Volume 15 Number 2 ‘May 2001 COUNTRY CLOSE-UP: INDIA EXECUTIVE VOICE ARTICLES The Academi Op ISTERNATIONSE: of Managenteh SES Executive THEME: POSITIONING ORGANIZATIONS AND PEOPLE FOR COMPETITIVE ADVANTAGE Finance Minister Yashwant Sinha on India’s Changing Role in the 8 World Economy Intec Bast Ramamurt ‘Wipro’s Chairman Azim Premji on Building a World-Class 3 ‘Company Inlerica by Rat Ramat India’s Emerging Competitive Advantage in Services 20 ‘Article by Ravi Ramanurt and Devesh Kapur Executive Commentary by Deependra Moira McKinsey’s Managing Director Rajat Gupta on Leading a 34 Knowledge-Based Global Consulting Organization “ner byFendraV. Singh Converting Global Presence into Global Competitive Advantage 5 ‘Auil K. Gupta an Vijay Govindarajan Executive Commentary by Peter Rocke King of the Hill: Dethroning the Industry Leader 59 Kea . Sith, Walter J erie, and Cutis M. Grimm ‘The Shared Leadership Challenge in Strategic Alliances: n Lessons from the US. Healthcare Industry William © dge and foe A. Ryman Making Meigers and Acquisitions Work: Strategic and 80 ical Preparation ‘Mitchell Lee Marks and Philip H. Mircis Executive Commentary by Lo F.Brjloich Managing Organizational Competencies for Competitive Advantage: 95 ‘The Middle Management Edge ‘Adelaide Wieox King, Sally W. Fee and Carl P Zeithand ‘More Articles, Research Brief, and Book Reviews on back cover |)techy mp i YL Ba | Converting global presence into global competitive advantage all . Gupta and Vijey Govindézojan 1} Executive Overview: ‘Global presence by itself does not conifer global competitive advantage. Global presente ‘market difeences fo exlalt economies of global ste, to expt ténomfe of Globa scope {0 ap optima! locations for activities and resources aod o maximize Enowledgetranaler | exze locations, However cack of thse opportunites x atocoted with sgaficont obstacles and challenges that often prevent firms from exploiting them optimally. To overcome these thellenges, managers need to adopt «two-step approach fr aval ad action They Should fit evaluco the optimality ofthe firm's global network foreach value-chan actly ‘long the dimensions of ecdvityercitecture, competencies atthe locations and coordination ‘cross locations Based on this evaltion. they should then design and execute cctins fo mitigate or eliminate the suboptimalitles. In the early 1990s, PepsiCo, Increstablished an ‘rabltlous goal to more than triple its international solt drinks reventes—fom $1.5 billion in 1990 to '$50 billion by 1995. Charging boldly in the pursuit ‘of these goals, Pepsl indeed built an extensive and seide-ranging global presence by the mid-1990s. Yet this global expansion did not translate Into” ‘owth and profitability. In fact, by 1997, Popel ‘withdrew from some major markets, such ae South Area, dnd had to take « nearly $1 billion los from international beverage operations. While the global ‘mcriat for beverages continued to expand rapidly, pets Intemational market share nd-rovenu ‘wore actually shrinking, «situation that contrasted sharply with am-aggressively growing Coca-Cola! ‘As PopsiCo's experience demonstrates, securing global prosonce Is anything ut synonymous with ‘Possessing global competitive advantage. Building {global presence gives you the right to play the game. However, i says litle about whether and hov you vill octually win the game, Furthermore, winning ‘one game doos not ensure that you will win the noxt fone. In short, transforming global’ presence into global competitive: adventage requires systematic alysis, purposofl thinking, and careful orchestra- tion, and is a neverending process. Without a rigor- ‘ously disciplined approach, global presence can s ‘easily degenerate into a licbilty that distracts men- ‘agement and wastes resources. The ond result con ‘even be a loss of competitive advantage in the do- smostic markot. Sources of Global Competitive Advantage ‘To convert global présence into global competitive ‘advantage, companios must exploit five value cro ‘ation opportunities: adapting to local market dit- erences, exploiting economies of global scale, ex- ploiting economies of global scope. tapping the ‘optimal locations for activities and resources, and maximizing knowledge transfer across locations. ‘We discuss the origins of each opportunity and the specific ways in which they can yield compot- itive advantage. We also oulline the challenges sand obetacles that often proven firms froin exploit- ing these opportunities to the fullest extent? Adapting te local market differences A. direct fmplication-of being present in moltiple countries Is that-companios must respond to the inevitable: heterogeneity they will encounter in these markets. Dillerences in language, culture, Inicome levels, customer preferences, and distribu | | makes available tothe fima's managers five valuecreation opportunities fo adapt fo local | | |s Academy of Managenect Executive tian systems are only some of ihe factors to be considered. Even in the case of apparently stan- end products, at least ssme dogros of local adep- {ation is often necessary, oF at least advisable, Collular phone manufacturers, for exemple, must ‘adapt their products to diferent languages and the magnitude of background noise on the stroct. By responding to country-level heterogeneity throigh local adaptation of products, services, Gnd pro- cosses, a compimy ccm reap benefits in throo fun- damental areas: market share, price realization, ‘and competitive position? TIncreased market share. By definition, offeriag standard preducts end services across countries reduces the boundaaies of the derved market to only those customers whose needs are, uniform ‘across countries. Local adaptation of products and services has the opposite effect, expanding the ‘boundaries to also include those customers within @ country who value different features and at- ‘tibutes. One of McGraw-Hill Companies’ prod- ‘ucts, BusinessWeek; provides « goed illustration of how local adaptation of products and services can enlarge the customer base. As the magazine's ed Horinehiel explained: "Each week, we produce three editions. For example, this week's North ‘American cover story 's "The New Hucksterism.' ‘The Aslan edition cover is ‘Acer, Taiwan's Global Powerhouse.’ And the European-edition cover Is ‘Central Europe. In addition, our vatters create aa, ‘additional 10 to 12 pages of stories customized for roadere in Burope, Asia, and Latin America. They algo tum out four pages of interational-finanee ‘coverage, Intemational editorials, and economic ‘analysis, and a regional feature column." Local adaptation of products and services has the opposite effect, expanding the Boundaries to also include those customers within « country who value different features and attributes. Improved price realisation. Tailoring products ‘and services tothe preferences of local customers . Baskin-Robbine’s introduction of green-tea Mavored ico cream in Japan) enbances the value delivered to them. As corollary, a portion of this increased value should translate into higher price realization forthe firm. ‘Neutralizing local competitors. One of the natu- ral advantages enjoyed by most local competitors stems from their deep understanding of and single-minded responsiveness to the needs of the local market. For example, in the Japanese solt- dsinks market, Suntory Ltd. amd Asah! Solt Drinks Co. have been among the first movers in offering nei concepts suchas Asian teas end fermonted- allk dtipks, When a global player cleo customizes {ts products and services te local needs «nd ‘fences; it is motinting a frontal attack on the local competitors in thelr markot niche. In its efforts to ‘outfalize Suntory’ and Asahi's moves and attack ‘thom on their home turf, Coca-Cola introduced sev- ‘ral new products in Japan that are not offered by the company in other markets including an Asian toa called Sokenbicha, an English tea called Kochakaden, and « coffee drink called Georgia Challenges. While seeking the benefits of local ‘adaptation, however, companies must be propared. to faco « number of challonges and obstacles: «+ In most cases, local adaptation of products and services will incroase the company’s'cost struc: ‘ure. Given the inexorable intensity of compel ton in most Industies, companies cam Il afford ‘any compatitiva disadvantage on the cost di- ‘mension. Managers have to find the right equi- [ibrium in the trade-off between localization and coat structure. For example, cost considerations Initially led Procter & Gamble to standardise Alaper design across European markets, despite market research data indicating that Italian mothers, unlike those in other counties, pre- {erred diapers covering the baby's navel. Af ‘some time, however, recognizing that thls par- ticular feature was critical to ltclian mothers, ‘the company consequently incorporated this de- feature for the Italian market, despite its ‘adverse cost implications + In many instances, local adaptation, even when well intentioned, may prove to be misgulded, When the Amorican restaurant chain TGI Fr. days entered the South Korean markot, it delib- ‘rately Incorporated many local dishes, such as Kimchi, in its menu, This responsiveness, how: ever, backlired. Company analysis of the topid market perlormance revoaled that Kerean cus- ‘tomers anticipated a visit to TGIF as a visit to ‘America, finding local dishes on the menu was Inconsisient with their expectations. Companies must take the pulse of thelr market continually to detect if and when local adaptation becomes rmloguided adaptation. + As with many other axpects of global marketing, the necessary degree of local adaptation usi- ally will shit over time. In many industry seo- ‘ments, a varloty of factors, such cs the influence of globel media, greater International travel, tand declining income disparities across coun- may pave the way towardNncreasing0. global standardization. Consistent with the ear- Ilor example of BusinessWeek, wo foresee a dl- ‘minished noed over timo for geography-bazod ‘customization. In other industry segments, par- teularly where the product or service can be dolivered over the Internet (such as muse), the need for even’ greater customization and local ‘adaptation may increase over time. Companies saust recalibrate the need for local adaptation ‘on am ongolag basis; over-adaptation extracts ‘rice just as surely as does underadaptation. Exploiting economfes of global scale Building global presence automatically expands « company's scale of operations, giving it larger rev- fenuos and a larger assot base. However, larger ‘2eale will creato compotitive advantage only ifthe company systematically undertakes the tough ac- tone nosded to convert sealo into economies of scale. The potential bonofits of economies of scale can appear in various ways: spreading fixed costs, reducing capital and operating costs, pooling pur- chasing power, and creating eritieal mass? ‘Spreading fixed costs over larger volume. This benefit is most sallent In areas such as research ‘and dovelopment, operations, and advertising. For instance, Merck, the pharmacoutical glant, can sproad R&D costs over its global sales volume thoreby reducing per-unit coete of development. Reducing capital and operating costs per unit. ‘This benefit is often a consequence of the fact that doubling the capacity ofa production facility typ- feally increases the cost of building and operating tho facility by « facter of less tham two. Pooling global purchasing power over suppliers. Concentrating global purchasing power over any specitic'aupplior generally leads to volume dis- counts atid lower transaction costs. For example ta: Marriott has raised its stakes inthe global lodg” ing business, te purchase of such goods az far nlshings, linons, and beverages has stepped up dramatically. Exercising global purchasing power over a few vondors (0.4 PopeiCo for soft drinks) is part of Mariott’ elforts to convert ite global pros ‘nce into global competitive advantage. ‘Creating requisite critical mass In selected activ- ities. A larger scale gives the global player the ‘opportunity to bulld centers of excellence for the development of specific technologias andlor prod ‘ucts. To develop a center of excellence, « company generally noods tofocus a ritieal mass of talont in ‘one location. In view of tho potontial to leverage the output of such a conter on a global seale, a global player will be more willing and able to Gaplaand Govtndaroon e ‘make the necessary resource commitments 10 quired for such a conter. Challenges. Few, if any, of these’potential stra- tegie kenafits of acale materialize automatically. The following challenges await firms in thelr of {orts to secure these benefit + Scale economles canbe realized only by concon- trating scale-sensitive resources and activities {im one or a few locations, Concentation is a two- ‘edged sword, howover. For example, with manu- facturing activities, concentration ‘moans that finns must export centrally manufactured goods (eg. components, subsystems, or finished prod- ‘ucls) to various markets. In making decisions ‘about the location of amy activity, firs must weigh the potential benefits from conientration against increased transportation and tariff costs + One unintended result of the geographic concen- twation of any activity is to Isolate that activity from tho tangoted markots. Such isolation can be risky since it may cause dalayed, or inadequate, response to market needs. Another management challenge is to minimize the costs of isolation ‘+ Concontrating an activity in « designated loca tion also makes the rest of the company depen- dont on that location. This sole-source depen- dence implies that, unless the lecation has ‘world-class competencies, a firm may create c global mess instoad of global competitive ad- ‘vantage. A European executive of Ford Motor Company, reflecting on the company’s concen- tration of activities during « global integration rather than only one.” The pursuit of global scale ‘economies raises the added challenge of building Wworkclass competencies at thore locations in ‘which the activities will be concentrated. “Now if you misjudge the market. you are wrong in 15 countries rather than only one.” ‘+ In situations where global prosonce stems from cross-border aequisitions, as with British Potro- Joum's aequisition of Amoco, realizing econo- mies of scalo requires massive restructuring. Firms must scale up at those lecations where ‘actvitioe are to be concentrated and scale down ‘oF even close shop at the othor locations. This, Testructuring demands largo financlal invest ‘ment, news huge one-time transition costs, and always fesults in organizational and peychslogt- ‘eal trauma. Futhermors, ecaledowns or closureson Aeodemy of Nonagerent Executing Mey may damage the company’s tmage and relations ‘wih local governments, oval customers, and local Communica. On top ofall thls, exensous deci ‘ions in checaing locations are usually very di call expensive, cad time consuming to reverse Nonetheles, fiona conpot realize the cdvamo: goous economies of scale without making tough ‘ecisiona. Management must be willing to under- take « comprehensive and logical analysis amd then have the courage of is convictions fo camry ‘out anely end decisive acien. Exploiting economies of global scope Global scope refers to the multiplicity of regions cand countries in which @ company markets its products and services. Consider the case of two hypothetical advertising agencies, Alpha and Bela, whose sales revenues are roughly compara ble, Assume that Alpha offers services in only five countries, whereas Beta isn 25 countries. In this Instance, we would consider the global scope of Beta tobe broader than that of Alpha. Global ecope ls rarely @ statogic imperative when vendors are ‘serving customers who operate in just one country fr customers who are global but who engage in centralized sourcing. In contrast, the economic ‘value of global scope can be enormous when ven- dors are serving customers who, despite being global, need the delivery of identical o similar products and services across many markets In ful- {illing the neods of such multilocation global cus tomers, companies have two potential avenus through which to tum global scope Into global compelitive advantage: providing coordinated ser- ‘vices and lovoréging their market powor# ‘Providing eoordinated services to global custo ‘ers. Consider three scencrios: Microsoft, az it launches a new software product in more than 50 countries on the same day and needs to source ‘advertising services in, every one of the targeted markets: McDonald's, which must source vitally identical ketchup and mustard pouches for ita op- erations In every market; cnd Shell Oil, which ‘needs to source similar process-control equipment for its many refineries around the world, In all of ‘these oxamples, « global customer needs to pur- chase « bundle of identical or similar products and services across « number of countries. The global customer could source these products and services ther from a host of local suppliers or from a Single global supplies Osat is prosent in all of ite markets. Compared with ahorde of local suppliers, {single global euppliex can provide value for the global customer through greater consistency in the quality and features of products and services cocross countles, faster and smoother coordination ‘across countries, and lower transaction costs. ‘Market power compared with compotitor. global supplier has the opportunity to understand the unique strategic requirements and culture of Its global customer. Since ittakes time to build this type of customer-specific proprietary knowledge, pprticulany in the case of multilocation global cus- tomers, potential competitors are initially hamdi- capped and can more easily be kept at buy. Fed ‘eral Express, a major supplier of logistics and What ete sian of the ona and omplomen! hows? {ae we coptored evoories ol ctl and arope fa asnoeisog, sittin er mtr pcre? Ke em ny cme ck + Bowe hav the neded sal ond distrbation strength nl ker mares? ‘oo ou tiation epten te concentatd otto dapersed? + Do'welbeve the seeded erica mace in each key technalogy ea? I there ‘moweded doplirton acres technology center? + Dolostionl choles automaticly rete pas for excallenc i he perclor etety fog. minitatation i apani? + Bowe hove clic lent aaiable? “Wha wi be the Stel fmpact on omerl ost erctre? 1 What wil be the impact of government indocenenta an Wor conedaatons? Whet are the cureey end plc res? + Do we dele quot fom our cstomars pit of vam? 1 Do me delice quality wae fg product deity on or broly (queltyofpodactaservcee, ond forall management? + Do me te mearrae ndnsors f quality or para on gut fal? 1 Do.we cmstaaly compare ourselves with external benches? 1 Hw do we compare mil conpeltns on boy alls of quai: ead tine- Inaed competion? + tn doivering quality ond speed re we improving a sowor fir ate ha he competion? + How diet ond fconlee ore the communication channels ot castes oo ‘rales and cancers fo be heat no fut by marketing but lo production {Sed RED personal? + low diet and files one th communication chanls betwoon it ‘eros complementary sctils? Sotresn its pelorang simiar + Bo rowed eetome enero o dlecurage naaded cootioaton’? 1 Heth compony erected fetionlos Ilana mara for dear at rma ‘th the produces ond he buere ofa goat doa? I th he olen active ot lepy ia coving ou Ie Enowledge broker roponsblies? Work class competence by faction: er ‘och fli Frlonler oocdincn tween til ‘clviler: between compli ‘ates!s Academy of Nonoperent Ecce Mey Endnotes Tomkins A Batre ipso Ueks is wounds The Finan le Tes, 0 May 190, 7 Our Haein hie eocton Bul on apd extend the work of many scholre in the aoe lob toy, Snluding Cares, FE Isa Mulloatincl eaters and ecsoeole analyia Com lrldge, UI: Conbesdge Unierty Pree: Ghosbol. 5.1057. {Global attegy fn ergntsiog lomemert Sategc Manage nest ural € 425-4; ond Poster, SCE 1B Global ster ‘Winning In he oec-nide markeiplace nL Fabey 800 ‘Reade Ede) The poneble MBA In stotegy: 100-4) Wow ‘York fobs iy ‘Foran oncisiofhow local ment dilerences alec etry statogios, ree Hoot F159 Entry staepies for fntaravona ‘Borde Hla Yo: Lexington Boks “hs businan goes glbal, 20. doeeBusnessWeck,Bolnes- Week Vly 186 "For Cova Cola in Japon, Yhngs ge beter wits mil: Wall Sgt furs. 20 Jeavary 1897.33. "Remarks by Iekn Poppa, cutrmen and CEO, Peter & Gamble 10 MBN slo ef Tuck Schoal, Dartmouth College, Honore, ME May 188, "Sea Chandar, AD 100 Seale and stop: Th dai of indarialcopltli. Combatage, MAC Harvard Usierlty "Foro lolerestig cove study on © company's elle coptring the aconomio af glabal scope, see Motnight TW. {281 Chubaok:Gloolearlomer management. Cove Ne 935. 12 Boston Horerd Busines Seek, * Fore recent oom othe reserch erature dating with ‘hoe of ocatons by sulinational ea RL 18 Location and ho tiation entry {cor? fart of Inteaetionl Busnes Sui 2, ‘Ser oio Porte, ME 10. The tle of locaton In compton, Jounal of rovomies ond Busnes 1 35-8. "We lor sbampi,Glaberman, & 8 Spiro, DM, 199 The lnnpact i government polices on foe dee iavesient Tho Conan enerenc, journal Inraationl Busines Staien, ‘oer sine Se Done KM. kRaline, TP 100. Accounting for good- ‘it A cae anlyels of US. UA, a Japon, ourel a er atonal Accuntng Auditing ond Tavao, 2 18-2 ail K Gupta te «dite (plebed scholanteacbor end Fleer of srotegy end labial ‘buniness ct the. Rober Th maith Schol of Burlaees, The University of Marland et Co. lege Pork Ts resnarch Inter: leu on matoping Ia the age, manogg alsa Teal, and the quot fx a7 ‘ay Hes contort Voy GGovindareja, of The Quest fF (GibelDersiaanen published Dy fomey-Base in 251, Conte cserhamih md os "Sn, forename, Mle, KD. Ma, 11068. Fm rt gy end scouts ecpemae fe liga rekange role ore ‘Stoke fumed Inerctional Busines Sass, 20 19-51, "Ee Gupta, AK Govindan, 181 Knowledge Nowe cad ihe stcte of conte wha malate! corporations ‘eademy of Manogeneat Review, Ie 78-Ma Copia, AK ‘Gorideraian,¥. 200 Xoomledg Dome wii mulatinal ‘cuportins Stalegie MenagemontJoursal 2: (7-496 bel, 1 Bkinsbaw 18, Inovaton Ia malsatinal corer” flow: Contol nd commuataton pattems in Inarctonal RD operation, Stoogie Managemen osraa, 14S: 0-10; {and Hagut Bot Zanes U. 180 Koodo othe, combi ‘ave copie, and th repletion of technology. Orpen ‘lon Sconce, 9 56-37 ‘ingrssa,P-lndty ie shoprlag bread er goad ides to opty o product. The Woll Soe ouza, 2 Kp 195 1 "* Garchowen Dos 188 Local emotes le glbel moor arpa Baines Rerlow: Mort pt "Oat dear hs nection ald on ha workof Koga, B18. Designing global stotogier: Comperotive ond campaliiv ral ‘weeded chan Soos Monagement Ravow,1-2r and Port, UE. 1908 Competition in globel industries, Bosc: Harvard Basins School Prov. Wgey ll WE ABB to cat jobs In Westen Europe. 1 Financial Tas, 9 Jane 127. he old The Econo, 18 November 15 Pepper rman, op Tolar WISI. The logic of plbal busnees: An interview vy ABB Perey Berek: Harvard Business Review, Mor a ‘Pepper marks op ct. Taper pe Peppa omar op ' Weleter 8 1051 Diving change: Aa fotrviow with Ford Mote Compeny Joss Nosoe. Harvard Buisss Review Mageh-Ap 76-2 Safar A 190. Inside Unilever: The evolving want: tional company Harard Busnes Review, Seplmbr-Ockb. ‘Wier Govern tet Eat (Dru 100 Proteeor a no Sctlonel Buetncer end decor ‘t thw Willem P Aebepet Center forGlobl Leaduehipat {Bo Tuck Schoo of Busines ot Dentnouth Colloge. He is lo tho. Tocly atone lr the Clebal Leadership 2030 Prox ‘rom Hl ovate wil Ral Gupte. o The Ques for Gist! Dominanen, published by Tox Sepase in 201. Contct v901 Bost 2 eter Roche The London Perret Roche Group LIC In a spocch to the British-Americam Chamber of Commerce in March 1992, John Zoglis, then prest- dont of ATA, said, “Youare only going tohave two kinds of companies in the future: those that go global and those that go bankrupt.” Zoglls’s view ‘appears tobe widely shared, as there are now over 190 countries Involved in global trade. Govern- rmonts are lowering trade barriers with iree trade ‘agreements. Global bankers, like The World Bank ‘ond the IMF are eager to finance this internation- alization of business. Purther, « host of service providers ond suppliers have declared themselves global enterprises," as they stop beyond their hhome shores to compote in the world market. ‘The management implications are significant for these ontitis. Competition is soaring. The com- plesity ofthe entity fo be managed has increased ‘exponentially because of shoor scale, business laws, business ethics, accounting procedures, and divergent cultures «md habits, to name a few. Tho speed at which best practices are emulated is Ireathtaking—making that source of advantage less sustainable. Conducting business success: fully i this environment requirct a new business model. ‘The global enterprise described by Gupta and Govindarajan Is a new species of organization. It Js not the familiar multinational enterprise (MNE) simply expanded to a larger eot of geographical locations. Rather, its @ new way of organizing designed for competitive advantage. What distin- dguishes « global enterprise with a competitive ad- vantage from an MNE? According to Gupta and Govindarajan the differences are: how managers take advantage of economies of scale, rationalize production, develop a worldwide management tal- tent pool; engage in R&D, cnd exchange knowledge tend best practices across the globe, Many mergers designed to produce global entities have failed becouse they did not understand the distintions botwoon MNEs and global enterprises. They did not leverage the five “opportunitioe” outlined by Gupta and Govindarojan in their article: adapting to local market differences, exploiting economies of zcale, exploiting eroncmios of global scope, tap- png the optimal locations for activities andlor re- sources, and maximizing knowledge transfor ‘across locations. Thsco opportunities are at the heart of Gupte and Govindarajan's framework. ‘Their fromowork isnot simplistic: Nor is It a cloar- ‘cut prescriptive sat of dos and don'ts. Bach of the five opportunitios has multiple facets. challenges, ‘and obstacles for each business and market. In ‘other words, there is no single right answer, such ‘98 “always adapt the product tothe local markol.” ‘TGIF Fridays discovered this in South Korea, whom it added local dishes to Its mens, The restaurant found that local customers thought of a visit to ‘TGIF as being a viet to America and théy did not want fo be served South Korean food. According to Gupta ond Govindarajan, the right answer for any particular business could be adapting « litle, ‘adapting a lot, or not adapting at all. Moreover, the right anewer could change overtime. Many mergers designed to produce global entities have failed because they did not understand the distinctions between MNEs and global enterprises. Gupte and Govindarajan's framework suggests that, o be successful, businesses should institute «an ongoing process of discovery, along with rigor- ‘ous thinking and thoughtful application across tho ntire fim. Theit framework is not a short-cut to the solution. At one point in my career I was an ‘executive with an organization that manufactured ‘Products for the constriction industry around the ‘world. Applying Gupta and Govindarojan's frame srork to this business, itis clear that we did abide by one oftheir key recommendations—wre adapted tolocal market differences for one customer bul not {or another. More specifically, for construction in- dustry customers we adapted to the loca kinguage ‘and how the products were packaged and shipped. For the homo improvement industry. which sold ‘many of the seme products, but toa dfforent set of ‘oustomors, we needed many more adaptations from one market to the next. Many of these adap- tations were a result of vatlable retail practices saa differant rales about product labeling. In both ‘cases wo competed very successfully. Yet in other chreumstances, the organization's thinking was os sentially MNE. That is, many of our adaptations toa Academy of Nopavenen! Erecte local market# were net optimal. Clearly, we were not alwaya systematic in exploiting the five oppor. tunities presented in Gupta and Govindarojan's sramevork. Based on Gupta and Govindarajan's” model, there are many. powerful questions companies jould ask themselves: Are you cloar about the iflerence betwoen an MNE and « global enter- (prise with a competitive advantage? I there awore {scale with MINE at one end and global enterprise ‘with « competitive advantage at the other, where would your company fall? Finally, what are the best leverage opportunities for your business? How these questions are answered just might spire an organization to change the way It con- ducts its global business, ‘garbe wor abcd enter at CoD tated ‘atonal compen Cot ocketipsrompenm