Firms that pursue such a strategy can realize what we refer to as location economies, which are the economies that arise from performing a value creation activity in the optimal location for that activity, wherever in the world that might be (transportation costs and trade barriers permitting).
Locating value creation activities in optimal locations for that activity can have one of two effects:
Can lower the costs of value creation and/or
Can enable a firm to differentiate its product offering from those of competitors.