in the domestic market. In other words, when a new industry emerges in one country, domestic suppliers start competing for business. Thus through this competition, quality is bound to increase and prices will decrease which in turn reinforces and gives the industry a competitive advantage in the international market. Firm Strategy, Structure and Rivalry: The fourth broad determinant is the context in which firms are created, organised and managed as well as the nature of domestic rivalry. The pattern of rivalry at home also has a profound role to play in the process of innovation and the ultimate prospects for international success (Porter, 1980). A firm strategy & competition in domestic market shapes its performance in the international market. In some cases strategies used in the domestic market can be applied internationally with little or no modifications. However, sometimes it is not so easy. Global Strategic Rivalry TheoryThe Global Strategic Rivalry theory was developed in the 1980s as a means to ‘examine the impact on trade flows arising from global strategic rivalry between Multi National Corporations.’ (Mahoney, et al 1998). It explores the notion that in order to stay viable, firms should exploit their competitive advantage globally and try to keep it sustainable. There are many ways in which a firm can hold a competitive advantage, these include; Owning intellectual property rights Investing in research and development Achieving economies of scale or scope Exploiting the experience curveA good example of strategic alliance, which gave two companies a competitive advantage, is Qantas and British Airways. Qantas had solid air route throughout the Asia Pacific region, likewise British airways had strong network within Europe, North Atlantics, and North America. By forming an alliance in 1993, both companies strategically positioned themselves to have a strong worldwide network. This...
