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Summary of the article “Managing Differences

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The primary tension companies face when going global is between economies of scale and local responsiveness. This arcle provides a framework of approaching global integraon. The framework is named the AAA Triangle. A: Adaptaon, boosng revenues and market share by maximizing a rm’s local relevance. A: Aggregaon, bene ts from economies of scale by standardizing the product regionally or globally. A: Arbitrage, exploing di”erences between naonal and regional markets by locang supply chains in di”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 adversement represents adaptaon. The percentage of sales spent on R&D represents aggregaon. The percentage of sales spent of labor represents arbitrage. Most companies will emphasize di”erent A’s at di”erent out of 3  Download Conclusion of the arcle : Focus on one or two A’s Make sure the new elements of a strategy are a good t organizaonally While this isn’t a xed rule, if your strategy does embody new elements, you should pay a.enon to how well they work with other things the organizaon is doing. Employ mulple integraon mechanisms Pursuit of more than one of the A’s requires creavity and breadth in thinking about integraon mechanisms. Given the stakes, these factors can’t be le2 to chance. Think about externalizing integraon Not all integraon required to add value across borders needs to occur within the organizaon. Know when not to integrate Some integraon is always a good idea, however this doesn’t mean that more integraon is be.er. First, very ghtly coupled systems are not parcularly 4exible. Second, even when many diverse acvies are housed within one organizaon, keeping them apart may be be.er than forcing them together. points of their evoluon. Companies will not be able to pursue all Read More …

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