In [[M21-S8 - Article - Managing Differences]] the AAA triangle is defined to include three measures to manage differences in 'distance' between companies (see [[M21-S2 - Article - Distance Still Matters]]):

* [[Aggregation]]
** With the strategy of //Aggregation// a company tries to achieve economies of scale by standardizing regional or global operations.
* [[Adaptation]]
** With the strategy of //Adaptation// a company tries to boost market share by adapting process and offerings to meet local needs.
* [[Arbitrage]]
** With the strategy of //Arbitrage// a company exploits differences and local strengths, for instance by outsourcing labor to lower wages countries.

The percentage of sales spend on advertising is a metric on how important [[Adaptation]] is for the company. The percentage of R&D is an indication of the importance for [[Aggregation]] and the percentage spent on labor helps gauge the importance of [[Arbitrage]].

<<image /static/files/MBI/Module%2021/aaa_triangle.png width:600>>

||[[Adaptation]]|[[Aggregation]]|[[Arbitrage]]|h
|''Competitive advantage''<br>//Why globalize at all?//|To achieve local relevance through national focus while exploiting some economies of scale|To achieve economies of scale and scope through international standardization|To achieve absolute economies through international specialization|
|''Configuration''<br>//Where should we locate operations overseas?//|Mainly in foreign counties that are similar to the home base, to limit the effects of cultural, administrative, geographic and economic distance|Same as adaptation|In a more divers set of countries, to exploit some elements of distance|
|''Coordination''<br>//How should we connect international operations?//|By country, with emphasis on achieving local presence withing borders|By business, region or customer, with emphasis on horizontal relationships for cross border economies of scale|By function with emphasis on vertical relationships, even across organizational boundaries|
|''Controls''<br>//What types of extremes should we watch for?//|Excessive variety or complexity|Exessive standardization, with emphasis on scale|Narrowing spreads|
|''Change Blockers''<br>Whom should we watch out for internally?|Entrenched country chiefs|All-powerful unit, regional or account heads|Heads or key functions|
|''Corporate Diplomacy''<br>//How should we approach corporate diplomacy//|Address issues of concern but proceed with discretion, given the emphasis on cultivating local presence|Avoid the appearance of homohenization or hegemonism (especially for U.S. companies), ben senistive to any backlash|Address the exploitation or displacement of suppliers, channels or intermediaries, which are potentially most prone to political disruption.|
|''Corporate Strategy''<br>What strategic levers do we have?|Scope selection<br>Variation<br>Decentralisation<br>Partitioning<br>Modularization<br>Flexibility<br>partnership<br>Recombination<br>Invocation|Regions and other country groupings<br>Products or business<br>Function<br>Platform<br>Competence<br>|Cultural (country of origin effects)<br>Administrative (taxes, regulations, security)<br>Geographic(distances, climate)<br>Economic (Differences in prices, resources, knowledge)|

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mbi_public
created
Thu, 05 Jan 2012 14:32:15 GMT
creator
dirkjan
modified
Thu, 05 Jan 2012 14:32:15 GMT
modifier
dirkjan
tags
M21
Model
Term
creator
dirkjan