Agenda

1
Agenda

• Last week
• Review Keiretsu model of Transnational
  organization
• Transnational Production Networks
• Headquarters
• RD
• Production
• Subcontracting
• Garment Industry video
• This week
• Exam
• Strategic Alliances
• Economic landscape
• TNCs States

2
Exam

• Chaps 7-9, 18
• Chaps 10-14 stockyards
• Student seminars
• Chaps 5-6 in support of the above

3
SubContracting

• Commercial subcontracting
• Entire product
• To spec, under principals brand name
• Retailer buyer-driven production network
• Producer producer-driven production network
• Industrial subcontracting
• Processes OR components
• Plating, packaging OR accessory parts (buttons
  zips)
• OEM vs. Aftermarket auto parts

4
Motives for Subcontracting

• Specialty subcontracting
• Specialty products or processes
• Cost-saving subcontracting
• E.g. sweatshop labour
• Complementary/intermittant
• Employment/capacity buffer

5
Relationships with subcontractors

• Principal may provide
• Materials
• Specs technical advice
• Finance or capital equipment
• Cooperation between subcontractor and principal
  in design
• Proximity may be important
• Domestic or international

6
Strategic Alliances

• Collaboration across borders
• Between competitors
• New rivalry, competition collaboration
• Joint Venture
• Networks of alliances
• Constellations of economic power
• Collective competition

7
Strategic Alliances as Constellations
in the Computer Industry

• Imagine the second tier of subcontractors!
• Note international links
• No archrivals

8
Motives for Strategic Alliances

• Specific strategic objective
• Sharing risk
• Sharing consequences rewards/costs
• Research
• Cooperation/universities/venture capital
• Technology
• Sharing/cooperation/licensing
• Market
• Access, service infrastructure, promotion

9
Economic Landscape
10
Economic Landscape

• Intra-organizational networks
• HQ, RD Labs, Production, Service agents
• Interorganizational networks
• SMEs, Multilocational firms, TNCs
• Localized clusters
• Firm-place relations (symbiosis)
• Place-place relations
• Embedded in regions

11
TNCs and States Issues

• Size of TNCs and states
• Cooperative and competing
• Supportive and conflictual

12
Conflicting Objectives

• How are TNC/state objectives in conflict?
• Performance
• Technology
• High order functions
• Responsiveness
• (to whom?)

13
Regulatory Arbitrage

• What is regulatory?
• What is arbitrage?
• What is regulatory arbitrage
• Belfast Public Abattoir c. 1890s

14
TNCs Host Economies

• Fig. 9.2!
• Nature of the subsidiary
• Mode of entry
• Function
• Local resource processing
• Import substitution
• Export platform

15
TNCs Host Economies

• Potential Areas of Conflict
• Capital
• Transfer pricing
• Technology
• Know-how but not know-why
• Appropriate technology
• Trade and linkages
• Concentration
• Employment

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17
TNCs Home Economies

• Employment impact of Outward Investment

18
Bargaining Power TNCs States

• Upon entry
• Michelin bill
• To reduce exit
• Vote with their feet

19
Locational Tournaments

• Macromarketing
• Competitive bidding for investment