Managing Differences: The Central Challenge of Global Strategy

Question 1

What are the three A’s of global strategy options?

Answer 1

1. Adaptation
2. Aggregation
3. Arbitrage

Question 2

adaptation

Answer 2

seeks to boost revenues and market share by maximizing a firm’s local relevance.

Question 3

aggregation

Answer 3

To achieve scale and scope economies through international standardization

Question 4

arbitrage

Answer 4

exploitation of differences between national or regional markets, often by locating separate parts of the supply chain in different places

To achieve absolute econo- mies through international specialization

Question 5

heavy investment in advertising indicates a possible need for _______________________

Answer 5

adaptation to local markets

Question 6

R&D focus suggests ___________ for its economies of scale

Answer 6

aggregation

Question 7

A preponderance of labor expenses hints at ____________

Answer 7

arbitrage

Question 8

describe AA: Aggregation and Arbitrage with regards to global, regional, and nearshore centers

Answer 8

*The global centers (India & China) serve large customers and have breadth and depth of skill, very high scales, and mature coding and quality control processes.

*The regional centers (Uruguay, Brazil, and Hungary) have medium scales, select capabilities, and an emphasis on addressing language and cultural challenges.

*The nearshore centers (such as those in Boston and Phoenix) have small scales and focus on building customer comfort through proximity.

Question 9

The Challenges of Trifecta (Following 3 A’s at once) (4)

Answer 9

1. The complexity of doing so collides with limited managerial bandwidth.
2. Many people think an organization should have only one culture, and that can get in the way of hitting multiple strategic targets.
3. Capable competitors can force a company to choose which dimension it is going to try to beat them on.
4. External relationships may have a focusing effect as well.
   –> For instance, several private label manufacturers whose businesses were built around arbitrage have run into trouble because of their efforts to aggregate as well as arbitrage by building up their own brands in their customers’ markets.

Question 10

AAA competitive map for diagnostic imaging (3 points)

Answer 10

1. Philips Medical Systems, the smallest of the big three diagnostic imaging firms, historically emphasized adaptation but has recently placed some focus on aggregation.
2. Siemens Medical Solutions emphasizes aggregation and uses some arbitrage.
3. The most successful of the three, GE Healthcare, beats each of its rivals on two out of the three A’s.