Book

Description

The book discusses the magnitude, sequence, and dynamics of interdependent decisions regarding the location and control of various parts of the value chain: manufacturing cost, onshore manufacturing, offshoring site selection, competitive cost analysis, offshoring advantages and disadvantages, re-shoring and social impact. By using case illustrations from textile, clothing and footwear manufacturing the book provides a novel perspective on the disintegration, mobility, and reintegration of value chains. A specific chapter deals with Benetton new strategy, abandoning Italy and organising production around a dual supply chain: close locations (East Europe and North Africa) for quick production and far away locations (Asia) for more standardised products. This choice affects the definition of competences in the clothing district, where Benetton traditional sub-contractors have been drastically curtailed. Leveraging knowledge from geographically disparate subsidiaries is a crucial source of competitive advantage for multinational corporations. The determinants of knowledge transfers and dynamic capability building  (not building) are investigated: motivations behind Italian parent companies’ decisions to create subsidiaries abroad, cost and differentiation advantages, relations between the newly established production facilities, their local suppliers and markets, organisational adaptations, and the cultural and administrative difficulties. By combining direct observations with balance sheets data, and data on employment stock at the firm's level, the impact of the offshoring decision is evaluated both in the domestic and in the foreign markets.