Competition in Global Industries
Edited volume
Summary
The reference has not verified this book in detail; the summary states only what the title, author and subject establish.
Porter edited this volume of research on how firms compete internationally, based on a Harvard Business School colloquium, with contributions from scholars in strategy, economics and international business.
Porter's own framing chapter makes the analytical distinction the book rests on. He separates multidomestic industries, where competition in each country is essentially independent and a firm's position in one market does not affect its position in another, from global industries, where a firm's competitive position in one country is materially affected by its position elsewhere. The strategic implications differ entirely: in a multidomestic industry a firm should manage each country as a standalone business, while in a global industry it must coordinate across countries and can gain advantage from that coordination.
His analytical tool is the configuration and coordination framework. Configuration concerns where activities in the value chain are performed, ranging from concentrated in one location to dispersed across many. Coordination concerns how tightly activities in different locations are linked. A firm can concentrate research and manufacturing while dispersing sales, or disperse everything with high coordination, and each combination produces different advantages and costs.
Other contributions cover industry case studies, the role of governments, technology transfer, alliances and the coordination problems in managing multinational organisations.
The volume is academic and from 1986, so the specific industries and the international environment described are dated. The multidomestic versus global distinction and the configuration and coordination framework entered the strategy literature and remain in use. Porter developed the national dimension further in The Competitive Advantage of Nations.
Key takeaways 7
- Multidomestic industries permit independent country-by-country competition while global industries link a firm's position across markets.
- The distinction determines whether a firm should manage countries as standalone businesses or coordinate across them.
- Configuration concerns where value chain activities are performed and ranges from concentrated to dispersed.
- Coordination concerns how tightly activities in different locations are linked, and it is a separate decision from where they are located.
- A firm can concentrate some activities while dispersing others, and the correct pattern differs by activity rather than by firm.
- Advantage in a global industry can come from coordination itself rather than from the location of any individual activity.
- Government policy affects international competition through its effect on configuration choices rather than only through trade barriers.
Who should read it
Executives designing international operations who need the framework for deciding what to concentrate, what to disperse and what to coordinate.
About Michael E. Porter
Bishop William Lawrence University Professor Emeritus, Harvard Business School; founder, Institute for Strategy and Competitiveness
Competitive Strategy and the five-forces framework are the primary source for industry analysis, and Competitive Advantage supplied the value-chain vocabulary the field still uses.
Harvard Business School, Institute for Strategy and Competitiveness
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