Decision 2: Where in the World Should Value-Adding Activities Be Located?
A second key decision that firms face is whether to keep each value-adding activity in the home country or locate it in a foreign country. Configuration of value-adding activity refers to the pattern or geographic arrangement of locations where the firm carries out value-chain activities.5 Instead of concentrating value-adding activities in their home country, many firms configure them across the world to save money, reduce delivery time, access factors of production, or extract maximum advantages relative to competitors.
This helps explain the migration of manufacturing industries from Europe, Japan, and the United States to emerging markets in Asia, Latin America, and ...
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