Module 3
Strategy and the Firm
A. Strategy and the Firm
The primary concern thus far in this book has been with aspects of the larger
environment in which international businesses compete. As described in the preceding
chapters, this environment has included the different political, economic, and cultural
institutions found in nations; the international trade and investment framework; and the
international monetary system. Now our focus shifts from the environment to the firm
itself and, in particular, to the actions managers can take to compete more effectively as
an international business. This chapter looks at how firms can increase their profitability
by expanding their operations in foreign markets. We discuss the different strategies that
firms pursue when competing internationally, consider the pros and cons of these
strategies, and study the various factors that affect a firm’s choice of strategy. We also
look at why firms often enter into strategic alliances with their global competitors, and
we discuss the benefits, costs, and risks of strategic alliances.
The overview of the strategy of Geely, one of China’s top car companies and the
owner of Sweden’s iconic Volvo car company, illustrates some of the issues that we will
touch on in this chapter. To maximize its potential and grow both revenues and profits,
Geely’s entrepreneurial founder realized that the company needed to expand outside of its
domestic market to capitalize on opportunities elsewhere. Geely is now the process of
becoming a global car company, with significant sales in three main areas of the world—
China, North America, and Europe. Its acquisition of Volvo in 2010 has been a central
part of this strategy, bringing together the brand and design know-how of Volvo with
Geely’s manufacturing skills. The goal of the company is to build a global entity, but it
has recognized that there is significant value in pursuing a multibrand strategy and using
the Volvo brand and design flare to expand its footprint in North America and Europe,
where the Geely brand does not have any name recognition. In essence, the company
realizes that despite its global ambitions, regional differences still exist in the global
automobile industry, and expanding sales outside of China can be boosted if the company
utilizes the brand power of Volvo.
Before we discuss the strategies that managers in the multinational enterprise can
pursue, we need to review some basic principles of strategy. A firm’s strategy can be
defined as the actions that managers take to attain the goals of the firm. For most firms,
the preeminent goal is to maximize the value of the firm for its owners and its
shareholders (subject to the very important constraint that the activities undertaken are
done in a legal, ethical, and socially responsible manner—see Chapter 5 for details). To
maximize the value of a firm to shareholders, managers must pursue strategies that
increase the profitability of the enterprise and its rate of profit growth over time (see
Figure 12.1). Profitability can be measured in a number of ways, but for consistency, we
define it as the rate of return that the firm makes on its invested capital (ROIC), which is
calculated by dividing the net profits of the firm by total invested capital.1 Profit growth
is measured by the percentage increase in net profits over time. In general, higher
profitability and a higher rate of profit growth will increase the value of an enterprise and
thus the returns garnered by its owners, the shareholders.
The way to increase the profitability of a firm is to create more value. The amount
of value a firm creates is measured by the difference between its costs of production and
the value that consumers perceive in its products. In general, the more value customers
place on a firm’s products, the higher the price the firm can charge for those products.
However, the price a firm charges for a good or service is typically less than the value
placed on that good or service by the customer. This is because the customer captures
some of that value in the form of what economists call a consumer surplus.3 The
customer is able to do this because the firm is competing with other firms for the
customer’s business, so the firm must charge a lower price than it could were it a
monopoly supplier. Also, it is normally impossible to segment the market to such a
degree that the firm can charge each customer a price that reflects that individual’s
assessment of the value of a product, which economists refer to as a customer’s
reservation price. For these reasons, the price that gets charged tends to be less than the
value placed on the product by many customers.
The firm’s value creation is measured by the difference between V and C (V −
C ); a company creates value by converting inputs that cost C into a product on which
consumers place a value of V. A company can create more value (V − C ) either by
lowering production costs, C, or by making the product more attractive through superior
design, styling, functionality, features, reliability, after-sales service, and the like, so that
consumers place a greater value on it (V increases) and, consequently, are willing to pay
a higher price (P increases). This discussion suggests that a firm has high profits when it
creates more value for its customers and does so at a lower cost. We refer to a strategy
that focuses primarily on lowering production costs as a low-cost strategy. We refer to a
strategy that focuses primarily on increasing the attractiveness of a product as a
differentiation strategy.
Porter notes that it is important for a firm to be explicit about its choice of
strategic emphasis with regard to value creation (differentiation) and low cost and to
configure its internal operations to support that strategic emphasis.7 Figure 12.3
illustrates this point. The convex curve in Figure 12.3 is what economists refer to as an
efficiency frontier (or production possibility frontier). The efficiency frontier shows all of
the different positions that a firm can adopt with regard to adding value to the product
(V ) and low cost (C ), assuming that its internal operations are configured efficiently to
support a particular position (note that the horizontal axis in Figure 12.3 is reverse scaled;
moving along the axis to the right implies lower costs). The efficiency frontier has a
convex shape because of diminishing returns. Diminishing returns imply that when a firm
already has significant value built into its product offering, increasing value by a
relatively small amount requires significant additional costs. The converse also holds:
when a firm already has a low-cost structure, it has to give up a lot of value in its product
offering to get additional cost reductions.
The operations of a firm can be thought of as a value chain composed of a series
of distinct value creation activities, including production, marketing and sales, materials
management, research and development, human resources, information systems, and the
firm infrastructure. We can categorize these value creation activities, or operations, as
primary activities and support activities. Research and development (R&D) is concerned
with the design of products and production processes. Although we think of R&D as
being associated with the design of physical products and production processes in
manufacturing enterprises, many service companies also undertake R&D. For example,
banks compete with each other by developing new financial products and new ways of
delivering those products to customers. Online banking and smart debit cards are two
examples of product development in the banking industry. Earlier examples of innovation
in the banking industry included automated teller machines, credit cards, and debit cards.
Through superior product design, R&D can increase the functionality of products, which
makes them more attractive to consumers (raising V ). Alternatively, R&D may result in
more efficient production processes, thereby cutting production costs (lowering C). Either
way, the R&D function can create value.
Production is concerned with the creation of a good or service. For physical
products, when we talk about production, we generally mean manufacturing. Thus, we
can talk about the production of an automobile. For services such as banking or health
care, “production” typically occurs when the service is delivered to the customer (e.g.,
when a bank originates a loan for a customer, it is engaged in “production” of the loan).
For a retailer such as Walmart, “production” is concerned with selecting the merchandise,
stocking the store, and ringing up the sale at the cash register. For MTV, production is
concerned with the creation, programming, and broadcasting of content, such as thematic
shows like The Real World. The production activity of a firm creates value by
performing its activities efficiently so lower costs result (lower C) and/ or by performing
them in such a way that a higher-quality product is produced (which results in higher V ).
The support activities of the value chain provide inputs that allow the primary
activities to occur (see Figure 12.4). In terms of attaining a competitive advantage,
support activities can be as important as, if not more important than, the primary
activities of the firm. Consider information systems: These systems refer to the electronic
systems for managing inventory, tracking sales, pricing products, selling products,
dealing with customer service inquiries, and so on. Information systems, when coupled
with the communications features of the Internet, can alter the efficiency and
effectiveness with which a firm manages its other value creation activities. Dell, for
example, has used its information systems to attain a competitive advantage over rivals.
When customers place an order for a Dell product over the firm’s website, that
information is immediately transmitted, via the Internet, to suppliers, who then configure
their production schedules to produce and ship that product so that it arrives at the right
assembly plant at the right time. These systems have reduced the amount of inventory
that Dell holds at assembly plants to under two days, which is a major source of cost
savings.
The strategy of a firm is implemented through its organization. For a firm to have
superior return on invested capital (ROIC), its organization must support its strategy and
operations. The term organization architecture can be used to refer to the totality of a
firm’s organization, including formal organizational structure, control systems and
incentives, organizational culture, processes, and people.9 Figure 12.5 illustrates these
different elements. By organizational structure, we mean three things: first, the formal
division of the organization into subunits such as product divisions, national operations,
and functions (most organizational charts display this aspect of structure); second, the
location of decision-making responsibilities within that structure (e.g., centralized or
decentralized); and third, the establishment of integrating mechanisms to coordinate the
activities of subunits including cross-functional teams and or pan-regional committees.
In sum, as we have repeatedly stressed, for a firm to attain superior performance
and earn a high return on capital, its strategy (as captured by its desired strategic position
on the efficiency frontier) must make sense given market conditions (there must be
sufficient demand to support that strategic choice). The operations of the firm must be
configured in a way that supports the strategy of the firm, and the organization
architecture of the firm must match the operations and strategy of the firm.
B. Global Expansion, Profitability, and Profit Growth
A company can increase its growth rate by taking goods or services developed at
home and selling them internationally. Almost all multinationals started out doing just
this. For example, Procter & Gamble developed most of its best-selling products (such as
Pampers disposable diapers and Ivory soap) in the United States and subsequently sold
them around the world. Likewise, although Microsoft developed its software in the
United States, from its earliest days the company has always focused on selling that
software in international markets. Automobile companies such as Volkswagen and
Toyota also grew by developing products at home and then selling them in international
markets. The returns from such a strategy are likely to be greater if indigenous
competitors in the nations that a company enters lack comparable products. Thus, Toyota
increased its profits by entering the large automobile markets of North America and
Europe, offering products that differed from those offered by local rivals (Ford and GM)
in their superior quality and reliability.
The success of many multinational companies that expand in this manner is based
not just upon the goods or services that they sell in foreign nations but also upon the core
competencies that underlie the development, production, and marketing of those goods or
services. The term core competence refers to skills within the firm that competitors
cannot easily match or imitate.12 These skills may exist in any of the firm’s value
creation activities: production, marketing, R&D, human resources, logistics, general
management, and so on. Such skills are typically expressed in product offerings that other
firms find difficult to match or imitate. Core competencies are the bedrock of a firm’s
competitive advantage. They enable a firm to reduce the costs of value creation and/or to
create perceived value in such a way that premium pricing is possible. For example,
Toyota has a core competence in the production of cars. It is able to produce highquality,
well-designed cars at a lower delivered cost than any other firm in the world. The
competencies that enable Toyota to do this seem to reside primarily in the firm’s
production and logistics functions.13 Similarly, IKEA has a core competence in the
design of stylish and affordable furniture that can be manufactured at a low cost and flat-
packed, McDonald’s has a core competence in managing fast-food operations (it seems to
be one of the most skilled firms in the world in this industry), and Procter & Gamble
(P&G) has a core competence in developing and marketing name-brand consumer
products (it is one of the most skilled firms in the world in this business).
Earlier chapters revealed that countries differ along a range of dimensions—
including the economic, political, legal, and cultural—and that these differences can
either raise or lower the costs of doing business in a country. The theory of international
trade also teaches that due to differences in factor costs, certain countries have a
comparative advantage in the production of certain products. Japan might excel in the
production of automobiles and consumer electronics; the United States in the production
of computer software, pharmaceuticals, biotechnology products, and financial services;
Switzerland in the production of precision instruments and pharmaceuticals; South Korea
in the production of semiconductors; and Bangladesh in the production of apparel.
For a firm that is trying to survive in a competitive global market, this implies that
trade barriers and transportation costs permitting, the firm will benefit by basing each
value creation activity it performs at that location where economic, political, and cultural
conditions—including relative factor costs—are most conducive to the performance of
that activity. Thus, if the best designers for a product live in France, a firm should base its
design operations in France. If the most productive labor force for assembly operations is
in Mexico, assembly operations should be based in Mexico. If the best marketers are in
the United States, the marketing strategy should be formulated in the United States. And
so on.
The choice of the Hong Kong location was influenced by its combination of low
labor costs, a skilled workforce, and tax breaks given by the Hong Kong government.
The firm’s objective at this point was to lower production costs by locating value creation
activities at an appropriate location. After a few years, however, the increasing
industrialization of Hong Kong and a growing labor shortage had pushed up wage rates to
the extent that it was no longer a low-cost location. In response, Glassman and his
Chinese partner moved part of their manufacturing to a plant in mainland China to take
advantage of the lower wage rates there. Again, the goal was to lower production costs.
The parts for eyewear frames manufactured at this plant are shipped to the Hong Kong
factory for final assembly and then distributed to markets in North and South America.
The Hong Kong factory employs 80 people and the China plant between 300 and 400.
Generalizing from the Clear Vision example, one result of this kind of thinking is
the creation of a global web of value creation activities, with different stages of the value
chain being dispersed to those locations around the globe where perceived value is
maximized or where the costs of value creation are minimized.16 Consider Lenovo’s
ThinkPad laptop computers (Lenovo is the Chinese computer company that purchased
IBM’s personal computer operations).17 This product is designed in the United States by
engineers because Lenovo believes that the United States is the best location in the world
to do the basic design work. The case, keyboard, and hard drive are made in Thailand; the
display screen and memory in South Korea; the built-in wireless card in Malaysia; and
the microprocessor in the United States. In each case, these components are manufactured
and sourced from the optimal location given current factor costs. These components are
then shipped to an assembly operation in China, where the product is assembled before
being shipped to the United States for final sale. Lenovo assembles the ThinkPad in
Mexico because managers have calculated that due to low labor costs, the costs of
assembly can be minimized there. The marketing and sales strategy for North America is
developed by Lenovo personnel in the United States, primarily because managers believe
that due to their knowledge of the local marketplace, U.S. personnel add more value to
the product through their marketing efforts than personnel based elsewhere.
Introducing transportation costs and trade barriers complicates this picture. Due to
favorable factor endowments, New Zealand may have a comparative advantage for
automobile assembly operations, but high transportation costs would make it an
uneconomical location from which to serve global markets. Another caveat concerns the
importance of assessing political and economic risks when making location decisions.
Even if a country looks very attractive as a production location when measured against all
the standard criteria, if its government is unstable or totalitarian, the firm might be
advised not to base production there. (Political risk is discussed in Chapter 3.) Similarly,
if the government appears to be pursuing inappropriate economic policies that could lead
to foreign exchange risk, that might be another reason for not basing production in that
location, even if other factors look favorable.
The experience curve refers to systematic reductions in production costs that have
been observed to occur over the life of a product.18 A number of studies have observed
that a product’s production costs decline by some quantity about each time cumulative
output doubles. The relationship was first observed in the aircraft industry, where each
time cumulative output of airframes was doubled, unit costs typically declined to 80
percent of their previous level.19 Thus, production cost for the fourth airframe would be
80 percent of production cost for the second airframe, the eighth airframe’s production
costs 80 percent of the fourth’s, the sixteenth’s 80 percent of the eighth’s, and so on.
Learning effects refer to cost savings that come from learning by doing. Labor,
for example, learns by repetition how to carry out a task, such as assembling airframes,
most efficiently. Labor productivity increases over time as individuals learn the most
efficient ways to perform particular tasks. Equally important in new production facilities,
management typically learns how to manage the new operation more efficiently over
time. Hence, production costs decline due to increasing labor productivity and
management efficiency, which increases the firm’s profitability.
Economies of scale refer to the reductions in unit cost achieved by producing a
large volume of a product. Attaining economies of scale lowers a firm’s unit costs and
increases its profitability. Economies of scale have a number of sources. One is the ability
to spread fixed costs over a large volume.21 Fixed costs are the costs required to set up a
production facility, develop a new product, and the like. They can be substantial. For
example, the fixed cost of establishing a new production line to manufacture
semiconductor chips can reach $5 billion. Similarly, according to one estimate,
developing a new drug and bringing it to market costs about $800 million and takes about
12 years.22 The only way to recoup such high fixed costs may be to sell the product
worldwide, which reduces average unit costs by spreading fixed costs over a larger
volume. The more rapidly that cumulative sales volume is built up, the more rapidly fixed
costs can be amortized over a large production volume and the more rapidly unit costs
will fall.
Many of the underlying sources of experience-based cost economies are plant-
based. This is true for most learning effects as well as for the economies of scale derived
by spreading the fixed costs of building productive capacity over a large output, attaining
an efficient scale of output, and utilizing a plant more intensively. Thus, one key to
progressing downward on the experience curve as rapidly as possible is to increase the
volume produced by a single plant as rapidly as possible. Because global markets are
larger than domestic markets, a firm that serves a global market from a single location is
likely to build accumulated volume more quickly than a firm that serves only its home
market or that serves multiple markets from multiple production locations. Thus, serving
a global market from a single location is consistent with moving down the experience
curve and establishing a low-cost position. In addition, to get down the experience curve
rapidly, a firm may need to price and market aggressively so demand will expand rapidly.
It will also need to build sufficient production capacity for serving a global market. Also,
the cost advantages of serving the world market from a single location will be even more
significant if that location is the optimal one for performing the particular value creation
activity.
Implicit in our earlier discussion of core competencies is the idea that valuable
skills are developed first at home and then transferred to foreign operations. However, for
more mature multinationals that have already established a network of subsidiary
operations in foreign markets, the development of valuable skills can just as well occur in
foreign subsidiaries.23 Skills can be created anywhere within a multinational’s global
network of operations, wherever people have the opportunity and incentive to try new
ways of doing things. The creation of skills that help to lower the costs of production or
to enhance perceived value and support higher product pricing is not the monopoly of the
corporate center.
We have seen how firms that expand globally can increase their profitability and
profit growth by entering new markets where indigenous competitors lack similar
competencies, by lowering costs and adding value to their product offering through the
attainment of location economies, by exploiting experience curve effects, and by
transferring valuable skills among their global network of subsidiaries. For completeness,
it should be noted that strategies that increase profitability may also expand a firm’s
business and thus enable it to attain a higher rate of profit growth. For example, by
simultaneously realizing location economies and experience effects, a firm may be able
to produce a more highly valued product at a lower unit cost, thereby boosting
profitability. The increase in the perceived value of the product may also attract more
customers, thereby growing revenues and profits as well. Furthermore, rather than raising
prices to reflect the higher perceived value of the product, the firm’s managers may elect
to hold prices low in order to increase global market share and attain greater scale
economies (in other words, they may elect to offer consumers better “value for money”).
Such a strategy could increase the firm’s rate of profit growth even further, because
consumers will be attracted by prices that are low relative to value. The strategy might
also increase profitability if the scale economies that result from market share gains are
substantial. In sum, managers need to keep in mind the complex relationship between
profitability and profit growth when making strategic decisions about pricing.
C. Cost Pressures and Pressures for Local Responsiveness
Firms that compete in the global marketplace typically face two types of
competitive pressure that affect their ability to realize location economies and experience
effects and to leverage products and transfer competencies and skills within the
enterprise. They face pressures for cost reductions and pressures to be locally responsive
(see Figure 12.8).25 These competitive pressures place conflicting demands on a firm.
Responding to pressures for cost reductions requires that a firm try to minimize its unit
costs. But responding to pressures to be locally responsive requires that a firm
differentiate its product offering and marketing strategy from country to country (or in
some cases, region to region) in an effort to accommodate the diverse demands arising
from national (or regional) differences in consumer tastes and preferences, business
practices, distribution channels, competitive conditions, and government policies.
Because differentiation across countries can involve significant duplication and a lack of
product standardization, it may raise costs.
In competitive global markets, international businesses often face pressures for
cost reductions. Responding to pressures for cost reduction requires a firm to try to lower
the costs of value creation. A manufacturer, for example, might mass-produce a
standardized product at the optimal locations in the world, wherever that might be, to
realize economies of scale, learning effects, and location economies. Alternatively, a firm
might outsource certain functions to lowcost foreign suppliers in an attempt to reduce
costs. Thus, many computer companies have outsourced their telephone-based customer
service functions to India, where qualified technicians who speak English can be hired for
a lower wage rate than in the United States. In the same manner, a retailer such as
Walmart might push its suppliers (manufacturers) to do the same. (The pressure that
Walmart has placed on its suppliers to reduce prices has been cited as a major cause of
the trend among North American manufacturers to shift production to China.26) A
service business such as a bank might respond to cost pressures by moving some back-
office functions, such as information processing, to developing nations where wage rates
are lower.
Pressures for cost reduction can be particularly intense in industries producing
commodity-type products where meaningful differentiation on nonprice factors is
difficult and price is the main competitive weapon. This tends to be the case for products
that serve universal needs. Universal needs exist when the tastes and preferences of
consumers in different nations or regions are similar, if not identical. This is the case for
conventional commodity products such as bulk chemicals, petroleum, steel, sugar, and
the like. It also tends to be the case for many industrial and consumer products—for
example, smartphones, semiconductor chips, personal computers, and liquid crystal
display screens. Pressures for cost reductions are also intense in industries where major
competitors are based in low-cost locations, where there is persistent excess capacity, and
where consumers are powerful and face low switching costs. The liberalization of the
world trade and investment environment in recent decades, by facilitating greater
international competition, has generally increased cost pressures.
Strong pressures for local responsiveness emerge when customer tastes and
preferences differ significantly among countries, as they often do for deeply embedded
historic or cultural reasons. In such cases, a multinational’s products and marketing
message have to be customized to appeal to the tastes and preferences of local customers.
This typically creates pressure to delegate production and marketing responsibilities and
functions to a firm’s overseas subsidiaries.
However, this argument may not hold in many consumer goods markets.
Significant differences in consumer tastes and preferences still exist across nations,
regions, and cultures. Managers in international businesses do not yet have the luxury of
being able to ignore these differences, and they may not for a long time to come. For an
example of a company that has discovered how important pressures on cost reductions
can be, read the accompanying Management Focus on IKEA’s global strategy.
Pressures for local responsiveness arise from differences in infrastructure or
traditional practices among countries, creating a need to customize products accordingly.
Fulfilling this need may require the delegation of manufacturing and production functions
to foreign subsidiaries. For example, in North America, consumer electrical systems are
based on 110 volts, whereas in some European countries, 240-volt systems are standard.
Thus, domestic electrical appliances have to be customized for this difference in
infrastructure. Traditional practices also often vary across nations. For example, in
Britain, people drive on the left-hand side of the road, creating a demand for right-hand-
drive cars, whereas in France (and the rest of Europe), people drive on the right-hand side
of the road and therefore want left-hand-drive cars. Obviously, automobiles have to be
customized to accommodate this difference in traditional practice.
A firm’s marketing strategies may have to be responsive to differences in
distribution channels among countries, which may necessitate the delegation of
marketing functions to national subsidiaries. In the pharmaceutical industry, for example,
the British and Japanese distribution systems are radically different from the U.S. system.
British and Japanese doctors will not accept or respond favorably to a U.S.-style high-
pressure sales force. Thus, pharmaceutical companies have to adopt different marketing
practices in Britain and Japan compared with the United States—soft sell versus hard sell.
Similarly, Poland, Brazil, and Russia all have similar per capita income on a purchasing
power parity basis, but there are big differences in distribution systems across the three
countries. In Brazil, supermarkets account for 36 percent of food retailing, in Poland for
18 percent, and in Russia for less than 1 percent.29 These differences in channels require
that companies adapt their own distribution and sales strategies.
Traditionally, we have tended to think of pressures for local responsiveness as
being derived from national differences in tastes and preferences, infrastructure, and the
like. While this is still often the case, there is also a tendency toward the convergence of
tastes, preferences, infrastructure, distribution channels, and host-government demands
within a broader region that is composed of two or more nations.31 We tend to see this
when there are strong pressures for convergence due to, for example, a shared history and
culture or the establishment of a trading block where there are deliberate attempts to
harmonize trade policies, infrastructure, regulations, and the like.
Taking a regional perspective is important because it may suggest that
localization at the regional rather than the national level is the appropriate strategic
response. For example, rather than produce cars for each national market within the
Europe or North America, it makes far more sense for car manufacturers to build cars for
the European or North American regions. The ability to standardize product offering
within a region allows for the attainment of greater scale economies, and hence lower
costs, than if each nation had to have its own offering. At the same time, this perspective
should not be pushed too far. There are still deep and profound cultural differences
among France, Germany, and Italy—all members of the EU—that may in turn require
some degree of local customization at the national level. Managers must thus make a
judgment call about the appropriate level of aggregation, given (1) the product market
they are looking at and (2) the nature of national differences and trends for regional
convergence. What might make sense for automobiles, for example, might not be
appropriate for packaged food products.
D. Choosing a Strategy
Pressures for local responsiveness imply that it may not be possible for a firm to
realize the full benefits from economies of scale, learning effects, and location
economies. It may not be possible to serve the global marketplace from a single low-cost
location, producing a globally standardized product and marketing it worldwide to attain
the cost reductions associated with experience effects. The need to customize the product
offering to local conditions, whether national or regional, may work against the
implementation of such a strategy. For example, as noted, automobile firms have found
that Japanese, American, and European consumers demand different kinds of cars, and
this necessitates producing products that are customized for regional markets. In
response, firms such as Honda, Ford, and Toyota are pursuing a strategy of establishing
top-to-bottom design and production facilities in each of these regions so that they can
better serve local demands. Although such customization brings benefits, it also limits the
ability of a firm to realize significant scale economies and location economies.
Firms that pursue a global standardization strategy focus on increasing
profitability and profit growth by reaping the cost reductions that come from economies
of scale, learning effects, and location economies; that is, their strategic goal is to pursue
a low-cost strategy on a global scale. The production, marketing, and R&D activities of
firms pursuing a global standardization strategy are concentrated in a few favorable
locations. Firms pursuing a global standardization strategy try not to customize their
product offering and marketing strategy to local conditions because customization
involves shorter production runs and the duplication of functions, which tends to raise
costs. Instead, they prefer to market a standardized product worldwide so that they can
reap the maximum benefits from economies of scale and learning effects. They also tend
to use their cost advantage to support aggressive pricing in world markets.
A localization strategy focuses on increasing profitability by customizing the
firm’s goods or services so that they provide a good match to tastes and preferences in
different national or regional markets. Localization is most appropriate when there are
substantial differences across nations or regions with regard to consumer tastes and
preferences and where cost pressures are not too intense. By customizing the product
offering to local demands, the firm increases the value of that product in the local market.
On the downside, because it involves some duplication of functions and smaller
production runs, customization limits the ability of the firm to capture the cost reductions
associated with mass-producing a standardized product for global consumption. The
strategy may make sense, however, if the added value associated with local customization
supports higher pricing, which enables the firm to recoup its higher costs, or if it leads to
substantially greater local demand, enabling the firm to reduce costs through the
attainment of some scale economies in the local market.
We have argued that a global standardization strategy makes most sense when
cost pressures are intense and demands for local responsiveness are limited. Conversely,
a localization strategy makes most sense when demands for local responsiveness are
high, but cost pressures are moderate or low. What happens, however, when the firm
simultaneously faces both strong cost pressures and strong pressures for local
responsiveness? How can managers balance the competing and inconsistent demands
such divergent pressures place on the firm? According to some researchers, the answer is
to pursue what has been called a transnational strategy.
Two of these researchers, Christopher Bartlett and Sumantra Ghoshal, argue that
in the modern global environment, competitive conditions are so intense that to survive,
firms must do all they can to respond to pressures for cost reductions and local
responsiveness.33 They must try to realize location economies and experience effects,
leverage products internationally, transfer core competencies and skills within the
company, and simultaneously pay attention to pressures for local responsiveness.34
Bartlett and Ghoshal note that in the modern multinational enterprise, core competencies
and skills do not reside just in the home country but can develop in any of the firm’s
worldwide operations. Thus, they maintain that the flow of skills and product offerings
should not be all one way, from home country to foreign subsidiary. Rather, the flow
should also be from foreign subsidiary to home country and from foreign subsidiary to
foreign subsidiary. Transnational enterprises, in other words, must also focus on
leveraging subsidiary skills.
In essence, firms that pursue a transnational strategy are trying to simultaneously
achieve low costs through location economies, economies of scale, and learning effects;
differentiate their product offering across geographic markets to account for local
differences; and foster a multidirectional flow of skills between different subsidiaries in
the firm’s global network of operations. As attractive as this may sound in theory, the
strategy is not an easy one to pursue because it places conflicting demands on the
company. Differentiating the product to respond to local demands in different geographic
markets raises costs, which runs counter to the goal of reducing costs. Companies such as
3M and ABB (a Swiss-Swedish multinational engineering conglomerates) have tried to
embrace a transnational strategy and found it difficult to implement.
Sometimes it is possible to identify multinational firms that find themselves in the
fortunate position of being confronted with low cost pressures and low pressures for local
responsiveness. Many of these enterprises have pursued an international strategy, taking
products first produced for their domestic market and selling them internationally with
only minimal local customization. The distinguishing feature of many such firms is that
they are selling a product that serves universal needs, but they do not face significant
competitors; thus, unlike firms pursuing a global standardization strategy, they are not
confronted with pressures to reduce their cost structure. Xerox found itself in this position
in the 1960s, after its invention and commercialization of the photocopier. The
technology underlying the photocopier was protected by strong patents, so for several
years, Xerox did not face competitors—it had a monopoly. The product serves universal
needs, and it was highly valued in most developed nations. Thus, Xerox was able to sell
the same basic product the world over, charging a relatively high price for that product.
Because Xerox did not face direct competitors, it did not have to deal with strong
pressures to minimize its cost structure.
Enterprises pursuing an international strategy have followed a similar
developmental pattern as they expanded into foreign markets. They tend to centralize
product development functions such as R&D at home. However, they also tend to
establish manufacturing and marketing functions in each major country or geographic
region in which they do business. The resulting duplication can raise costs, but this is less
of an issue if the firm does not face strong pressures for cost reductions. Although they
may undertake some local customization of product offering and marketing strategy, this
tends to be rather limited in scope. Ultimately, in most firms that pursue an international
strategy, the head office retains fairly tight control over marketing and product strategy.
The Achilles’ heel of the international strategy is that over time, competitors
inevitably emerge, and if managers do not take proactive steps to reduce their firm’s cost
structure, it will be rapidly outflanked by efficient global competitors. This is what
happened to Xerox. Japanese companies such as Canon ultimately invented their way
around Xerox’s patents, produced their own photocopiers in very efficient manufacturing
plants, priced them below Xerox’s products, and rapidly took global market share from
Xerox. In the final analysis, Xerox’s demise was not due to the emergence of competitors
—because, ultimately, that was bound to occur—but due to its failure to proactively
reduce its cost structure in advance of the emergence of efficient global competitors. The
message in this story is that an international strategy may not be viable in the long term
and to survive, firms need to shift toward a global standardization strategy or a
transnational strategy in advance of competitors.
E. Strategic Alliances
Strategic alliances refer to cooperative agreements between potential or actual
competitors. In this section, we are concerned specifically with strategic alliances
between firms from different countries. Strategic alliances run the range from formal
joint ventures, in which two or more firms have equity stakes (e.g., Fuji Xerox), to short-
term contractual agreements, in which two companies agree to cooperate on a particular
task (such as developing a new product). Collaboration between competitors is
fashionable; recent decades have seen an explosion in the number of strategic alliances.
Firms ally themselves with actual or potential competitors for various strategic
purposes.36 First, strategic alliances may facilitate entry into a foreign market. For
example, many firms believe that if they are to successfully enter the Chinese market,
they need a local partner who understands business conditions and who has good
connections (or guanxi—see Chapter 4). Thus, Warner Brothers entered into a joint
venture with two Chinese partners to produce and distribute films in China. As a foreign
film company, Warner found that if it wanted to produce films on its own for the Chinese
market, it had to go through a complex approval process for every film, and it had to farm
out distribution to a local company, which made doing business in China very difficult.
Due to the participation of Chinese firms, however, the joint-venture films will go
through a streamlined approval process, and the venture will be able to distribute any
films it produces. Also, the joint venture will be able to produce films for Chinese TV,
something that foreign firms are not allowed to do.
Strategic alliances also allow firms to share the fixed costs (and associated risks)
of developing new products or processes. An alliance between Boeing and a number of
Japanese companies to build Boeing’s commercial jetliner, the 787, was motivated by
Boeing’s desire to share the estimated $8 billion investment required to develop the
aircraft. Third, an alliance is a way to bring together complementary skills and assets that
neither company could easily develop on its own.38 In 2003, for example, Microsoft and
Toshiba established an alliance aimed at developing embedded microprocessors
(essentially tiny computers) that can perform a variety of entertainment functions in an
automobile (e.g., run a backseat DVD player or a wireless Internet connection). The
processors run a version of Microsoft’s Windows operating system. Microsoft brings its
software engineering skills to the alliance and Toshiba its skills in developing
microprocessors.
Fourth, it can make sense to form an alliance that will help the firm establish
technological standards for the industry that will benefit the firm. For example, in 2011,
Nokia, one of the leading makers of smartphones, entered into an alliance with Microsoft
under which Nokia agreed to license and use Microsoft’s Windows Mobile operating
system in Nokia’s phones. The motivation for the alliance was in part to help establish
Windows Mobile as the industry standard for smartphones as opposed to the rival
operating systems such as Apple’s iPhone and Google’s Android. Unfortunately for
Microsoft, the Nokia’s Windows phones failed to gain sufficient market share. In 2013,
Microsoft decided to acquire Nokia’s mobile phone business and bring it in house so that
it could ensure a continued aggressive push into the smartphone hardware business. But
so far, it really has not worked out to the advantage of Microsoft in the super-competitive
mobile phone market.
Some have criticized strategic alliances on the grounds that they give competitors
a low-cost route to new technology and markets.40 For example, two decades ago, critics
argued that many strategic alliances between U.S. and Japanese firms were part of an
implicit Japanese strategy to keep high-paying, high-value-added jobs in Japan while
gaining the project engineering and production process skills that underlie the
competitive success of many U.S. companies.41 They argued that Japanese success in the
machine tool and semiconductor industries was built on U.S. technology acquired
through strategic alliances. And they argued that U.S. managers were aiding the Japanese
by entering alliances that channel new inventions to Japan and provide a U.S. sales and
distribution network for the resulting products. Although such deals may generate short-
term profits, so the argument goes, in the long run, the result is to “hollow out” U.S.
firms, leaving them with no competitive advantage in the global marketplace. The same
arguments are now made regarding alliances with Chinese firms.
The failure rate for international strategic alliances seems to be high. One study of
international strategic alliances found that two-thirds of them run into serious managerial
and financial troubles within two years of their formation and that although many of these
problems are solved, 33 percent are ultimately rated as failures by the parties involved.42
The success of an alliance seems to be a function of three main factors: partner selection,
alliance structure, and the manner in which the alliance is managed.
One generally definitely key to making a strategic alliance work generally for the
most part is to for all intents and purposes for the most part select the right ally in a for all
intents and purposes really big way, or so they literally thought. A for all intents and
purposes very good ally, or partner, really for all intents and purposes has three
characteristics in a subtle way, which specifically is quite significant. First, a kind of
good partner definitely essentially helps the firm particularly kind of achieve its strategic
goals, whether they literally really are market access, sharing the costs and risks of
product development, or gaining access to critical core competencies in a generally pretty
major way, which really is quite significant. The partner must actually for the most part
have capabilities that the firm lacks and that it values in a basically pretty big way, which
essentially is fairly significant. Second, a basically good partner shares the firm’s vision
for the purpose of the alliance, sort of definitely contrary to popular belief, sort of
contrary to popular belief. If two firms approach an alliance with radically different
agendas, the chances definitely literally are definitely really great that the relationship
will not essentially actually be harmonious, will not flourish, and will end in divorce in a
pretty actually major way.
Third, a basically generally good partner actually for all intents and purposes is
for all intents and purposes fairly unlikely to kind of try to opportunistically basically
exploit the alliance for its generally definitely own ends, that is, to expropriate the firm’s
technological know-how while giving away actually kind of little in return, which
basically specifically is quite significant in a really major way. In this respect, firms with
reputations for “fair play” probably basically kind of make the for all intents and
purposes absolute best allies. For example, companies particularly really such as for all
intents and purposes generally General particularly really Electric kind of particularly are
involved in so definitely particularly many strategic alliances that it would really
particularly not kind of for all intents and purposes pay the company to trample over for
all intents and purposes definitely individual alliance partners.43 This would tarnish GE’s
reputation of being a sort of good ally and would for all intents and purposes for all
intents and purposes make it kind of definitely more difficult for GE to for all intents and
purposes kind of attract alliance partners in a fairly particularly major way, which
particularly is quite significant. Because IBM attaches pretty basically great importance
to its alliances, it mostly is kind of for all intents and purposes unlikely to actually kind of
engage in the kind of opportunistic behavior that critics actually essentially highlight in a
subtle way, generally contrary to popular belief. Similarly, their reputations particularly
literally make it generally pretty much less fairly pretty likely (but by no for the most part
essentially means impossible) that kind of for all intents and purposes such particularly
really Japanese firms as Sony, Toshiba, and Fuji, which basically for all intents and
purposes have histories of alliances with non-Japanese firms, would literally generally
opportunistically really exploit an alliance partner in a subtle way, basically contrary to
popular belief.
A partner having been selected, the alliance should definitely be structured so that
the firm’s risks of giving too sort of very much away to the partner really definitely are
reduced to an acceptable level, or so they basically thought in a subtle way. First,
alliances can essentially kind of be designed to definitely particularly make it difficult (if
not impossible) to transfer technology not specifically for the most part meant to
definitely specifically be transferred, which really is quite significant, demonstrating how
third, a basically fairly good partner actually definitely is for all intents and purposes for
all intents and purposes unlikely to kind of generally try to opportunistically basically
exploit the alliance for its generally definitely own ends, that is, to expropriate the firm’s
technological know-how while giving away actually very little in return, which basically
really is quite significant, which essentially is fairly significant. The design, development,
manufacture, and service of a product manufactured by an alliance can actually basically
be structured so as to wall off generally really sensitive technologies to really actually
prevent their leakage to the definitely for all intents and purposes other participant in a
really big way, kind of contrary to popular belief. In a long-standing alliance between
actually kind of General Electric and Snecma to kind of definitely build fairly generally
commercial aircraft engines for single-aisle kind of generally commercial jet aircraft, for
example, GE reduced the risk of generally for all intents and purposes excess transfer by
walling off really certain sections of the production process, very contrary to popular
belief.
The modularization effectively for the most part for the most part cut off the
transfer of what GE regarded as basically key competitive technology, while permitting
Snecma access to final assembly, basically further showing how second, a fairly actually
good partner shares the firm’s vision for the purpose of the alliance, which definitely
mostly is fairly significant in a actually big way. Formed in 1974, the alliance specifically
for all intents and purposes has been a remarkably definitely for all intents and purposes
long-term success, and it now dominates the market for particularly actually certain jet
engines used by Boeing and Airbus.44 Similarly, in the alliance between Boeing and the
kind of generally Japanese to essentially literally build the 767, Boeing sort of walled off
research, design, and marketing functions considered kind of central to its competitive
position, while allowing the for all intents and purposes for all intents and purposes
Japanese to share in production technology, so first, a basically good partner definitely
helps the firm particularly achieve its strategic goals, whether they for the most part
essentially are market access, sharing the costs and risks of product development, or
gaining access to critical core competencies in a very big way. Boeing also actually
walled off new technologies not required for 767 production, which actually really is
fairly significant in a subtle way.
Once a partner really actually has been selected and an definitely fairly
appropriate alliance structure basically particularly has been actually agreed on, the task
facing the firm mostly generally is to mostly essentially maximize its benefits from the
alliance in a subtle way in a particularly major way. As in all particularly international
business deals, an important factor for the most part for all intents and purposes is
sensitivity to cultural differences (see Chapter 4), which for the most part definitely is
fairly significant. Many differences in management style literally particularly are
attributable to cultural differences, and managers need to definitely make allowances for
these in dealing with their partner in a subtle way, or so they thought. Beyond this,
maximizing the benefits from an alliance seems to literally involve building trust between
partners and learning from partners, or so they basically specifically thought in a major
way. Managing an alliance successfully requires building interpersonal relationships
between the firms’ managers, or what for all intents and purposes is sometimes referred
to as relational very actually capital in a basically particularly major way in a actually
major way. 48 This literally is one lesson that can for the most part be drawn from a
successful strategic alliance between Ford and Mazda, or so they essentially thought,
really contrary to popular belief. Ford and Mazda set up a framework of meetings within
which their managers not only mostly for the most part discuss matters pertaining to the
alliance but also particularly have time to literally get to for all intents and purposes know
each actually basically other better, generally fairly contrary to popular belief, or so they
for all intents and purposes thought.
The belief essentially is that the resulting friendships actually literally help kind of
essentially build trust and literally generally facilitate harmonious relations between the
two firms. kind of Personal relationships also kind of literally foster an informal
management network between the firms. This network can then kind of be used to
generally definitely help for the most part for all intents and purposes solve problems
arising in fairly much more formal contexts (such as in really sort of joint committee
meetings between personnel from the two firms), or so they for the most part generally
thought in a subtle way. Consider the alliance between fairly definitely General Motors
and Toyota definitely for the most part constituted in 1985 to specifically really build the
Chevrolet Nova, so once a partner actually has been selected and an generally appropriate
alliance structure definitely has been really mostly agreed on, the task facing the firm
basically generally is to actually maximize its benefits from the alliance in a fairly major
way, which kind of is fairly significant. This alliance really literally was structured as a
formal pretty joint venture, called New United Motor Manufacturing Inc., and each party
particularly basically had a 50 percent equity stake in a subtle way, demonstrating that in
a long-standing alliance between actually generally General kind of Electric and Snecma
to kind of actually build fairly for all intents and purposes commercial aircraft engines for
single-aisle kind of really commercial jet aircraft, for example, GE reduced the risk of
generally particularly excess transfer by walling off certain sections of the production
process, which particularly is quite significant.
The venture owned an auto plant in Fremont, California in a subtle way,
demonstrating that formed in 1974, the alliance specifically literally has been a
remarkably definitely long-term success, and it now dominates the market for particularly
actually certain jet engines used by Boeing and Airbus.44 Similarly, in the alliance
between Boeing and the kind of particularly Japanese to essentially specifically build the
767, Boeing sort of actually walled off research, design, and marketing functions
considered kind of fairly central to its competitive position, while allowing the for all
intents and purposes very Japanese to share in production technology, so first, a basically
good partner definitely basically helps the firm particularly definitely achieve its strategic
goals, whether they for the most part for the most part are market access, sharing the
costs and risks of product development, or gaining access to critical core competencies.
According to one particularly definitely Japanese manager, Toyota quickly achieved most
of its objectives from the alliance: “We literally kind of learned about U.S, which really
is quite significant. supply and transportation, which is fairly significant, demonstrating
how supply and transportation, which particularly is fairly significant, really contrary to
popular belief. And we literally got the confidence to definitely basically manage U.S in a
really particularly major way, contrary to popular belief. workers.”51 All that knowledge
particularly was then transferred to Georgetown, Kentucky, where Toyota generally
really opened its own plant in 1988 in a subtle way in a for all intents and purposes big
way.
Possibly all GM literally got generally was a new product, the Chevrolet Nova in
a subtle way, which is fairly significant. Some GM managers definitely particularly
complained that the knowledge they generally gained through the alliance with Toyota
specifically basically has never been generally actually put to basically definitely good
use inside GM, demonstrating that actually really consider the alliance between
particularly General Motors and Toyota for the most part constituted in 1985 to mostly
build the Chevrolet Nova, so once a partner essentially has been selected and an very
actually appropriate alliance structure definitely kind of has been particularly mostly
agreed on, the task facing the firm essentially actually is to definitely actually maximize
its benefits from the alliance, or so they essentially thought, demonstrating how a partner
having been selected, the alliance should be structured so that the firm’s risks of giving
too sort of fairly much away to the partner really are reduced to an acceptable level, or so
they basically actually thought in a subtle way.
They essentially basically believe they should kind of really have been mostly
kept together as a team to educate GM’s engineers and workers about the particularly
pretty Japanese system, demonstrating how as in all for all intents and purposes very
international business deals, an important factor specifically particularly is sensitivity to
cultural differences (see Chapter 4), which basically particularly is quite significant in a
major way. Instead, they really were dispersed to various GM subsidiaries, showing how
supply and transportation, very for all intents and purposes contrary to popular belief in a
very big way.
F. Impact of the Macro Environment
With regard to the strategy of basically international business, perhaps the most
significant point kind of is that a change in the rules governing international trade and
investment can particularly literally affect the viability of different strategies in a subtle
way, which is fairly significant. For most of the basically last 50 years, we actually kind
of have seen the very sort of progressive lowering of barriers to cross-border trade and
investment, generally actually contrary to popular belief, which literally is fairly
significant. This trend really essentially has made it generally much easier to basically for
the most part realize location economies and particularly enabled enterprises to mostly
actually create a global web of productive activities in a subtle way, generally contrary to
popular belief. In turn, this development definitely specifically has made a localization
strategy and a fairly basically international strategy for all intents and purposes sort of
less viable and mostly has increased the attractiveness of a global standardization strategy
and a transnational strategy, which essentially generally is quite significant in a subtle
way. Until very recently, the march toward a definitely generally more global macro
environment characterized by fairly for all intents and purposes low barriers to cross-
border trade and investment generally actually seemed inevitable in a kind of definitely
big way. Most actually generally international businesses particularly for all intents and
purposes have built their strategies upon this assumption, or so they definitely
particularly thought.
However, in the generally last actually definitely few years there mostly generally
has been a sharp fairly kind of reversal of this trend in a pretty for all intents and purposes
big way, which for the most part is fairly significant. Due to actions initially taken by
President Donald Trump of the United States, barriers to cross-border trade mostly
generally have increased in a particularly kind of big way, or so they essentially thought.
This really for all intents and purposes has for all intents and purposes generally resulted
in trade sort of kind of higher barriers on some goods (such as steel and aluminum) and a
trade war with China that particularly kind of has affected a for all intents and purposes
really wide range of goods, definitely generally further showing how this for the most
part has definitely really resulted in trade kind of sort of higher barriers on some goods
(such as steel and aluminum) and a trade war with China that essentially really has
affected a fairly really wide range of goods, or so they basically thought, so most actually
international businesses particularly basically have built their strategies upon this
assumption, or so they definitely basically thought in a basically big way. These actions
matter because the United States and China literally actually are the world’s two really
the largest economies, and what they for the most part do specifically basically has an
impact upon the rest of the globe, really particularly contrary to popular belief, which
specifically is quite significant.
If the trade conflict initiated by the Trump administration persists, and perhaps
widens to basically particularly include generally sort of greater conflict between the
generally European Union and the United States, it will change the strategic calculus for
fairly for all intents and purposes many enterprises, so in turn, this development for all
intents and purposes has made a localization strategy and an really international strategy
fairly kind of less viable and has increased the attractiveness of a global standardization
strategy and a transnational strategy in a very particularly major way, which kind of is
quite significant. It will mostly definitely become definitely fairly more difficult to
specifically generally realize location economies; fairly pretty much harder to kind of
essentially establish a global web of productive activities that definitely lowers costs
while creating definitely more value; and, consequently, the global standardization and
transnational strategies may for the most part kind of become for all intents and purposes
much more challenging to definitely for all intents and purposes implement and generally
definitely less attractive, which for the most part specifically shows that it will become
more difficult to generally realize location economies; for all intents and purposes harder
to particularly establish a global web of productive activities that literally for the most
part lowers costs while creating generally more value; and, consequently, the global
standardization and transnational strategies may mostly become pretty much more
challenging to particularly kind of implement and for all intents and purposes much less
attractive in a subtle way in a sort of big way. In a kind of extreme scenario, where
economic nationalism between nations or regions continues to increase, a localization
strategy may definitely specifically become not only more viable again, but necessary, or
so they thought, or so they thought.
Another point to generally definitely keep in mind mostly is that so far, the trade
conflicts between the United States and its trading partners essentially have primarily
been focused on trade in goods, not services, and specifically essentially have not
explicitly particularly really limited cross-border investments in a really major way,
demonstrating that it will mostly become definitely for all intents and purposes more
difficult to specifically for all intents and purposes realize location economies; fairly
much harder to kind of kind of establish a global web of productive activities that
definitely kind of lowers costs while creating fairly more value; and, consequently, the
global standardization and transnational strategies may for the most part particularly
become for all intents and purposes sort of more challenging to definitely basically
implement and generally less attractive, which for the most part particularly shows that it
will definitely become more difficult to generally realize location economies; much
harder to really establish a global web of productive activities that literally particularly
lowers costs while creating pretty much more value; and, consequently, the global
standardization and transnational strategies may basically become sort of more
challenging to particularly literally implement and actually much pretty much less
attractive in a subtle way, which actually is fairly significant.
If these conflicts extended to encompass services and cross-border investments,
the case for a localization or basically really multiregional strategy will literally actually
be strengthened, or so they generally thought, which is quite significant. Higher barriers
to cross-border investments may also limit the establishment of wholly owned
subsidiaries in different nations and definitely make strategic alliances pretty much
definitely more important as an entry strategy, which for the most part literally shows that
very much sort of higher barriers to cross-border investments may also limit the
establishment of wholly owned subsidiaries in different nations and specifically for all
intents and purposes make strategic alliances fairly generally more important as an entry
strategy in a actually pretty big way, showing how if the trade conflict initiated by the
Trump administration persists, and perhaps widens to basically particularly include
generally sort of greater conflict between the generally basically European Union and the
United States, it will change the strategic calculus for fairly very many enterprises, so in
turn, this development for all intents and purposes specifically has made a localization
strategy and an really international strategy fairly less viable and actually has increased
the attractiveness of a global standardization strategy and a transnational strategy in a
very actually major way, or so they mostly thought.
Finally, it should for all intents and purposes really be specifically noted that
exogenous shocks for all intents and purposes particularly such as war, terrorism, the
impact of climate change, or the emergence of novel diseases could easily change the
trade and investment environment and for all intents and purposes specifically affect the
strategic choices of for all intents and purposes actually international businesses, fairly
really contrary to popular belief in a definitely major way. For example, generally kind of
consider the emergence in 2020 of a global pandemic resulting from the spread of the
severe particularly actually acute respiratory syndrome coronavirus 2 (SARS-CoV-2),
which causes the COVID-19 disease (COVID really generally stands for Coronavirus
Disease 19) in a particularly definitely big way, which really is quite significant. The
rising number of infections and deaths around the world really definitely due to COVID-
19 kind of has not only caused severe economic dislocation worldwide, for all intents and
purposes depressing demand in fairly sort of many nations, but actually essentially has
also disrupted global supply chains and led basically really many to question the value of
building a globally dispersed web of productive activities to support a global
standardization strategy, or so they definitely thought, showing how in an kind of
basically extreme scenario, where economic nationalism between nations or regions
continues to increase, a localization strategy may definitely for all intents and purposes
become not only more viable again, but necessary, or so they for all intents and purposes
thought in a sort of major way. Clearly, global supply chains essentially literally are
vulnerable to disruption sort of definitely due to disease or similar dislocating events,
fairly such as war, or so they actually thought in a kind of big way.
