ABSTRACT
Global presence by itself does not confer global competitive advantage. Global presence makes available to the firm’s managers five value-creation opportunities: to adapt to local market differences, to exploit economies of global scale, to exploit economies of global scope, to tap optimal locations for activities and resources, and to maximize knowledge transfer across locations. However, each of these opportunities is associated with significant obstacles and challenges that often prevent firms from exploiting them optimally. To overcome these challenges, managers need to adopt a two-step approach for analysis and action. They should first evaluate the optimality of the firm’s global network for each value-chain activity along the dimensions of activity architecture, competencies at the locations, and coordination across locations. Based on this evaluation, they should then design and execute actions to mitigate or eliminate the suboptimalities.
