Dirkjan: Created page with "In M21-S8 - Article - Managing Differences the AAA triangle is defined to include three measures to manage differences in 'distance..."

2020-08-25T08:15:45Z

Created page with "In M21-S8 - Article - Managing Differences the AAA triangle is defined to include three measures to manage differences in 'distance..."

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In [[M21-S8 - Article - Managing Differences|M21-S8 - Article - Managing Differences]] the AAA triangle is defined to include three measures to manage differences in 'distance' between companies (see [[M21-S2 - Article - Distance Still Matters|M21-S2 - Article - Distance Still Matters]]):

* [[Aggregation|Aggregation]]
** With the strategy of ''Aggregation'' a company tries to achieve economies of scale by standardizing regional or global operations.
* [[Adaptation|Adaptation]]
** With the strategy of ''Adaptation'' a company tries to boost market share by adapting process and offerings to meet local needs.
* [[Arbitrage|Arbitrage]]
** With the strategy of ''Arbitrage'' a company exploits differences and local strengths, for instance by outsourcing labor to lower wages countries.

The percentage of sales spend on advertising is a metric on how important [[Adaptation|Adaptation]] is for the company. The percentage of R&D is an indication of the importance for [[Aggregation|Aggregation]] and the percentage spent on labor helps gauge the importance of [[Arbitrage|Arbitrage]].

<html><img src = "/static/files/MBI/Module%2021/aaa_triangle.png" width="600"/></html>

{| class="wikitable"
!
![[Adaptation|Adaptation]]
![[Aggregation|Aggregation]]
![[Arbitrage|Arbitrage]]
|-
|'''Competitive advantage''' ''Why globalize at all?''
|To achieve local relevance through national focus while exploiting some economies of scale
|To achieve economies of scale and scope through international standardization
|To achieve absolute economies through international specialization
|-
|'''Configuration''' ''Where should we locate operations overseas?''
|Mainly in foreign counties that are similar to the home base, to limit the effects of cultural, administrative, geographic and economic distance
|Same as adaptation
|In a more divers set of countries, to exploit some elements of distance
|-
|'''Coordination''' ''How should we connect international operations?''
|By country, with emphasis on achieving local presence withing borders
|By business, region or customer, with emphasis on horizontal relationships for cross border economies of scale
|By function with emphasis on vertical relationships, even across organizational boundaries
|-
|'''Controls''' ''What types of extremes should we watch for?''
|Excessive variety or complexity
|Exessive standardization, with emphasis on scale
|Narrowing spreads
|-
|'''Change Blockers''' Whom should we watch out for internally?
|Entrenched country chiefs
|All-powerful unit, regional or account heads
|Heads or key functions
|-
|'''Corporate Diplomacy''' ''How should we approach corporate diplomacy''
|Address issues of concern but proceed with discretion, given the emphasis on cultivating local presence
|Avoid the appearance of homohenization or hegemonism (especially for U.S. companies), ben senistive to any backlash
|Address the exploitation or displacement of suppliers, channels or intermediaries, which are potentially most prone to political disruption.
|-
|'''Corporate Strategy''' What strategic levers do we have?
|Scope selection Variation Decentralisation Partitioning Modularization Flexibility partnership Recombination Invocation
|Regions and other country groupings Products or business Function Platform Competence 
|Cultural (country of origin effects) Administrative (taxes, regulations, security) Geographic(distances, climate) Economic (Differences in prices, resources, knowledge)
|-
|}

[[Category:mbi]]

[[Category:M21]]

[[Category:Model]]

[[Category:Term]]

The AAA Triangle - Revision history

Dirkjan: Created page with "In M21-S8 - Article - Managing Differences the AAA triangle is defined to include three measures to manage differences in 'distance..."