Discussion Questions

Why is the study of value and supply chain contributions of Asian markets important?

  • Asia as a whole is an outstanding contributor to “the global factory” (Buckley, 2011) and is predicted to remain in that role, despite the impact of the Covid-19 pandemic, as the economy is set to become the world’s largest economy before 2030. As economies develop across the region at different paces and upon use of varying capabilities and resources, we learn about shifts in its distribution. In essence, companies analyse with great attention which part of their value chain to locate in which part of Asia, how to utilize their physical and digital capabilities in these locations and how to connect them, and how to keep their higher value suppliers close to drive efficiencies and resilience as well as compliance and reputation.

Why are companies doing business in Asia focusing their supply chain management on flexibility and speed?

  • This chapter teaches you that – and why – flexibility and speed are at a premium: Mitigating risk and bringing a product or service to market faster than the competition constitutes a crucial part of competitive advantage in most cases. To remain competitive, allocating the most value-adding stages of the SC in a way that retains ownership of the main factors of competitive advantage tends to be crucial especially for companies that are dependent on keeping IP and other knowledge factors. Consider that across Asia, clients demand that you deliver on increasing product complexity and have high service expectations. Given the diversity of Asian markets, firms often use the multi-supplier strategy to gain advantage. They also generally support more market integration to facilitate the movement of goods and, if more advanced, services, across the region or part of it, such as through, for example, TTP or ASEAN. Those factors also provide supply chains with resilience during times of crises.

Why do multinationals develop local, regional and global strategies that are intertwined especially with their SC management?

  • The nature of the multinational’s structure and depth of investment defines the ownership and control that ultimately determine the strength of the network. When it comes to own subsidiaries, it is their research and development, manufacturing, assembly, distribution, and marketing functions that precondition the product scope and functional orientation of its strategy, and the mind set to make a decision of how much value-add a given location is expected to provide. To make this even clearer: If a company runs a sales office or a trading office in a given location, its value-add will be lesser (and it will be considered a less strategic part of the value chain) than a facility that provides some essential part of manufacture or service, or offers service in the form of a knowledge centre of innovation hub. We have also demonstrated in the two case studies that to maintain and strengthen competitive advantage, focused strategy-formulation and execution need to include a focus-continuous, long‐term innovation and productivity gains including in SC management. What this looks like, clearly depends on whether the company is mainly market seeking, resource seeking, efficiency seeking, and/or strategic asset seeking in a given location or region. The case studies reveal how different the motivations are when it comes to using Chinese suppliers versus South Korean or Japanese suppliers. You will have learnt how firms use various locations in that they balance where more or less value is added and efficiencies reside.