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ADMS 3960 ADMS 3960 International Business International Business

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  • ADMS 3960International Business

  • Chapter 11The Strategy of International Business

  • Chapter ObjectivesTo identify how managers develop strategyTo examine industry structure, firm strategy, and value creationTo profile the features and functions of the value chain frameworkTo assess how managers configure and coordinate a value chainTo explain global integration and local responsivenessTo profile the types of strategies firms use in international business

  • The Role of Strategy in International Business

  • Industry, Strategy ,and Firm Performance Industry organization paradigm leading strategy perspectivesThe exceptions of imperfect competitionThe idea of industry structure: The Five Forces Model

  • Five Forces Model

  • Industry Change

    Industry structure changes because of events like Competitors moves Government policies Changes in economics Shifting buyer preferences Technological developments Rate of market growth

  • Competition

    In its pure form it refers to the conditions that are present in the marketplace when buyers and sellers interact to establish prices and exchange goods and services.It refers to the means whereby the self interest of buyers and sellers acts to serve the needs of society as well as those of individual market participants.

  • The Practical Significance of Perfect CompetitionA large number of small firms and many buyers do not possess the power to influence the behavior of the participants in the marketplace.That power is thoroughly dispersed throughout the marketplace.Perfect Competition rarely exists in the real world.

  • Desirable Conditions for Workable CompetitionA market structure with at least two buyers and two sellers, but preferably moreA mixture of large and small firmsNo collusion or coercion among sellers

  • Desirable Conditions for Workable CompetitionAs much market information as possibly is available to buyers and sellersNo barriers to entry and exit

  • Strategy and ValueStrategy helps managers assess the companys present situation, identify the direction the company should go, and determine how the company will get there.

  • StrategiesStrategy is a set of goals and policies or actions to achieve those goals. A strategic plan must link to sub-strategies at the operations level.

  • Strategic ProgrammingThis focuses on, who what and how much. Day to day prioritiesRoles and responsibilities

  • Tactics and ExecutionThis focuses on how to get it done Immediate objectives with a focus on adjustment based on new information

  • Michael PorterCompetitive strategy, is all about being different from others. As a nation or a company your differences will allow you to excel in areas that other will not.Strategy is not about one activity, but a series of complementary and reinforcing activities.

  • What does strategy give us?Organizational purposeCompetitive domainsInterpretations of opportunities, threats, strengths and weaknessesDefines managerial tasks and processesDefines the impact that the firm intends to make on its shareholdersDetermines investment

  • ValueValue is what remains after costs have been deducted from the revenues of a firm. Cost leadership emphasizes high production volumes, low costs, and low prices. Firms that choose this strategy strive to be the low-cost producer in an industry for a given level of quality. This strategy requires that a firm sell its products at the average industry price to earn a profit higher than that of rivals or below the average industry prices to capture market share.

  • Value ChainWhat is the value chain?A value chain disaggregates a firm into:Primary activities that create and deliver the productSupport activities that aid the individuals and groups engaged in primary activitiesValue chains identify the format and interactions between different activities of the company.

  • Porters Value Chain

  • Purpose of The Value Chain? Cost AnalysisDefine the value chain in terms of sources of competitive advantageEstablish the relative importance of each activity in terms of total product costCompare costs by activity and against competitorsIdentify cost driversIdentify linkages between activitiesIdentify opportunities for reducing costs

  • Using the Value ChainUsing the value chain leads to Configuration of the CompanyMacro Cost FactorsLogistics analysisIndustry ClustersDigitizationEconomies of ScaleBusiness Environment

  • DigitizationThe process of digitization involves converting an analog product into a string of zeros and ones. Increasingly, products like software, music, and books, as well as services like call centers, application processing, and financial consolidation, can be digitized and, hence, located virtually anywhere. Equipped with networked computers, workers can move goods and services anywhere in the world at negligible cost and complication. Consequently, the potential for digitization of goods or services influences how a company configures its value chain.

  • ClustersAn industry cluster is a system of businesses and institutions engaged with one another at various levels.

  • ManufacturingManufacturing costs vary from country to country because of wage rates, worker productivity, resourceavailability, and fiscal and monetary policies.

  • LogisticsLogistics entails how companies obtain, produce, and exchange material and services in the proper place and in proper quantities for the proper value activity.

  • Economies of ScaleThe concept of economies of scale refers to a situation wherein a firm doubles its cumulative output yet total cost less than doubles due to efficiency gains. Effectively, reductions in the unit cost of a product result from the increasing efficiency that comes with larger operations.

  • Economies of ScaleSourcesThe division of labour This is related to specialization particularly in mass production. Leads to lower unit costs, machinery output increased, quality control improvements, time savings. Economies of massed resources Theory rests on the idea of large numbers. This is what insurance is based on. Any company needs excess resources and capacity. The larger the firm, the smaller the proportion of duplicate capacity needed.

  • Economies of ScaleSourcesFirm-level economies of scaleAdministrative economiesFinancial economiesMarketing economies

  • Porters Value Chain

  • Economies of ScaleLimitsDiseconomies of scale in distributionComplexity of large-scale managementCosts of product differentiation HRM costs in large plants

  • Economies of Scale

  • CoordinationCoordination ConcernsAs companies globally configure value activities, they must develop coordination tools. Coordinated well, MNEs can leverage their core competencies, using them to serve customers, boost sales, and improve profits.

  • National CulturesCultures impose hurdles in coordinating a transaction from one stage of the value chain to another. Units anchored in individual versus collectivist cultures may disagree over information sharing or collaboration responsibilities; conflicts complicate coordination.

  • National CulturesHence, features of national culture require managers to understand their implications to the collaborative relationship that shape the coordination of value activities.

  • Learning CurveLearning curve is the commonsense principle that the more one does something, the better one gets at it.Companies configure value chain activities to exploit the learning curve.

  • The Experience Curve

    The Experience CurveUnit cost reductions arising from experience of productionBenefits accrue to first movers and those who facilitate learning

  • Experience leads to Core CompetencyA core competency can emerge from various sources, including: Product development Employee productivity Manufacturing expertise Marketing imagination Executive leadership

  • Operational ObstaclesOperating internationally inevitably runs into communication challenges because of time zones, differing languages, and ambiguous meanings. Increasingly, companies rely on browser-based communications methods to coordinate the handoffs from link to link.

  • Change and the Value ChainThe configuration and coordination of value chains respond to changes in customers, competitors, industries, and environments.

    Caveat: The Risk of Strategy

  • Global Integration versus Local ResponsivenessPressures for Global IntegrationGlobalization of MarketsA provocative thesis, increasingly supported by global buying patterns and companies strategies, suggests that consumers worldwide seek global productswhether they are Apple iPods, Samsung plasma screens, Facebook connections, Starbucks espressos, Google searches, or Zara blouses.

  • Global Integration versus Local ResponsivenessEfficiency Gains of StandardizationGlobal and local pressures challenge how the firm configures and coordinates its value chain. The convergence of national markets and quest for production efficiency push for the global integration of value activities.

  • StandardizationStandardization is the handmaiden of globalization, encouraging supply conditions that produce volumes of low-cost, high-quality products. That is, standardization is the push dynamic that drives supply, whereas the globalization of markets represents the pull dynamic that converges consumer preferences.

  • StandardizationThe logic of standardization is straightforward. Repeatedly doing the same task the same way improves the efficiency of effort. Improving efficiency in the value chain, in turn, supports aggressive product development, lower-cost production processes, and lower prices.

  • Local ResponsivenessContrary to the globalization-of-markets thesis, others argue that divergences in consumer preferences across countries necessitate locally responsive value chains.Differences in local consumers preferences endure due to cultural predisposition, historical legacy, and endemic nationalism. Regardless of the cause, consumers often prefer goods that are sensitive to the particular idiosyncrasies of their daily life.

  • When Pressures InteractThe Integration-Responsiveness grid helpsmanagers measure the global and localpressures that influence the configuration andcoordination of their value chains.

  • Integration Responsiveness Grid

  • Strategic Choices

  • What Strategy to Pursue?Multidomestic StrategyCompetition in one country is independent of competition elsewhere.Markets in each country have different consumer behaviour.Portfolio of independent subsidiariesLeads to product diversity.

  • From International to Global StrategyGlobal StrategyCompetition in one country influenced by competition elsewhere.Markets and consumer behaviour broadly similar in all countries.International coordination and integration. Leads to product standardisation

  • ToyotaOur global strategy used to center on world cars which we would modify slightly to accommodate demand in different markets. Today our focus is shifting to models that we develop and manufacture for selected regional markets.

  • Ford

  • Transnational StrategiesExploit experience-based cost economies and location economies, transfer distinctive competences within the company, and at the same time pay attention to pressures for local responsiveness(Bartlett and Ghoshal, 1989)

  • Why Global? Scale is important but..Exposure to global best practices.Access to technologyAbility to serve customersAbility to anticipate competitorsLeaning and knowledge transfer

  • Why Global? They are only viable ifThey serve locals better than the domesticsAre hard to copyAre sustainable.Change the economics of the industryAre capable of further development.

  • How to be BIGMNEs go through three phases on the path to becoming a global powerhouse:1. First there was the nineteenth-century international model, whereby the company was headquartered both physically and mentally in its home country; it sold goods, when it was so inclined, through a scattering of overseas sales offices.

  • How to be BIGThe third phase, the globally integrated enterprise, is one that builds a company-wide value chain that put people, jobs, and investments anywhere in the world based on the right cost, the right skills and the right business environment . . . . now work flows to the places where it will be done best, that is, most efficiently and to the highest quality.

  • How to be BIGPhase two of the evolution ushered in the classic, multinational firm of the late twentieth century. This model saw the parent company creating smaller versions of itself in foreign markets. These smaller satellite companies were run by home-nation executives sent from headquarters, who typically had great technical expertise but little cultural fluency and minimal foreign-language competency.

  • Future: Whats New in the World of Strategy TypesEvolution of the Multinational CorporationVisions of the FutureThe Metanational CompanyMicro-NationalsThe Cybercorp

  • MetanationalThrives on seeking unique ideas, activities, and insights that complement its existing operations as well as creating leverage points. The metanational company builds a new kind of competitive advantage by discovering, accessing, mobilizing, and leveraging knowledge from many locations around the world.

  • Metanational

  • Micro NationalAlthough the number of MNEs grows worldwide, their average size is fallingmost of the 70,000 or so firms that operate internationally employ less than 250 people. This anomaly signals the era of so-called micro-multinationals: clever, small companies that are born global and operate worldwide from day one. Unlike their bigger counterparts that expanded internationally by gradually entering new markets, micro-multinationals go global immediately.

  • CybercorpTo this type of MNE, national boundaries no longer organize consumers, locations, markets, or industries. Instead, the cyberspace created by evolving Internet technologiesnot the physical geography of lines on a mapdefines markets. The cybercorp develops competencies that let it react in real time to changes in its customers, competition, industry, and environment.

  • Micro National

    **Strategy is the framework that managers apply to determine the competitive moves and business approaches that run the company.Strategy is managements idea on how to best: Attract customers Operate efficiently Compete effectively Create value

    *An industry is composed of the companies engaged in a particular kind of commercial enterprise.The IO paradigm presumes that markets demonstrate perfect competition. Perfect competition presumes: Many buyers and sellers such that no individual affects price or quantity Perfect information for both producers and consumers Few, if any, barriers to market entry and exit Full mobility of resources Perfect knowledge among firms and buyersThe IO paradigm assumes that firm performance is a function of its conduct, which is ultimately determined by industry factors that shape the corresponding pattern of competition.Firm conduct refers to the strategic and tactical choices a company makes regarding research and innovation, product strategy, plant investment, pricing behavior, and the like that influence its profitability.These two anomaliesmarkets are not always perfectly competitive and some firms consistently outperform industry averagessuggest that industry structure is not entirely deterministic of firm performance. Instead, firm performance is influenced by the presence of bright, motivated managers and their keen sense of innovative products or processes.

    The idea of industry structure helps explain the functions, form, and interrelationships among: Suppliers of inputs Buyers of outputs Substitute products Potential new entrants Rivalry among competing sellers

    *New products, new firms, new markets, and new managers trigger new developments in rivalry, pricing, substitutes, buyers, and suppliers. These developments often change a minor feature of the industry, such as the expansion of an existing distribution channel. More recently, changes due to the global economic crisis are resetting the structure of most industries.

    *****Creating value spurs the firm to develop a compelling value proposition (why a consumer should buy its goods or use its services) that specifies its targeted customer markets (those consumers for whom a firm creates goods or services).Value is what remains after costs have been deducted from the revenues of a firm. Cost leadership emphasizes high production volumes, low costs, and low prices. Firms that choose this strategy strive to be the low-cost producer in an industry for a given level of quality. This strategy requires that a firm sell its products at the average industry price to earn a profit higher than that of rivals or below the average industry prices to capture market share.

    Differentiation spurs the company to provide a unique product that customers value and that rivals find hard, if not impossible, to match or copy.

    ******Creating value spurs the firm to develop a compelling value proposition (why a consumer should buy its goods or use its services) that specifies its targeted customer markets (those consumers for whom a firm creates goods or services).Value is what remains after costs have been deducted from the revenues of a firm. Cost leadership emphasizes high production volumes, low costs, and low prices. Firms that choose this strategy strive to be the low-cost producer in an industry for a given level of quality. This strategy requires that a firm sell its products at the average industry price to earn a profit higher than that of rivals or below the average industry prices to capture market share.

    Differentiation spurs the company to provide a unique product that customers value and that rivals find hard, if not impossible, to match or copy.

    *The value chain is the set of linked value-creating activities the company performs to design, produce, market, distribute, and support a product. Value-chain analysis helps managers understand the behavior of costs and existing and potential sources of differentiation. A value chain disaggregates a firm into: Primary activities that create and deliver the product Support activities that aid the individuals and groups engaged in primary activities

    Value chains identify the format and interactions between different activities of the company.

    Configuration is the way in which managers arrange the activities of the value chain.

    Manufacturing costs vary from country to country because of wage rates, worker productivity, resourceavailability, and fiscal and monetary policies.

    An industry cluster is a system of businesses and institutions engaged with one another at various levels.

    Logistics entails how companies obtain, produce, and exchange material and services in the proper place and in proper quantities for the proper value activity.

    The process of digitization involves converting an analog product into a string of zeros and ones. Increasingly, products like software, music, and books, as well as services like call centers, application processing, and financial consolidation, can be digitized and, hence, located virtually anywhere. Equipped with networked computers, workers can move goods and services anywhere in the world at negligible cost and complication. Consequently, the potential for digitization of goods or services influences how a company configures its value chain.

    The concept of economies of scale refers to a situation wherein a firm doubles its cumulative output yet total cost less than doubles due to efficiency gains. Effectively, reductions in the unit cost of a product result from the increasing efficiency that comes with larger operations.*The value chain is the set of linked value-creating activities the company performs to design, produce, market, distribute, and support a product. Value-chain analysis helps managers understand the behavior of costs and existing and potential sources of differentiation. A value chain disaggregates a firm into: Primary activities that create and deliver the product Support activities that aid the individuals and groups engaged in primary activitieschains identify the format and interactions between different activities of the company.

    Configuration is the way in which managers arrange the activities of the value chain.

    ValueManufacturing costs vary from country to country because of wage rates, worker productivity, resourceavailability, and fiscal and monetary policies.

    An industry cluster is a system of businesses and institutions engaged with one another at various levels.

    Logistics entails how companies obtain, produce, and exchange material and services in the proper place and in proper quantities for the proper value activity.

    The process of digitization involves converting an analog product into a string of zeros and ones. Increasingly, products like software, music, and books, as well as services like call centers, application processing, and financial consolidation, can be digitized and, hence, located virtually anywhere. Equipped with networked computers, workers can move goods and services anywhere in the world at negligible cost and complication. Consequently, the potential for digitization of goods or services influences how a company configures its value chain.

    The concept of economies of scale refers to a situation wherein a firm doubles its cumulative output yet total cost less than doubles due to efficiency gains. Effectively, reductions in the unit cost of a product result from the increasing efficiency that comes with larger operations.**The value chain is the set of linked value-creating activities the company performs to design, produce, market, distribute, and support a product. Value-chain analysis helps managers understand the behavior of costs and existing and potential sources of differentiation. A value chain disaggregates a firm into: Primary activities that create and deliver the product Support activities that aid the individuals and groups engaged in primary activities

    Value chains identify the format and interactions between different activities of the company.

    Configuration is the way in which managers arrange the activities of the value chain.

    Manufacturing costs vary from country to country because of wage rates, worker productivity, resourceavailability, and fiscal and monetary policies.

    An industry cluster is a system of businesses and institutions engaged with one another at various levels.

    Logistics entails how companies obtain, produce, and exchange material and services in the proper place and in proper quantities for the proper value activity.

    The process of digitization involves converting an analog product into a string of zeros and ones. Increasingly, products like software, music, and books, as well as services like call centers, application processing, and financial consolidation, can be digitized and, hence, located virtually anywhere. Equipped with networked computers, workers can move goods and services anywhere in the world at negligible cost and complication. Consequently, the potential for digitization of goods or services influences how a company configures its value chain.

    The concept of economies of scale refers to a situation wherein a firm doubles its cumulative output yet total cost less than doubles due to efficiency gains. Effectively, reductions in the unit cost of a product result from the increasing efficiency that comes with larger operations.*The value chain is the set of linked value-creating activities the company performs to design, produce, market, distribute, and support a product. Value-chain analysis helps managers understand the behavior of costs and existing and potential sources of differentiation. A value chain disaggregates a firm into: Primary activities that create and deliver the product Support activities that aid the individuals and groups engaged in primary activities

    Value chains identify the format and interactions between different activities of the company.

    Configuration is the way in which managers arrange the activities of the value chain.

    Manufacturing costs vary from country to country because of wage rates, worker productivity, resourceavailability, and fiscal and monetary policies.

    An industry cluster is a system of businesses and institutions engaged with one another at various levels.

    Logistics entails how companies obtain, produce, and exchange material and services in the proper place and in proper quantities for the proper value activity.

    The process of digitization involves converting an analog product into a string of zeros and ones. Increasingly, products like software, music, and books, as well as services like call centers, application processing, and financial consolidation, can be digitized and, hence, located virtually anywhere. Equipped with networked computers, workers can move goods and services anywhere in the world at negligible cost and complication. Consequently, the potential for digitization of goods or services influences how a company configures its value chain.

    The concept of economies of scale refers to a situation wherein a firm doubles its cumulative output yet total cost less than doubles due to efficiency gains. Effectively, reductions in the unit cost of a product result from the increasing efficiency that comes with larger operations.*The value chain is the set of linked value-creating activities the company performs to design, produce, market, distribute, and support a product. Value-chain analysis helps managers understand the behavior of costs and existing and potential sources of differentiation. A value chain disaggregates a firm into: Primary activities that create and deliver the product Support activities that aid the individuals and groups engaged in primary activities

    Value chains identify the format and interactions between different activities of the company.

    Configuration is the way in which managers arrange the activities of the value chain.

    Manufacturing costs vary from country to country because of wage rates, worker productivity, resourceavailability, and fiscal and monetary policies.

    An industry cluster is a system of businesses and institutions engaged with one another at various levels.

    Logistics entails how companies obtain, produce, and exchange material and services in the proper place and in proper quantities for the proper value activity.

    The process of digitization involves converting an analog product into a string of zeros and ones. Increasingly, products like software, music, and books, as well as services like call centers, application processing, and financial consolidation, can be digitized and, hence, located virtually anywhere. Equipped with networked computers, workers can move goods and services anywhere in the world at negligible cost and complication. Consequently, the potential for digitization of goods or services influences how a company configures its value chain.

    The concept of economies of scale refers to a situation wherein a firm doubles its cumulative output yet total cost less than doubles due to efficiency gains. Effectively, reductions in the unit cost of a product result from the increasing efficiency that comes with larger operations.*The value chain is the set of linked value-creating activities the company performs to design, produce, market, distribute, and support a product. Value-chain analysis helps managers understand the behavior of costs and existing and potential sources of differentiation. A value chain disaggregates a firm into: Primary activities that create and deliver the product Support activities that aid the individuals and groups engaged in primary activities

    Value chains identify the format and interactions between different activities of the company.

    Configuration is the way in which managers arrange the activities of the value chain.

    Manufacturing costs vary from country to country because of wage rates, worker productivity, resourceavailability, and fiscal and monetary policies.

    An industry cluster is a system of businesses and institutions engaged with one another at various levels.

    Logistics entails how companies obtain, produce, and exchange material and services in the proper place and in proper quantities for the proper value activity.

    The process of digitization involves converting an analog product into a string of zeros and ones. Increasingly, products like software, music, and books, as well as services like call centers, application processing, and financial consolidation, can be digitized and, hence, located virtually anywhere. Equipped with networked computers, workers can move goods and services anywhere in the world at negligible cost and complication. Consequently, the potential for digitization of goods or services influences how a company configures its value chain.

    The concept of economies of scale refers to a situation wherein a firm doubles its cumulative output yet total cost less than doubles due to efficiency gains. Effectively, reductions in the unit cost of a product result from the increasing efficiency that comes with larger operations.*The value chain is the set of linked value-creating activities the company performs to design, produce, market, distribute, and support a product. Value-chain analysis helps managers understand the behavior of costs and existing and potential sources of differentiation. A value chain disaggregates a firm into: Primary activities that create and deliver the product Support activities that aid the individuals and groups engaged in primary activities

    Value chains identify the format and interactions between different activities of the company.

    Configuration is the way in which managers arrange the activities of the value chain.

    Manufacturing costs vary from country to country because of wage rates, worker productivity, resourceavailability, and fiscal and monetary policies.

    An industry cluster is a system of businesses and institutions engaged with one another at various levels.

    Logistics entails how companies obtain, produce, and exchange material and services in the proper place and in proper quantities for the proper value activity.

    The process of digitization involves converting an analog product into a string of zeros and ones. Increasingly, products like software, music, and books, as well as services like call centers, application processing, and financial consolidation, can be digitized and, hence, located virtually anywhere. Equipped with networked computers, workers can move goods and services anywhere in the world at negligible cost and complication. Consequently, the potential for digitization of goods or services influences how a company configures its value chain.

    The concept of economies of scale refers to a situation wherein a firm doubles its cumulative output yet total cost less than doubles due to efficiency gains. Effectively, reductions in the unit cost of a product result from the increasing efficiency that comes with larger operations.*The value chain is the set of linked value-creating activities the company performs to design, produce, market, distribute, and support a product. Value-chain analysis helps managers understand the behavior of costs and existing and potential sources of differentiation. A value chain disaggregates a firm into: Primary activities that create and deliver the product Support activities that aid the individuals and groups engaged in primary activities

    Value chains identify the format and interactions between different activities of the company.

    Configuration is the way in which managers arrange the activities of the value chain.

    Manufacturing costs vary from country to country because of wage rates, worker productivity, resourceavailability, and fiscal and monetary policies.

    An industry cluster is a system of businesses and institutions engaged with one another at various levels.

    Logistics entails how companies obtain, produce, and exchange material and services in the proper place and in proper quantities for the proper value activity.

    The process of digitization involves converting an analog product into a string of zeros and ones. Increasingly, products like software, music, and books, as well as services like call centers, application processing, and financial consolidation, can be digitized and, hence, located virtually anywhere. Equipped with networked computers, workers can move goods and services anywhere in the world at negligible cost and complication. Consequently, the potential for digitization of goods or services influences how a company configures its value chain.

    The concept of economies of scale refers to a situation wherein a firm doubles its cumulative output yet total cost less than doubles due to efficiency gains. Effectively, reductions in the unit cost of a product result from the increasing efficiency that comes with larger operations.***The value chain is the set of linked value-creating activities the company performs to design, produce, market, distribute, and support a product. Value-chain analysis helps managers understand the behavior of costs and existing and potential sources of differentiation. A value chain disaggregates a firm into: Primary activities that create and deliver the product Support activities that aid the individuals and groups engaged in primary activitieschains identify the format and interactions between different activities of the company.

    Configuration is the way in which managers arrange the activities of the value chain.

    ValueManufacturing costs vary from country to country because of wage rates, worker productivity, resourceavailability, and fiscal and monetary policies.

    An industry cluster is a system of businesses and institutions engaged with one another at various levels.

    Logistics entails how companies obtain, produce, and exchange material and services in the proper place and in proper quantities for the proper value activity.

    The process of digitization involves converting an analog product into a string of zeros and ones. Increasingly, products like software, music, and books, as well as services like call centers, application processing, and financial consolidation, can be digitized and, hence, located virtually anywhere. Equipped with networked computers, workers can move goods and services anywhere in the world at negligible cost and complication. Consequently, the potential for digitization of goods or services influences how a company configures its value chain.

    The concept of economies of scale refers to a situation wherein a firm doubles its cumulative output yet total cost less than doubles due to efficiency gains. Effectively, reductions in the unit cost of a product result from the increasing efficiency that comes with larger operations.***Coordination is the way that managers connect the activities of the value chain. As companies globally configure value activities, they must develop coordination tools. Coordinated well, MNEs can leverage their core competencies, using them to serve customers, boost sales, and improve profits. A companys core competency is: The unique skills and/or knowledge that it does better than its competitors Essential to its competitiveness and profitability

    A core competency can emerge from various sources, including: Product development Employee productivity Manufacturing expertise Marketing imagination Executive leadership

    Several factors influence value chain coordination: Operational obstacles National cultures Learning effects Subsidiary networksThe globalization of a companys value chain, such as design done in Finland, inputs sourced from Brazil, production done in China, distribution organized in the United States, and service done in Mexico, presses managers to understand how foreign cultures influence coordination.

    National cultures also impose hurdles in coordinating a transaction from one stage of the value chain to another. Units anchored in individual versus collectivist cultures may disagree over information sharing or collaboration responsibilities; conflicts complicate coordination. Hence, features of national culture require managers to understand their implications to the collaborative relationship that shape the coordination of value activities.

    A learning curve is the commonsense principle that the more one does something, the better one gets at it.

    Companies configure value chain activities to exploit the learning curve.

    The matter of learning shapes how manufacturing and service MNEs coordinate value chains. In the case of the former, MNEs often adapt production activities for different attitudes and approaches to manufacturing. For example, an MNE may have factories in different countries, such as Japan and Mexico, which manufacture the same product but apply different production philosophies. The Mexican factory may use a traditional assembly-line operation given the local conditions of inexpensive labor, patchy transportation infrastructure, and marginal cost of high technology. The Japanese factory, in contrast, may use a lean production system given local labor competency, manufacturing expertise, and efficient logistics. The different manufacturing approaches complicate how managers coordinate activities between factories. Planning to learn how to coordinate these links in the value-chain positions the MNE to gain production efficiencies that lead to lower costs, higher quality, satisfied customers, and new sales. MNEs run into problems getting the various links of their global value chain to engage.

    Operating internationally inevitably runs into communication challenges because of time zones, differing languages, and ambiguous meanings. Increasingly, companies rely on browser-based communications methods to coordinate the handoffs from link to link. The thinking goes that electronically linked producers and retailers can lower coordination costs throughout the value chain. In addition, standardizing the format for data input helps standardize the format for interpretation. Electronic transactions boost efficiency by reducing intermediary transactions and the associated unneeded coordination (streamlining the distributor link in the value chain by eliminating an intermediary).

    The growing prevalence of social networks provides perspectives for managers to better understand the dynamics of their subsidiary networks.

    *Coordination is the way that managers connect the activities of the value chain. As companies globally configure value activities, they must develop coordination tools. Coordinated well, MNEs can leverage their core competencies, using them to serve customers, boost sales, and improve profits. A companys core competency is: The unique skills and/or knowledge that it does better than its competitors Essential to its competitiveness and profitability

    A core competency can emerge from various sources, including: Product development Employee productivity Manufacturing expertise Marketing imagination Executive leadership

    Several factors influence value chain coordination: Operational obstacles National cultures Learning effects Subsidiary networksThe globalization of a companys value chain, such as design done in Finland, inputs sourced from Brazil, production done in China, distribution organized in the United States, and service done in Mexico, presses managers to understand how foreign cultures influence coordination.

    National cultures also impose hurdles in coordinating a transaction from one stage of the value chain to another. Units anchored in individual versus collectivist cultures may disagree over information sharing or collaboration responsibilities; conflicts complicate coordination. Hence, features of national culture require managers to understand their implications to the collaborative relationship that shape the coordination of value activities.

    A learning curve is the commonsense principle that the more one does something, the better one gets at it.

    Companies configure value chain activities to exploit the learning curve.

    The matter of learning shapes how manufacturing and service MNEs coordinate value chains. In the case of the former, MNEs often adapt production activities for different attitudes and approaches to manufacturing. For example, an MNE may have factories in different countries, such as Japan and Mexico, which manufacture the same product but apply different production philosophies. The Mexican factory may use a traditional assembly-line operation given the local conditions of inexpensive labor, patchy transportation infrastructure, and marginal cost of high technology. The Japanese factory, in contrast, may use a lean production system given local labor competency, manufacturing expertise, and efficient logistics. The different manufacturing approaches complicate how managers coordinate activities between factories. Planning to learn how to coordinate these links in the value-chain positions the MNE to gain production efficiencies that lead to lower costs, higher quality, satisfied customers, and new sales. MNEs run into problems getting the various links of their global value chain to engage.

    Operating internationally inevitably runs into communication challenges because of time zones, differing languages, and ambiguous meanings. Increasingly, companies rely on browser-based communications methods to coordinate the handoffs from link to link. The thinking goes that electronically linked producers and retailers can lower coordination costs throughout the value chain. In addition, standardizing the format for data input helps standardize the format for interpretation. Electronic transactions boost efficiency by reducing intermediary transactions and the associated unneeded coordination (streamlining the distributor link in the value chain by eliminating an intermediary).

    The growing prevalence of social networks provides perspectives for managers to better understand the dynamics of their subsidiary networks.

    *Coordination is the way that managers connect the activities of the value chain. As companies globally configure value activities, they must develop coordination tools. Coordinated well, MNEs can leverage their core competencies, using them to serve customers, boost sales, and improve profits. A companys core competency is: The unique skills and/or knowledge that it does better than its competitors Essential to its competitiveness and profitability

    A core competency can emerge from various sources, including: Product development Employee productivity Manufacturing expertise Marketing imagination Executive leadership

    Several factors influence value chain coordination: Operational obstacles National cultures Learning effects Subsidiary networksThe globalization of a companys value chain, such as design done in Finland, inputs sourced from Brazil, production done in China, distribution organized in the United States, and service done in Mexico, presses managers to understand how foreign cultures influence coordination.

    National cultures also impose hurdles in coordinating a transaction from one stage of the value chain to another. Units anchored in individual versus collectivist cultures may disagree over information sharing or collaboration responsibilities; conflicts complicate coordination. Hence, features of national culture require managers to understand their implications to the collaborative relationship that shape the coordination of value activities.

    A learning curve is the commonsense principle that the more one does something, the better one gets at it.

    Companies configure value chain activities to exploit the learning curve.

    The matter of learning shapes how manufacturing and service MNEs coordinate value chains. In the case of the former, MNEs often adapt production activities for different attitudes and approaches to manufacturing. For example, an MNE may have factories in different countries, such as Japan and Mexico, which manufacture the same product but apply different production philosophies. The Mexican factory may use a traditional assembly-line operation given the local conditions of inexpensive labor, patchy transportation infrastructure, and marginal cost of high technology. The Japanese factory, in contrast, may use a lean production system given local labor competency, manufacturing expertise, and efficient logistics. The different manufacturing approaches complicate how managers coordinate activities between factories. Planning to learn how to coordinate these links in the value-chain positions the MNE to gain production efficiencies that lead to lower costs, higher quality, satisfied customers, and new sales. MNEs run into problems getting the various links of their global value chain to engage.

    Operating internationally inevitably runs into communication challenges because of time zones, differing languages, and ambiguous meanings. Increasingly, companies rely on browser-based communications methods to coordinate the handoffs from link to link. The thinking goes that electronically linked producers and retailers can lower coordination costs throughout the value chain. In addition, standardizing the format for data input helps standardize the format for interpretation. Electronic transactions boost efficiency by reducing intermediary transactions and the associated unneeded coordination (streamlining the distributor link in the value chain by eliminating an intermediary).

    The growing prevalence of social networks provides perspectives for managers to better understand the dynamics of their subsidiary networks.

    *Coordination is the way that managers connect the activities of the value chain. As companies globally configure value activities, they must develop coordination tools. Coordinated well, MNEs can leverage their core competencies, using them to serve customers, boost sales, and improve profits. A companys core competency is: The unique skills and/or knowledge that it does better than its competitors Essential to its competitiveness and profitability

    A core competency can emerge from various sources, including: Product development Employee productivity Manufacturing expertise Marketing imagination Executive leadership

    Several factors influence value chain coordination: Operational obstacles National cultures Learning effects Subsidiary networksThe globalization of a companys value chain, such as design done in Finland, inputs sourced from Brazil, production done in China, distribution organized in the United States, and service done in Mexico, presses managers to understand how foreign cultures influence coordination.

    National cultures also impose hurdles in coordinating a transaction from one stage of the value chain to another. Units anchored in individual versus collectivist cultures may disagree over information sharing or collaboration responsibilities; conflicts complicate coordination. Hence, features of national culture require managers to understand their implications to the collaborative relationship that shape the coordination of value activities.

    A learning curve is the commonsense principle that the more one does something, the better one gets at it.

    Companies configure value chain activities to exploit the learning curve.

    The matter of learning shapes how manufacturing and service MNEs coordinate value chains. In the case of the former, MNEs often adapt production activities for different attitudes and approaches to manufacturing. For example, an MNE may have factories in different countries, such as Japan and Mexico, which manufacture the same product but apply different production philosophies. The Mexican factory may use a traditional assembly-line operation given the local conditions of inexpensive labor, patchy transportation infrastructure, and marginal cost of high technology. The Japanese factory, in contrast, may use a lean production system given local labor competency, manufacturing expertise, and efficient logistics. The different manufacturing approaches complicate how managers coordinate activities between factories. Planning to learn how to coordinate these links in the value-chain positions the MNE to gain production efficiencies that lead to lower costs, higher quality, satisfied customers, and new sales. MNEs run into problems getting the various links of their global value chain to engage.

    Operating internationally inevitably runs into communication challenges because of time zones, differing languages, and ambiguous meanings. Increasingly, companies rely on browser-based communications methods to coordinate the handoffs from link to link. The thinking goes that electronically linked producers and retailers can lower coordination costs throughout the value chain. In addition, standardizing the format for data input helps standardize the format for interpretation. Electronic transactions boost efficiency by reducing intermediary transactions and the associated unneeded coordination (streamlining the distributor link in the value chain by eliminating an intermediary).

    The growing prevalence of social networks provides perspectives for managers to better understand the dynamics of their subsidiary networks.

    **Coordination is the way that managers connect the activities of the value chain. As companies globally configure value activities, they must develop coordination tools. Coordinated well, MNEs can leverage their core competencies, using them to serve customers, boost sales, and improve profits. A companys core competency is: The unique skills and/or knowledge that it does better than its competitors Essential to its competitiveness and profitability

    A core competency can emerge from various sources, including: Product development Employee productivity Manufacturing expertise Marketing imagination Executive leadership

    Several factors influence value chain coordination: Operational obstacles National cultures Learning effects Subsidiary networksThe globalization of a companys value chain, such as design done in Finland, inputs sourced from Brazil, production done in China, distribution organized in the United States, and service done in Mexico, presses managers to understand how foreign cultures influence coordination.

    National cultures also impose hurdles in coordinating a transaction from one stage of the value chain to another. Units anchored in individual versus collectivist cultures may disagree over information sharing or collaboration responsibilities; conflicts complicate coordination. Hence, features of national culture require managers to understand their implications to the collaborative relationship that shape the coordination of value activities.

    A learning curve is the commonsense principle that the more one does something, the better one gets at it.

    Companies configure value chain activities to exploit the learning curve.

    The matter of learning shapes how manufacturing and service MNEs coordinate value chains. In the case of the former, MNEs often adapt production activities for different attitudes and approaches to manufacturing. For example, an MNE may have factories in different countries, such as Japan and Mexico, which manufacture the same product but apply different production philosophies. The Mexican factory may use a traditional assembly-line operation given the local conditions of inexpensive labor, patchy transportation infrastructure, and marginal cost of high technology. The Japanese factory, in contrast, may use a lean production system given local labor competency, manufacturing expertise, and efficient logistics. The different manufacturing approaches complicate how managers coordinate activities between factories. Planning to learn how to coordinate these links in the value-chain positions the MNE to gain production efficiencies that lead to lower costs, higher quality, satisfied customers, and new sales. MNEs run into problems getting the various links of their global value chain to engage.

    Operating internationally inevitably runs into communication challenges because of time zones, differing languages, and ambiguous meanings. Increasingly, companies rely on browser-based communications methods to coordinate the handoffs from link to link. The thinking goes that electronically linked producers and retailers can lower coordination costs throughout the value chain. In addition, standardizing the format for data input helps standardize the format for interpretation. Electronic transactions boost efficiency by reducing intermediary transactions and the associated unneeded coordination (streamlining the distributor link in the value chain by eliminating an intermediary).

    The growing prevalence of social networks provides perspectives for managers to better understand the dynamics of their subsidiary networks.

    *Designing and delivering a strategy is an ongoing struggle for companies. While some succeed, many fall shortof their objectives.

    *Integration is the process of combining differentiated parts into a standardized whole.Responsiveness is the process of disaggregating a standardized whole into differentiated parts.

    The convergence of national markets, standardization of business processes, and the drive to maximize production efficiency push for the integration of value activities. A provocative thesis, increasingly supported by global buying patterns and companies strategies, suggests that consumers worldwide seek global productswhether they are Apple iPods, Samsung plasma screens, Facebook connections, Starbucks espressos, Google searches, or Zara blouses. Two conditionsone demand-pull, the other supply-pushinfluence this trend. Powering demand-pull conditions are the intrinsic functions of money.Money has three inalienable features: difficult to acquire scarce transientGlobal and local pressures challenge how the firm configures and coordinates its value chain. The convergence of national markets and quest for production efficiency push for the global integration of value activities.

    Standardization is the handmaiden of globalization, encouraging supply conditions that produce volumes of low-cost, high-quality products. That is, standardization is the push dynamic that drives supply, whereas the globalization of markets represents the pull dynamic that converges consumer preferences. The logic of standardization is straightforward. Repeatedly doing the same task the same way improves the efficiency of effort. Improving efficiency in the value chain, in turn, supports aggressive product development, lower-cost production processes, and lower prices.

    Prominent pressures for local responsiveness are consumer divergence and host-government policies.

    Contrary to the globalization-of-markets thesis, others argue that divergences in consumer preferences across countries necessitate locally responsive value chains.

    Differences in local consumers preferences endure due to cultural predisposition, historical legacy, and endemic nationalism. Regardless of the cause, consumers often prefer goods that are sensitive to the particular idiosyncrasies of their daily life. Consequently, cross-national divergence presses MNEs to adapt value activities to the demands of local markets. The source of many variations is the policies, or the lack thereof, mandated by host-country governments. Prior to the economic crisis, companies confronted policy differences as they moved from country to country. However, these differences had been narrowing as capitalism and economic freedom shaped policy in a growing number of countries. Now, in the early phases of the crisis, governments distrust of market mechanisms spurs revising the rules of the market. Moreover, despite calls for coordinated policy initiatives, different countries have taken different paths to reset fiscal, monetary, and business policies. Collectively, these trends required companies to rethink their value chains. Constrained options for standardization and wavering momentum of globalization spotlight the sustainability of value chains biased toward local responsiveness.

    *Integration is the process of combining differentiated parts into a standardized whole.Responsiveness is the process of disaggregating a standardized whole into differentiated parts.

    The convergence of national markets, standardization of business processes, and the drive to maximize production efficiency push for the integration of value activities. A provocative thesis, increasingly supported by global buying patterns and companies strategies, suggests that consumers worldwide seek global productswhether they are Apple iPods, Samsung plasma screens, Facebook connections, Starbucks espressos, Google searches, or Zara blouses. Two conditionsone demand-pull, the other supply-pushinfluence this trend. Powering demand-pull conditions are the intrinsic functions of money.Money has three inalienable features: difficult to acquire scarce transientGlobal and local pressures challenge how the firm configures and coordinates its value chain. The convergence of national markets and quest for production efficiency push for the global integration of value activities.

    Standardization is the handmaiden of globalization, encouraging supply conditions that produce volumes of low-cost, high-quality products. That is, standardization is the push dynamic that drives supply, whereas the globalization of markets represents the pull dynamic that converges consumer preferences. The logic of standardization is straightforward. Repeatedly doing the same task the same way improves the efficiency of effort. Improving efficiency in the value chain, in turn, supports aggressive product development, lower-cost production processes, and lower prices.

    Prominent pressures for local responsiveness are consumer divergence and host-government policies.

    Contrary to the globalization-of-markets thesis, others argue that divergences in consumer preferences across countries necessitate locally responsive value chains.

    Differences in local consumers preferences endure due to cultural predisposition, historical legacy, and endemic nationalism. Regardless of the cause, consumers often prefer goods that are sensitive to the particular idiosyncrasies of their daily life. Consequently, cross-national divergence presses MNEs to adapt value activities to the demands of local markets. The source of many variations is the policies, or the lack thereof, mandated by host-country governments. Prior to the economic crisis, companies confronted policy differences as they moved from country to country. However, these differences had been narrowing as capitalism and economic freedom shaped policy in a growing number of countries. Now, in the early phases of the crisis, governments distrust of market mechanisms spurs revising the rules of the market. Moreover, despite calls for coordinated policy initiatives, different countries have taken different paths to reset fiscal, monetary, and business policies. Collectively, these trends required companies to rethink their value chains. Constrained options for standardization and wavering momentum of globalization spotlight the sustainability of value chains biased toward local responsiveness.

    *Integration is the process of combining differentiated parts into a standardized whole.Responsiveness is the process of disaggregating a standardized whole into differentiated parts.

    The convergence of national markets, standardization of business processes, and the drive to maximize production efficiency push for the integration of value activities. A provocative thesis, increasingly supported by global buying patterns and companies strategies, suggests that consumers worldwide seek global productswhether they are Apple iPods, Samsung plasma screens, Facebook connections, Starbucks espressos, Google searches, or Zara blouses. Two conditionsone demand-pull, the other supply-pushinfluence this trend. Powering demand-pull conditions are the intrinsic functions of money.Money has three inalienable features: difficult to acquire scarce transientGlobal and local pressures challenge how the firm configures and coordinates its value chain. The convergence of national markets and quest for production efficiency push for the global integration of value activities.

    Standardization is the handmaiden of globalization, encouraging supply conditions that produce volumes of low-cost, high-quality products. That is, standardization is the push dynamic that drives supply, whereas the globalization of markets represents the pull dynamic that converges consumer preferences. The logic of standardization is straightforward. Repeatedly doing the same task the same way improves the efficiency of effort. Improving efficiency in the value chain, in turn, supports aggressive product development, lower-cost production processes, and lower prices.

    Prominent pressures for local responsiveness are consumer divergence and host-government policies.

    Contrary to the globalization-of-markets thesis, others argue that divergences in consumer preferences across countries necessitate locally responsive value chains.

    Differences in local consumers preferences endure due to cultural predisposition, historical legacy, and endemic nationalism. Regardless of the cause, consumers often prefer goods that are sensitive to the particular idiosyncrasies of their daily life. Consequently, cross-national divergence presses MNEs to adapt value activities to the demands of local markets. The source of many variations is the policies, or the lack thereof, mandated by host-country governments. Prior to the economic crisis, companies confronted policy differences as they moved from country to country. However, these differences had been narrowing as capitalism and economic freedom shaped policy in a growing number of countries. Now, in the early phases of the crisis, governments distrust of market mechanisms spurs revising the rules of the market. Moreover, despite calls for coordinated policy initiatives, different countries have taken different paths to reset fiscal, monetary, and business policies. Collectively, these trends required companies to rethink their value chains. Constrained options for standardization and wavering momentum of globalization spotlight the sustainability of value chains biased toward local responsiveness.

    *MNEs go through three phases on the path to becoming a global powerhouse:1. First there was the nineteenth-century international model, whereby the company was headquartered both physically and mentally in its home country; it sold goods, when it was so inclined, through a scattering of overseas sales offices.

    2. Phase two of the evolution ushered in the classic, multinational firm of the late twentieth century. This model saw the parent company creating smaller versions of itself in foreign markets. These smaller satellite companies were run by home-nation executives sent from headquarters, who typically had great technical expertise but little cultural fluency and minimal foreign-language competency.

    3. The third phase, the globally integrated enterprise, is one that builds a company-wide value chain that put people, jobs, and investments anywhere in the world based on the right cost, the right skills and the right business environment . . . . now work flows to the places where it will be done best, that is, most efficiently and to the highest quality.

    Visions of the future: Others trumpet a world where a dynamic ecology of locations and firms pushes beyond the historic division of local firms versus global companies. This view provides for different types of companies following different types of strategies. In a sense, these companies create a natural ecology that reacts to, and interacts with, their different environments. The diversity of these strategies and companies in this global ecology creates a business world populated by a variety of local firms, regional firms, firms that operate in a few countries or many countries, centralized firms, and networks of firms.

    The Metanational Company: Others see the emergence of a new type of global corporation, the so-called metanational company, which thrives on seeking unique ideas, activities, and insights that complement its existing operations as well as creating leverage points. The metanational company builds a new kind of competitive advantage by discovering, accessing, mobilizing, and leveraging knowledge from many locations around the world.

    Micro-Nationals:Although the number of MNEs grows worldwide, their average size is fallingmost of the 70,000 or so firms that operate internationally employ less than 250 people. This anomaly signals the era of so-called micro-multinationals: clever, small companies that are born global and operate worldwide from day one. Unlike their bigger counterparts that expanded internationally by gradually entering new markets, micro-multinationals go global immediately.

    The Cybercorp:To this type of MNE, national boundaries no longer organize consumers, locations, markets, or industries. Instead, the cyberspace created by evolving Internet technologiesnot the physical geography of lines on a mapdefines markets. The cybercorp develops competencies that let it react in real time to changes in its customers, competition, industry, and environment.

    *MNEs go through three phases on the path to becoming a global powerhouse:1. First there was the nineteenth-century international model, whereby the company was headquartered both physically and mentally in its home country; it sold goods, when it was so inclined, through a scattering of overseas sales offices.

    2. Phase two of the evolution ushered in the classic, multinational firm of the late twentieth century. This model saw the parent company creating smaller versions of itself in foreign markets. These smaller satellite companies were run by home-nation executives sent from headquarters, who typically had great technical expertise but little cultural fluency and minimal foreign-language competency.

    3. The third phase, the globally integrated enterprise, is one that builds a company-wide value chain that put people, jobs, and investments anywhere in the world based on the right cost, the right skills and the right business environment . . . . now work flows to the places where it will be done best, that is, most efficiently and to the highest quality.

    Visions of the future: Others trumpet a world where a dynamic ecology of locations and firms pushes beyond the historic division of local firms versus global companies. This view provides for different types of companies following different types of strategies. In a sense, these companies create a natural ecology that reacts to, and interacts with, their different environments. The diversity of these strategies and companies in this global ecology creates a business world populated by a variety of local firms, regional firms, firms that operate in a few countries or many countries, centralized firms, and networks of firms.

    The Metanational Company: Others see the emergence of a new type of global corporation, the so-called metanational company, which thrives on seeking unique ideas, activities, and insights that complement its existing operations as well as creating leverage points. The metanational company builds a new kind of competitive advantage by discovering, accessing, mobilizing, and leveraging knowledge from many locations around the world.

    Micro-Nationals:Although the number of MNEs grows worldwide, their average size is fallingmost of the 70,000 or so firms that operate internationally employ less than 250 people. This anomaly signals the era of so-called micro-multinationals: clever, small companies that are born global and operate worldwide from day one. Unlike their bigger counterparts that expanded internationally by gradually entering new markets, micro-multinationals go global immediately.

    The Cybercorp:To this type of MNE, national boundaries no longer organize consumers, locations, markets, or industries. Instead, the cyberspace created by evolving Internet technologiesnot the physical geography of lines on a mapdefines markets. The cybercorp develops competencies that let it react in real time to changes in its customers, competition, industry, and environment.

    *MNEs go through three phases on the path to becoming a global powerhouse:1. First there was the nineteenth-century international model, whereby the company was headquartered both physically and mentally in its home country; it sold goods, when it was so inclined, through a scattering of overseas sales offices.

    2. Phase two of the evolution ushered in the classic, multinational firm of the late twentieth century. This model saw the parent company creating smaller versions of itself in foreign markets. These smaller satellite companies were run by home-nation executives sent from headquarters, who typically had great technical expertise but little cultural fluency and minimal foreign-language competency.

    3. The third phase, the globally integrated enterprise, is one that builds a company-wide value chain that put people, jobs, and investments anywhere in the world based on the right cost, the right skills and the right business environment . . . . now work flows to the places where it will be done best, that is, most efficiently and to the highest quality.

    Visions of the future: Others trumpet a world where a dynamic ecology of locations and firms pushes beyond the historic division of local firms versus global companies. This view provides for different types of companies following different types of strategies. In a sense, these companies create a natural ecology that reacts to, and interacts with, their different environments. The diversity of these strategies and companies in this global ecology creates a business world populated by a variety of local firms, regional firms, firms that operate in a few countries or many countries, centralized firms, and networks of firms.

    The Metanational Company: Others see the emergence of a new type of global corporation, the so-called metanational company, which thrives on seeking unique ideas, activities, and insights that complement its existing operations as well as creating leverage points. The metanational company builds a new kind of competitive advantage by discovering, accessing, mobilizing, and leveraging knowledge from many locations around the world.

    Micro-Nationals:Although the number of MNEs grows worldwide, their average size is fallingmost of the 70,000 or so firms that operate internationally employ less than 250 people. This anomaly signals the era of so-called micro-multinationals: clever, small companies that are born global and operate worldwide from day one. Unlike their bigger counterparts that expanded internationally by gradually entering new markets, micro-multinationals go global immediately.

    The Cybercorp:To this type of MNE, national boundaries no longer organize consumers, locations, markets, or industries. Instead, the cyberspace created by evolving Internet technologiesnot the physical geography of lines on a mapdefines markets. The cybercorp develops competencies that let it react in real time to changes in its customers, competition, industry, and environment.

    *MNEs go through three phases on the path to becoming a global powerhouse:1. First there was the nineteenth-century international model, whereby the company was headquartered both physically and mentally in its home country; it sold goods, when it was so inclined, through a scattering of overseas sales offices.

    2. Phase two of the evolution ushered in the classic, multinational firm of the late twentieth century. This model saw the parent company creating smaller versions of itself in foreign markets. These smaller satellite companies were run by home-nation executives sent from headquarters, who typically had great technical expertise but little cultural fluency and minimal foreign-language competency.

    3. The third phase, the globally integrated enterprise, is one that builds a company-wide value chain that put people, jobs, and investments anywhere in the world based on the right cost, the right skills and the right business environment . . . . now work flows to the places where it will be done best, that is, most efficiently and to the highest quality.

    Visions of the future: Others trumpet a world where a dynamic ecology of locations and firms pushes beyond the historic division of local firms versus global companies. This view provides for different types of companies following different types of strategies. In a sense, these companies create a natural ecology that reacts to, and interacts with, their different environments. The diversity of these strategies and companies in this global ecology creates a business world populated by a variety of local firms, regional firms, firms that operate in a few countries or many countries, centralized firms, and networks of firms.

    The Metanational Company: Others see the emergence of a new type of global corporation, the so-called metanational company, which thrives on seeking unique ideas, activities, and insights that complement its existing operations as well as creating leverage points. The metanational company builds a new kind of competitive advantage by discovering, accessing, mobilizing, and leveraging knowledge from many locations around the world.

    Micro-Nationals:Although the number of MNEs grows worldwide, their average size is fallingmost of the 70,000 or so firms that operate internationally employ less than 250 people. This anomaly signals the era of so-called micro-multinationals: clever, small companies that are born global and operate worldwide from day one. Unlike their bigger counterparts that expanded internationally by gradually entering new markets, micro-multinationals go global immediately.

    The Cybercorp:To this type of MNE, national boundaries no longer organize consumers, locations, markets, or industries. Instead, the cyberspace created by evolving Internet technologiesnot the physical geography of lines on a mapdefines markets. The cybercorp develops competencies that let it react in real time to changes in its customers, competition, industry, and environment.

    *MNEs go through three phases on the path to becoming a global powerhouse:1. First there was the nineteenth-century international model, whereby the company was headquartered both physically and mentally in its home country; it sold goods, when it was so inclined, through a scattering of overseas sales offices.

    2. Phase two of the evolution ushered in the classic, multinational firm of the late twentieth century. This model saw the parent company creating smaller versions of itself in foreign markets. These smaller satellite companies were run by home-nation executives sent from headquarters, who typically had great technical expertise but little cultural fluency and minimal foreign-language competency.

    3. The third phase, the globally integrated enterprise, is one that builds a company-wide value chain that put people, jobs, and investments anywhere in the world based on the right cost, the right skills and the right business environment . . . . now work flows to the places where it will be done best, that is, most efficiently and to the highest quality.

    Visions of the future: Others trumpet a world where a dynamic ecology of locations and firms pushes beyond the historic division of local firms versus global companies. This view provides for different types of companies following different types of strategies. In a sense, these companies create a natural ecology that reacts to, and interacts with, their different environments. The diversity of these strategies and companies in this global ecology creates a business world populated by a variety of local firms, regional firms, firms that operate in a few countries or many countries, centralized firms, and networks of firms.

    The Metanational Company: Others see the emergence of a new type of global corporation, the so-called metanational company, which thrives on seeking unique ideas, activities, and insights that complement its existing operations as well as creating leverage points. The metanational company builds a new kind of competitive advantage by discovering, accessing, mobilizing, and leveraging knowledge from many locations around the world.

    Micro-Nationals:Although the number of MNEs grows worldwide, their average size is fallingmost of the 70,000 or so firms that operate internationally employ less than 250 people. This anomaly signals the era of so-called micro-multinationals: clever, small companies that are born global and operate worldwide from day one. Unlike their bigger counterparts that expanded internationally by gradually entering new markets, micro-multinationals go global immediately.

    The Cybercorp:To this type of MNE, national boundaries no longer organize consumers, locations, markets, or industries. Instead, the cyberspace created by evolving Internet technologiesnot the physical geography of lines on a mapdefines markets. The cybercorp develops competencies that let it react in real time to changes in its customers, competition, industry, and environment.

    *MNEs go through three phases on the path to becoming a global powerhouse:1. First there was the nineteenth-century international model, whereby the company was headquartered both physically and mentally in its home country; it sold goods, when it was so inclined, through a scattering of overseas sales offices.

    2. Phase two of the evolution ushered in the classic, multinational firm of the late twentieth century. This model saw the parent company creating smaller versions of itself in foreign markets. These smaller satellite companies were run by home-nation executives sent from headquarters, who typically had great technical expertise but little cultural fluency and minimal foreign-language competency.

    3. The third phase, the globally integrated enterprise, is one that builds a company-wide value chain that put people, jobs, and investments anywhere in the world based on the right cost, the right skills and the right business environment . . . . now work flows to the places where it will be done best, that is, most efficiently and to the highest quality.

    Visions of the future: Others trumpet a world where a dynamic ecology of locations and firms pushes beyond the historic division of local firms versus global companies. This view provides for different types of companies following different types of strategies. In a sense, these companies create a natural ecology that reacts to, and interacts with, their different environments. The diversity of these strategies and companies in this global ecology creates a business world populated by a variety of local firms, regional firms, firms that operate in a few countries or many countries, centralized firms, and networks of firms.

    The Metanational Company: Others see the emergence of a new type of global corporation, the so-called metanational company, which thrives on seeking unique ideas, activities, and insights that complement its existing operations as well as creating leverage points. The metanational company builds a new kind of competitive advantage by discovering, accessing, mobilizing, and leveraging knowledge from many locations around the world.

    Micro-Nationals:Although the number of MNEs grows worldwide, their average size is fallingmost of the 70,000 or so firms that operate internationally employ less than 250 people. This anomaly signals the era of so-called micro-multinationals: clever, small companies that are born global and operate worldwide from day one. Unlike their bigger counterparts that expanded internationally by gradually entering new markets, micro-multinationals go global immediately.

    The Cybercorp:To this type of MNE, national boundaries no longer organize consumers, locations, markets, or industries. Instead, the cyberspace created by evolving Internet technologiesnot the physical geography of lines on a mapdefines markets. The cybercorp develops competencies that let it react in real time to changes in its customers, competition, industry, and environment.