected geographic markets through an adaptive product and marketing strategy and by introducing new product lines.The emphasis shifts at this stage to achieving economies of scope by leveraging the established contacts and knowledge of local markets. New products can often be introduced via the same sales channels, thereby bringing huge cost benefits (Douglas & Craig, 1989, pp.51–55).
In the global alignment phase, the company starts to co-ordinate and rationalize its operations on a global basis to achieve benefits from synergies. Skills or assets that are transferable, such as management competence, brands, and product knowledge, may be leveraged globally (Douglas & Craig, 1989, pp. 55–57). Global and regional level of coordination of product- and marketing-related requirements becomes important. These competencies and processes may bring a more sustainable competitive advantage than market-related advantages like economies of scale and/or scope. Recent findings, however, indicate that process and competence-related advantages are also vulnerable and may result in obsolete knowledge due to change in the underlining factors (Christensen, 2001).
In the global alignment phase, the company starts to co-ordinate and rationalize its operations on a global basis to achieve benefits from synergies. Skills or assets that are transferable, such as management competence, brands, and product knowledge, may be leveraged globally (Douglas & Craig, 1989, pp. 55–57). Global and regional level of coordination of product- and marketing-related requirements becomes important. These competencies and processes may bring a more sustainable competitive advantage than market-related advantages like economies of scale and/or scope. Recent findings, however, indicate that process and competence-related advantages are also vulnerable and may result in obsolete knowledge due to change in the underlining factors (Christensen, 2001).
