CPA Australia GSL key terms

The coordinated set of choices a firm makes about where to compete internationally, how to enter and position in foreign markets, and how to configure and coordinate activities across countries to build sustained competitive advantage.

A grid classifying international strategies by two pressures: global integration for cost and standardisation, and local responsiveness for adapting to national differences. It yields global, multidomestic, transnational and exporting positions, each with distinct configuration and coordination implications.

An approach that adapts products, branding and operations to each national market, giving local units high autonomy. It suits industries where consumer tastes, regulation or distribution differ sharply, but it sacrifices scale economies and can fragment learning across countries.

A strategy that sells largely standardised products worldwide and centralises key decisions to capture scale, experience and location economies. It works where customer needs converge and cost pressure dominates, but it is vulnerable to local competitors exploiting unmet local preferences.

A strategy seeking simultaneously low cost, local adaptation and worldwide learning. It uses differentiated subsidiary roles, flexible coordination and shared knowledge flows rather than a single centralised or decentralised model, making it demanding to implement because of the dual pressures it must satisfy.

A strategy that transfers distinctive home-country capabilities to foreign markets with limited local adaptation and modest coordination. It suits firms with strong proprietary technology or brands facing weak cost and localisation pressures, but it invites imitation and leaves local rivals room to win.

The chosen vehicle for operating in a foreign market, such as exporting, licensing, franchising, joint venture, strategic alliance or wholly owned subsidiary. Each mode trades off control, resource commitment, risk and speed of entry differently.

A foreign operation fully owned by the parent, established through acquisition or greenfield investment. It gives maximum control over technology, quality and strategy, but requires the largest capital commitment and exposes the firm to full political and commercial risk.

A separately incorporated entity created and shared by two or more partners. It provides access to local knowledge, distribution or capital and spreads risk, but creates challenges in control, profit sharing, goal conflict and eventual exit or ownership change.

A cooperative arrangement between independent firms to share resources or capabilities without full merger. Alliances accelerate market access and learning, but they are fragile when partner objectives diverge, contributions are asymmetric, or proprietary knowledge leaks.

The exposure of a firm's foreign operations to political, economic, legal and social instability in a host country, including expropriation, currency controls and policy shifts. It shapes entry mode choice, financing costs and the required return on investment.

The chance that host-government actions or political instability harm a foreign investor, through expropriation, discriminatory regulation, tax changes, capital controls or civil unrest. Firms mitigate it with political analysis, local partners, insurance and staged investment.

The extra costs and disadvantages a foreign firm bears relative to local rivals, arising from unfamiliarity with institutions, culture and networks, plus discrimination by customers, suppliers or governments. It can be reduced through local partners, reputation building and experience.

Gaps in a host market's formal institutions, such as weak contract enforcement, scarce market intermediaries or unreliable capital markets. Firms fill these voids internally, often through diversified business groups, which can become a source of advantage in emerging economies.

The sequence of activities from design through production to distribution and service, split across countries according to where each step is performed most advantageously. Configuration decisions determine which activities go offshore; coordination decisions determine how they are linked.

The two levers of international operations: configuration is where each value-chain activity is located, and coordination is how dispersed activities are linked and managed. Strategic fit between them determines whether global scale advantages outweigh added complexity.

Cost or differentiation advantages gained by placing an activity where factor costs, skills, infrastructure, clusters or institutions are most favourable. They motivate offshoring and specialisation, but can erode as wages rise or create dependency and coordination costs.

Relocating a business activity to a foreign country, whether through a captive subsidiary or an external provider. It targets lower costs or access to talent, but adds coordination, quality, intellectual property and reputational risks that must be actively managed.

Transferring an activity to an external supplier rather than performing it internally. It can lower cost and increase flexibility, but reduces direct control and may erode capabilities that underpin competitive advantage if the activity is strategically important.

Entrepreneurial action by a foreign subsidiary to develop new products, markets or capabilities beyond its assigned mandate. It supports transnational learning and local responsiveness, but requires headquarters to balance autonomy with coordination and avoid duplication.

A firm from a developing economy that expands internationally, often leveraging home-country cost advantages, network relationships or capability in managing institutional gaps. Its rise challenges traditional assumptions about which firms hold the resources needed to globalise.

A condition allowing a firm to create more value than rivals, achieved through lower costs, differentiation or focus. It is sustained only when the underlying resources are valuable, rare, hard to imitate and supported by the organisation.

Advantage that persists despite competitors' efforts to imitate or substitute it. It depends less on any single product and more on capabilities that are path-dependent, socially complex or causally ambiguous, and on the firm's ability to keep adapting.

An internal analysis tool testing whether a resource is Valuable, Rare, costly to Imitate, and supported by the Organisation. Positive answers across all four suggest sustained advantage; failure at any test indicates competitive parity, temporary advantage or disadvantage.

A perspective explaining performance differences through firms' internal resources and capabilities rather than industry position alone. Advantage arises when resources are heterogeneously distributed and imperfectly mobile, making some firms persistently better endowed than others.

A firm's capacity to sense opportunities, seize them through investment and business-model choices, and reconfigure assets as markets change. They explain why some firms sustain advantage in turbulent environments where static resources quickly become obsolete.

A bundle of skills and technologies that is central to a firm's competitiveness, hard for rivals to copy, and extendable to multiple products or markets. Identifying it guides diversification and outsourcing decisions by showing what must stay internal.

Four positions for competing: cost leadership, differentiation, cost focus and differentiation focus. Each requires a different value chain and culture, and firms caught between them without a clear choice risk being 'stuck in the middle'.

Offering buyers something they value enough to pay a premium for, such as quality, design, service or brand. It protects margins from price competition but requires continuous investment and clear customer insight to avoid features buyers will not fund.

Becoming the lowest-cost producer in an industry through scale, process efficiency, supply-chain control or experience effects. It allows a firm to defend against price pressure, but demands relentless cost discipline and can be undermined by new technology or cheaper locations.

Cost per unit falls as output volume rises, because fixed costs spread over more units and processes become more efficient. They are a key motive for global expansion and consolidation, but they can be offset by coordination and complexity costs.

The progression of an industry through introduction, growth, maturity and decline, with changing demand, competition and success factors at each stage. It informs timing of entry, investment in capacity and when to harvest or exit.

An industry-structure model assessing rivalry, buyer power, supplier power, threat of new entrants and threat of substitutes. It explains why average profitability differs across industries and highlights which forces a firm might try to weaken.

Benefits from entering a market or technology early, such as pre-empting scarce resources, setting standards, building switching costs and gaining reputation. It is offset by pioneer costs, uncertainty and the risk that followers learn faster and cheaper.

The systems, structures and processes by which a company is directed and held accountable, including board oversight, disclosure, audit and shareholder rights. Sound governance supports strategy by ensuring decisions are monitored, risks are managed and management acts in stakeholders' interests.

A conflict of interest where managers, acting as agents, pursue their own goals rather than shareholders' interests, for example through excessive expansion or short-term earnings management. Governance mechanisms such as independent boards, incentives and transparency aim to align them.

The view that a firm should serve all parties affected by its activities, not only shareholders, including employees, customers, suppliers, communities and governments. It broadens performance measurement and shapes how strategic trade-offs are justified and communicated.

A firm's voluntary commitment to act in ways that benefit society and the environment beyond legal minimums. It can build trust, licence to operate and brand value, but risks being seen as greenwashing if not embedded in strategy and measured.