The Concept of CSAs and FSAs in the Context of China

Subject: Case Studies
Pages: 2
Words: 300
Reading time:
< 1 min

Theorists believe that multinational enterprises will succeed only if they are able to develop capabilities that are knowledge based, which are often referred to as firm specific advantages (FSAs). Country specific advantages (CSAs) refer to the strengths emanating for MNEs upon which they can rely in obtaining competitive advantages in the international markets by operating in a specific country. FSAs and CSAs enable MNEs to make optimum use of ownership advantages, monopolistic advantages and competitive advantages and have been characterized as being the building blocks of research in regard to foreign direct investment (FDI) for the last several years.

The influence of FSAs and CSAs enable the firm to decide the extent of FDI to bring about in regard to the preferences for its foreign subsidiaries. In the context of China a very meaningful example of a company that has utilized the full potential in terms of being a MNE that has exploited to a great extent the potential emanating from CSAs and FSAs is 7-Eleven Japan (SEJ), the company that has made excellent forays in commodity trading and expansion of its business largely within China and other neighboring countries.

In the commodity business the system of establishing business networks is very successful and SEJ, as the flagship company, which has taken up the strategic issues in leadership, used networking with four partners to deal with suppliers, major customers, selected competitors and non business infrastructure. SEJ opted for the flagship strategy by using the classic example of international business strategies framework in combining firm specific advantages (FSAs) and country specific advantages (CSAs). The company was able to create trust and facilitated the benefits of synergy in stimulating commitment towards all partners as also in getting the same from them.