The primary tension companies face when going global is between economies of scale and localresponsiveness. This arcle provides a framework of approaching global integraon. The framework isnamed the AAA Triangle.A: Adaptaon, boosng revenues and market share by maximizing a rm’s local relevance.A: Aggregaon, bene ts from economies of scale by standardizing the product regionally or globally.A: Arbitrage, exploing di”erences between naonal and regional markets by locang supply chains indi”erent markets. (Call centers in India, factories in China)The AAA Triangle serves as a kind of strategy map for managers.The percentage of sales spent on adversement representsadaptaon.The percentage of sales spent on R&D representsaggregaon.The percentage of sales spent of labor represents arbitrage.Most companies will emphasize di”erent A’s at di”erent
Download Conclusion of the arcle : Focus on one or two A’sMake sure the new elements of a strategy are a good t organizaonallyWhile this isn’t a xed rule, if your strategy does embody new elements, you should pay a.enon tohow well they work with other things the organizaon is doing.Employ mulple integraon mechanismsPursuit of more than one of the A’s requires creavity and breadth in thinking about integraonmechanisms. Given the stakes, these factors can’t be le2 to chance.Think about externalizing integraonNot all integraon required to add value across borders needs to occur within the organizaon.Know when not to integrateSome integraon is always a good idea, however this doesn’t mean that more integraon is be.er. First,very ghtly coupled systems are not parcularly 4exible. Second, even when many diverse acvies arehoused within one organizaon, keeping them apart may be be.er than forcing them together. points of their evoluon. Companies will not be able to pursue all three A’s at once, companies shouldfocus on one or two A’s.There are serious constraints on the ability of any organizaon to use all three A’s with greate”ecveness. First, the complexity of doing so collides with limited managerial bandwidth. Second,many people think an organizaon should only have one culture. Third, competors can force acompany to choose which dimension it is going to beat them on. Finally, external relaonships may havefocusing e”ects as well.For a company to even contemplate an AAA strategy, it must be operang in an environment which thetensions among adaptaon, aggregaon and arbitrage are weak
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