The Network Company

   The network company symbolises the true advantages of multinationality. This strategy also uses the comparative advantage of countries. It does so to a much higher degree as it links the different subsidiaries in a common value-chain that cross borders. The network company transfers goods, services and knowledge between different subsidiaries. Every subsidiary plays an important role and its actions will affect the whole network. The strategic role of a subsidiary depends on the type of activity it is involved in. The network company also aims for economies of scale. The specialisation and concentration to certain countries are carried out at the chain activity level, rather than the product level as in the global company. The strength for the network company is to use the unique resources in every country and place the different activities in the most suitable country. There are no 'home markets' or 'host country markets' of the same type as in the former strategies, the only market is the global market.

   To divide industries in these opposite types is a severe simplification of reality, but it suggests two mutually strategic orientations: global integration on the one hand and national responsiveness on the other. In fact, each must contain element of the other. Companies in so-called multidomestic industries must take account of global forces, and companies in global industries must be responsive to national and local differences.