Production shifting. Flexible factories and excess capacity and suppliers can be
used to shift production from region to region to take advantage of current circumstances.
As exchange rates, labor cost, and so on, change, manufacturing can be
relocated.
Information sharing. Having an increased presence in many regions and markets
often will increase the availability of information, which can be used to anticipate
market changes and find new opportunities.
Global coordination. Having multiple facilities worldwide provides a firm with a
certain amount of market leverage that it might otherwise lack. If a foreign competitor
attacks one of your main markets, you can attack back. Of course, various
international laws and political pressures place limits on this type of retaliation.
Political leverage. The opportunity to move operations rapidly gives firms a measure
of political leverage in overseas operations. For example, if governments are
lax in enforcing contracts or international law, or present expensive tax alternatives,
firms can move their operations. In many cases, the implicit threat of movement
is sufficient to prevent local politicians from taking unfavorable actions.
Production shifting. Flexible factories and excess capacity and suppliers can be
used to shift production from region to region to take advantage of current circumstances.
As exchange rates, labor cost, and so on, change, manufacturing can be
relocated.
Information sharing. Having an increased presence in many regions and markets
often will increase the availability of information, which can be used to anticipate
market changes and find new opportunities.
Global coordination. Having multiple facilities worldwide provides a firm with a
certain amount of market leverage that it might otherwise lack. If a foreign competitor
attacks one of your main markets, you can attack back. Of course, various
international laws and political pressures place limits on this type of retaliation.
Political leverage. The opportunity to move operations rapidly gives firms a measure
of political leverage in overseas operations. For example, if governments are
lax in enforcing contracts or international law, or present expensive tax alternatives,
firms can move their operations. In many cases, the implicit threat of movement
is sufficient to prevent local politicians from taking unfavorable actions.
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