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The Strategic Assembly of Global Firms: A Micro-Structural Analysis of Local Learning and Global Adaptation

The Strategic Assembly of Global Firms: A Micro-Structural Analysis of Local Learning and Global Adaptation . Mitchell Koza , Rutgers Univ Stephen Tallman, Univ of Richmond Aylin Ataay , Galatasaray Univ. Strategic Assembly.

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The Strategic Assembly of Global Firms: A Micro-Structural Analysis of Local Learning and Global Adaptation

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  1. The Strategic Assembly of Global Firms: A Micro-Structural Analysis of Local Learning and Global Adaptation Mitchell Koza, Rutgers Univ Stephen Tallman, Univ of Richmond AylinAtaay, GalatasarayUniv

  2. Strategic Assembly The process of constructing a business firm in a calculated and forward-looking manner with the intention of gaining and maintaining competitive advantage under the dynamic environmental and competitive conditions facing that firm

  3. The Global Multi-Business Firm • Move the concept of the international firm beyond the traditional Multi-National Firm or B&G’s Trans-National Firm • A firm to match a chaotic environment – in which neither direction nor rate of change is predictable • A co-evolutionary model of the modern international firm

  4. Globalization Stages and Organizing Structures The Multinational The Transnational The GMBF Global HQ Local Unit Local Unit Local Unit Local Unit Global HQ Global HQ Local Unit Local Unit

  5. Managing the Globalization Stages

  6. Strategic Assembly – What Assets? • Access to the services of resources and capabilities, not ownership of the assets • What is strategic and what is complementary requires careful analysis • Avoiding resource and capability traps to maintain flexibility and innovation • Assembling a network of accessible, productive, technologically advanced assets

  7. Strategic Assembly – Where Are These Assets? • Comparative advantage in productivity • Separation of market and value-adding site • Global logistics networks as a core competency • Focus on the city-region with “Nation” as part of the background • Fading of the Industrial Triad concept

  8. Governing Strategic Assembly – Access, Capture, or Control? • Hierarchical command and control losing relevance compared to contract/network speed and adaptability • Innovation and flexibility over protection of assets and rents • Competitive advantage from organizing skills rather than production skills • The “Apple Model”

  9. The Intent of Strategic Assembly– Why These Assets? • Strategic intent in a co-evolutionary world • Need to retain world-wide flexibility and local competitiveness • Market seeking vs. asset seeking vs. capability building • Command without control; control without command

  10. Renault in Turkey – Strategic Assembly in an Emerging Market • Case method • Semi-structured interviews in Turkey • Archival data • Interviews at Group Renault • Strategic assembly of Renault in Turkey • Group Renault as an evolved GMBF • Co-evolutionary processes observable

  11. Renault in Turkey – Strategic Assembly in an Emerging Market • Entry, growth, and domination in Turkey • Seen as key market since 1960s • OYAK-Renault (51% owned) • Largest Renault plant outside EU • Production for local market and export • 119 local and international suppliers • Mais International • Sales and marketing JV in Turkey • Leading car distributor in Turkey

  12. Renault in Turkey – Strategic Assembly in an Emerging Market • Corporate renewal and global positioning • Model plant • 5 different car models • Closely integrated operations and HR • R&D center established in 2009 for processes • Supplier of managerial talent to France and to other ME/NA locations; site for successful expat learning experiences • Regional training and development center

  13. Turkey and Overcoming “NIH” in Making Renault a GMBF “I and several of my colleagues were convinced that we needed to value input and innovation from our overseas, especially emerging market, operations. Our traditional insularity was becoming an obstacle to our plans and ambitions. I am proud to have contributed to managing this in a constructive way with our colleagues in Turkey and elsewhere. Renault is a better company because of it.” – Private Communication from a Renault Board Member

  14. Group Renault & Strategic Assembly • Asset Identification • Co-specialization & synergy of GR and Renault-Turkey (Oyak-Renault & Mais Int’l) • R-T competencies in emerging markets match Renault expansion strategy • Location • Early: Large emerging market, Eurasian location • Later: Production for local and export, supplier networks, process knowhow • Structure: Equity joint ventures with Oyak (tied to Turkish Army) • Purpose • Enter and dominate Turkish market • Produce and then assist design for export to France • Training and experiential capabilities

  15. Conclusion: Managing the GMBF • Strategic assets and the external environment • Avoiding resource traps on a regular basis • Dynamic capabilities for learning and innovation; real options on location and activity • Assembly, disassembly, and reassembly on the fly and under competitive pressure

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