The terms of engagement have changed for many multinationals in recent years. Increasingly, competitors that still only function at a national level simply do not have the resources to offer any real challenge a global player. Rather, multinationals now go head-to-head with whichever rivals are comparable in scope, global market position and access to international resources.
INSEAD Associate Professor of Entrepreneurship Morten T. Hansen and Prof. Nitin Nohria of the Harvard Business School offer a broad and detailed analysis on how multinationals can best move away from their reliance on traditional means of gaining the upper hand. Which have primarily been based on economies of scale and scope. Giants in their fields can no longer rely on the methods that let them expand in the past. These usually involved realising economies of scale by utilising physical assets, and by exploiting their company brands. Today, the biggest players in sectors as diverse as pharmaceuticals, IT, or even retailing have reached near-parity in these areas at a worldwide level.
The authors have determined that in the new environment, economies of scope are largely based on the ability of a corporation's business units and subsidiaries to be able to function as a collaborative unit much more thoroughly than is usually the case at present. This will enable them to leverage their various resources and capabilities to maximum advantage across their global operations.