Porter (1986)

Management > Crisis Management > Lectures > Independent Research > Porter > The Value Chain > The Value System > Competitive Scope > Configuration/Co-ordination

Configuration and co-ordination of activities

A firm needs to decide how to spread the activities in its value chain across the world.
On the chain, the downstream activities create competitive advantages that are country specific, such as brand name and reputation. Pg16
Competitive advantage in the support and upstream activities “grows more out of the entire system of countries” in which a firm competes, rather than its position in one of them. (They follow general firm-specific rules, enabling the company to maintain a global strategy, while the downstream activities aid in local responsiveness)

This means that if the competitive advantage of a firm emphasises downstream activities, a multidomestic strategy would be better suited, as it allows greater autonomy to subsidiaries to tailor its marketing of the firm’s products to local tastes.

Conversely, if a firm’s competitive advantage depends on upstream and support activities, global strategies are prevalent. Pg17

Configuration – where activities are performed and in how many places (concentrated/dispersed)
Co-ordination – how like activities are performed (none – full autonomy to subsidiaries, decentralised control/high – no autonomy to subsidiaries, centralised control)

There are usually more choices for how to co-ordinate activities than how to configure them.

When applied to the value chain, all activities need to be evaluated with regards to each of their configuration and co-ordination. For example, R&D needs to be considered in terms of configuration, such as where to locate it and how many locations to have. Co-ordination issues include the extent of interchange between R&D centres.

Configuration and co-ordination of activities continued