Agenda
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Last week:
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Review Keiretsu model of Transnational organization
Transnational Production Networks
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Headquarters
R&D
Production
Subcontracting
Garment Industry video
This week:
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Exam
Strategic Alliances
Economic landscape
TNCs & States
Exam
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Chaps 7-9, 18
Chaps 10-14 + stockyards
Student seminars
Chaps 5-6 in support of the above
SubContracting
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Commercial subcontracting
• Entire product
• To spec, under principal’s brand name
• Retailer – buyer-driven production network
• Producer – producer-driven production network
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Industrial subcontracting
• Processes OR components
• Plating, packaging OR accessory parts (buttons & zips)
• OEM vs. Aftermarket auto parts
Motives for Subcontracting
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Specialty subcontracting
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Cost-saving subcontracting
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Complementary/intermittant
• Specialty products or processes
• E.g. sweatshop labour
• Employment/capacity buffer
Relationships with subcontractors
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Principal may provide:
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Cooperation between subcontractor and
principal in design
Proximity may be important
Domestic or international
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• Materials
• Specs & technical advice
• Finance or capital equipment
Strategic Alliances
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Collaboration across borders
Between competitors
• New rivalry, competition & collaboration
Joint Venture
Networks of alliances
• Constellations of economic power
• Collective competition
Strategic Alliances as Constellations
in the Computer Industry
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Imagine the
second tier of
subcontractors!
Note
international
links
No archrivals
Motives for Strategic Alliances
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Specific strategic objective
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Sharing risk
Sharing consequences: rewards/costs
Research
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Cooperation/universities/venture capital
Technology
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Sharing/cooperation/licensing
Market
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Access, service infrastructure, promotion
Economic Landscape
Economic Landscape
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Intra-organizational networks
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Interorganizational networks
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Localized clusters
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Embedded in regions
• HQ, R&D Labs, Production, Service agents
• SME’s, Multilocational firms, TNCs
• Firm-place relations (symbiosis)
• Place-place relations
TNCs and States: Issues
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Size of TNCs and states
Cooperative and competing
Supportive and conflictual
Conflicting Objectives
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How are TNC/state objectives in
conflict?
• Performance
• Technology
• High order functions
• Responsiveness
• (to whom?)
Regulatory Arbitrage
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What is regulatory?
What is arbitrage?
What is regulatory arbitrage
Belfast Public Abattoir c. 1890s
TNCs & Host Economies
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Fig. 9.2!
Nature of the subsidiary:
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Function
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• Mode of entry
• Local resource processing
• Import substitution
• Export platform
TNCs & Host Economies
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Potential Areas of Conflict:
• Capital
• Transfer pricing
• Technology
• ‘Know-how’ but not ‘know-why’
• Appropriate technology
• Trade and linkages
• Concentration
• Employment
TNCs & Home Economies
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Employment impact of Outward
Investment
Bargaining Power: TNCs & States
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Upon entry
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To reduce exit
• Michelin bill
• Vote with their feet
Locational Tournaments
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Macromarketing
Competitive bidding for investment