International Strategy Management: VRIO Framework and Global Dilemma

This essay delves into the complexities of international strategy management, focusing on the global-local dilemma and the effectiveness of the VRIO framework in identifying resources for competitive advantage. It begins by defining the global-local dilemma as the challenge companies face when expanding internationally, balancing the need for global consistency with the necessity of local responsiveness. The essay outlines four participation strategies: multi-domestic, transnational, regional, and global, each with its own advantages and disadvantages. It then evaluates the VRIO framework (Value, Rarity, Imitability, Organization) as a tool for assessing internal resources and capabilities, using Tesla as a case study to illustrate how a multinational company can leverage its resources for sustainable competitive advantage. The analysis considers factors such as access to raw materials, project execution, supply chain network, distribution cost competitiveness, IT capabilities, leadership team, digital technologies, and pricing strategies, concluding that while some resources are imitable, Tesla's focus on internal strategies allows it to maintain a competitive edge.

International Strategy
Management

TABLE OF CONTENTS
1. Global local dilemma and its four forms of participation strategies:......................................2
3. Effectiveness of VRIO framework in identifying as resources can be used a s a source of
competitive advantages................................................................................................................4
REFERENCES................................................................................................................................9

1. Global local dilemma and its four forms of participation strategies:
Every business organization want to expand their business across international border,
dealing in foreign market is one of the biggest dream of every company (deGuzman, 2018).
International market require company to be successful in their local market, then they can enter
into these foreign one. Many successful multinational companies like Tesla always look for
international expansion, they look for global local dilemma and its strategy which bring easiness
in expansion process. Global local dilemma means when company plan to expand their business,
then they have various strategy which will help company to perform expansion effectively.
This dilemma affect certain areas of company, mainly local area where company is expert
in dealing, this dilemma allow company to be king of local market as well as this help company
to become king of international market. Global local dilemma means, company use same local
product and strategy to deal in other nation, which means business will not going to change
product or innovation but rather they are planning to change the market. Dilemma of local
responsiveness may be different from local market so that company have to modify or customize
some of their product to meet the requirement of customer in different nation. There are four
strategies of global local dilemma, these are:
Multi domestic strategy: multi domestic strategy means business try to focus more on local
responsiveness of customer rather than adopting only one global strategy, many multinational
firms like Tesla deal in various countries and use different marketing strategy in each of these
nations, this company try to avoid one global marketing concept because taste and preference of
customer may be different from countries to countries (Peng, 2021). Multi domestic strategy
state that local should be first priority of company rather than reaching foreign customer base, it
is very clear that every multinational company have regional local brand which allow them to
reach as many local segment as possible.
In this strategy company develop various marketing strategy to win local market and
customer, Tesla usally adopt multi domestic strategy to win the local customer, marketing of this
company may be different in one country and different in another country. There are certain
advantage of this strategy; multi domestic strategy allow company to provide highly localized
product which meet the demand of local customer allowing company to expand in these local

market. Operating in local market of foreign country help company to arrange resource of
affordable prices, some rare resource provide competitive advantage to business organization.
Transnational strategy: transnational strategy is one of the most successful international
expansion strategy which allow company to set one over reaching branch and various other
subsidiaries in different countries. Every decision of these subsidiaries are taken and controlled
by centre of business organization, decision like supply chain management, allocation of
resource and budget and other crucial decision are taken by base company (Bartlett and Beamish,
2018). Many multinational companies adopt this method because risk of failure is quite low in
this strategy as main or business centre is located in local market and all other subsidiaries take
risk on behalf of parent company.
Multi national companies like Tesla also adopt transnational strategy to expand in
international market, this strategy allow Tesla to set subsidiaries first to check the condition of
market and demand and interest of customer in that particular market. In this strategy,
coordination of multiple business unit is very important because they are completely depends
upon parent company who tend to provide resource and make further decision. Tesla know that
this strategy may be beneficial in expansion to different nation but at some point this strategy
have high risk, because of lack of coordination, units of Tesla face challenging to meet the rising
demand of customer in that particular local market.
Regional strategy: regional strategy means multinational companies focus on core activities of
business organization, these core activities are marketing, finance and other core processes.
Many company fail to expand in international market because they do not focus more on these
basic area of company which provide boost to sales, these small activities of company plat vital
role in process of expansion (Mudambi and Puck, 2016.). It is very clear that if business
organization want to enter new market, then they have to adopt certain strategies but the most
important one is regional strategy which allow company to focus more on regional concept rather
than global approach.
Many multinational companies like Tesla focus on regional strategy which allow them to
enjoy benefit of core business activities, in regional strategy, Tesla use different marketing
approach in each of region because this company know demand and condition of that region may
be different from each other. In such scenario, company have to reach regionally rather than

reaching globally with one strategy, wining these small or different allow company to win one
global market.
Global strategy: global strategy means multinational business organization look for Greenfield
investments, this strategy is one of the most different and challenging because looking for right
type of investment is difficult task for these companies who plan to expand in international
market. Greenfield investment is one of the most beneficial thing for business but this can
become reason of failing expansion strategy, it is very clear that global expansion is full of risk
which fail the business process (Parameswar and Dhir, 2019).
Many companies look for these type of investment which can boost the growth of
expansion process, this can be challenging to find Greenfield investment but benefit of these
investment remain for long term. Many multinational companies like Tesla have their own
source of funding allowing them to adopt global strategy with the view point of Greenfield
invest, this company do not rely on forms of outsourcing rather they restart their business process
in new market. By adopting global strategy, business organization may reduce many cost such as
cost of product, cost of marketing and selling but these strategy do not allow company to focus
on local responsiveness this result in poor approach to local market.
3. Effectiveness of VRIO framework in identifying as resources can be used a s a source of
competitive advantages
In regard to multinational companies, it can be said that operating business to the great
extent and in different countries is not an easy task. There are number of large organisations in
which some have become successful and some have failed. There are number of reasons behind
it. But the main reason that has been identified from debate is: internal competencies and
resources as compared to eternal position. Business environment is made up of 2 types of factors
such as internal and externals (Kusuma, Dewi and Tho’in, 2021). This both business
environment consists of number of factors and for successful expansion of business, companies
require analyse both types of business environment. In regard to statement, given b Michael
about effectiveness of internal resources and competencies, it can be said that a successful
company is the one who has an ability to develop its internal resources as per the current
requirements of eternal business environment. Some internal environmental factors that
companies need to focus on include: strengths, weaknesses, skilled employees, resources, patent,

technologies and all other resources. External factors within business environment that may
affect the overall performance and internal competencies of companies include: political
situation, economic condition, social requirements of customers, technological requirements,
environmental situation and legal factors.
So, on the basis of above discussion, it can clearly be said that when companies have
capabilities to improve their internal resources as per the external environmental factors
requirement then they are more likely to become successful. The best and effective ways of
knowing effectiveness of internal resources and capabilities is implementation of VRIO analysis.
VRIO stands for valuable, resources, rare and imitation. On the basis of these all factors,
company identify as whether its resources are rare in this industry, whether their capabilities and
internal resources can be mitigated by other competitors or not (Carrión, Izquierdo and Cillán,
2020). On the basis of this, it finds suitability or effectiveness and accordingly makes changes. In
regard to Tesla that is one of the world’s most valuable companies, it can be said that it also
identify effectiveness of its internal resources and competencies for expanding business in other
countries and for becoming successful. VRIO of Tesla is:
Resources Value Rare Imitation
Access to critical raw
material
Yes, this internal
resources of Tesla is
valuable
Yes, as it has
capabilities and
improved financial
power and other
competitors might
face problems abide
terms with firm’s
dominant market
position (Hsu, Hwang
and Chiu, 2021).
Yes, this capability
can be imitated by
others as competitors
too have access to raw
materials for
converting them into
final products.
Track record on
project execution
Yes Yes, in the segment
that this company
No, as there is no
competitor in this

operates in. industry that can track
record as like Tesla
does.
Supply chain network
flexibility
Yes, this competency
has value.
Yes, it is rare in the
market
There are some
improved image of
companies in this
sector that also have
supply chain network
flexibility and share
same suppliers so, on
this basis it can be
said that this
competency can be
imitated (Hernández
and Garcia, 2018).
Distribution cost
competiveness
Yes, this competency
helps out Tesla in
lowering cost and
increasing profit
margin.
No, it is not rare
within market as
competitors can have
this cost
competitiveness.
Yes, can be imitated
easily.
Opportunities in E
commerce space using
IT capabilities
Yes. As E-commerce
space is increasing
and companies need
to take advantage by
making use of
advanced
technologies.
No. As people have
known that without IT
and technologies they
cannot survive in an
effective manner so,
companies are
investing highly in IT
to take advantages.
There are some IT
capabilities of Tesla
that cannot be
imitated easily such
as: AI and in-house
analytics.
Track record of
leadership team at
Yes. Leadership is
one of the main pillar
Yes, it is rare as
nowadays.
Competitors may find
difficulties in

company name and key of
organisational success
so, it is valuable.
imitating this ability
of recording
leadership team with
effectiveness that is
why this competency
is not imitable.
Successful
implementation of
digital technologies
Yes. It is too much
valuable as in this
digital era; it is not
possible to compete
without
comprehensive digital
strategy.
No, it is not rare as
almost companies are
investing highly in IT
and digital
technologies as it has
become one of the
most important ways
of being successful
and competitive in the
market.
Yes. Everyone has
great knowledge as
how to use advanced
and digital
technologies in
business.
Pricing strategies Yes, pricing strategy
plays a vital role as it
is being considered by
customers while
making buying
decision.
No, it is not rare as
competitors too need
to develop their
pricing strategies.
For attracting
customers and being
in the competition,
competitors often
imitate pricing
strategies of others.
So, it is imitable.
It is stated that this resources based strategic analysis provide Tesla an opportunity to build a
sustainable competitive advantages over its competitors. On the basis of above discussed
resources based strategic analysis, it can clearly be said that all internal resources and
competencies of Tesla are valuable and some of them have imitable and rare. Most of them are
rare which means, it focuses on its internal strategies and resources for being in the competition
and taking sustainable advantages (Galpin, 2019). Along with this, companies can make use of

SWOT analysis for knowing effectiveness of internal resources and competencies. On the basis
of this analysis, companies can identify as whether their resources can fulfil demands of
customers and can fulfil requirements of external environmental factors. It can provide number
of advantages to Tesla as it can take competitive advantages, it can make an effective position
within market, it can improve its image and can increase customers’ retention rate. It can be
suggested to Tesla that it needs to increase its competencies that are rare and cannot be imitable
as by doing so, it can make its current position within market and can accomplish goals.

REFERENCES
Books and Journals
Bartlett, C.A. and Beamish, P.W., 2018. Transnational management. Cambridge University
Press.
Carrión, C.H., Izquierdo, C.C. and Cillán, J.G., 2020. The internal mechanisms of entrepreneurs’
social capital: A multi-network analysis. Business Research Quarterly. 23(1). p.3.
deGuzman, M.M., 2018. The Global-Local Dilemma and the ICC's Legitimacy.
Galpin, T., 2019. Strategy beyond the business unit level: corporate parenting in focus. Journal
of Business Strategy.
Hernández, J.G.V. and Garcia, F.C., 2018. The link between a firm s internal characteristics and
performance: GPTW & VRIO dimension analysis. Revista de Administração
IMED. 8(2). pp.222-235.
Hsu, H.Y., Hwang, M.H. and Chiu, Y.S.P., 2021. Development of a strategic framework for
sustainable supply chain management. AIMS Environmental Science. 8(6). pp.532-552.
Kusuma, I.L., Dewi, M.W. and Tho’in, M., 2021. Analysis of the Effect of Human Resources
Competency, Utilization of Technological Information, and Internal Control Systems on
the Value of Financial Reporting Information. Annals of the Romanian Society for Cell
Biology, pp.14628-14638.
Mudambi, R. and Puck, J., 2016. A global value chain analysis of the ‘regional
strategy’perspective. Journal of Management Studies, 53(6), pp.1076-1093.
Parameswar, N. and Dhir, S., 2019. Global marketplace strategy and choice of interaction after
termination of international joint venture. Strategic Change, 28(3), pp.177-184.
Peng, M.W., 2021. Global strategy. Cengage learning.