International manufacturing strategy development and its execution depends on the combination of economic, competitive, legal, political, and environmental conditions. To answer the question, where in the world should be established new manufacturing facilities, the following decision-making dimension should be assessed: compatibility, configuration, coordination, and control (so called "Four Cs") (Daniels, Radebaugh, & Sullivan, 2001).
Compatibility
Compatibility represents a decision making dimension, when company management performs careful evaluation of different business scenarios of where and how should be established global manufacturing facilities, and how good this decision resolves the task of improving the company's competitive strategy. To succeed, it is not enough for the management to review and assess the historical development of the industry and sector in relation to different countries in terms of the manufacturing conditions, human resources availability, and market demand for the manufactured product. Because of the rapid and volatile changes in the market demand, conditions, political climates, business experts should make business scientific forecasts for the future world manufacturing trends as well.
According to David Busch, a former executive at contract manufacturer Solectron, companies should evaluate potential locations for international manufacturing along two dimensions - manufacturing attractiveness (costs, supply base, logistics infrastructure, etc.) and local market attractiveness (size and growth of market, financial incentives, level of competition, etc.) (Supply Chain Digest, 2008). The graphical representation of the overall attractiveness assessment approach is represented in the Attachment A.
Configuration
When the global competitive product compatibility strategy is elaborated, management approaches the development and configuration of the company's operational schemes on the Global Market in more details. Major types of international manufacturing configurations are (Gouvea, 2000):
� Home country production with exporting.
� Autonomous regional plants.
� Combination of regional and global focus.
� Centers of excellence.
These different configurations are not mutually exclusive but are often used simultaneously. Also, the manufacturing configuration - is not approach that made once and forever. In the dynamic marketplace, the configuration is reevaluated frequently, and necessary adjustments are made to follow the market, economic, political, and legal trends. The particular location of the manufacturing facilities establishment, number and scale of the built plants depend on complex combination of the interrelated factors, such as transportation costs; human resources availability and cost; duties, and local governments imposed legal barriers; need for closeness to the market; foreign-exchange risk; economies of scale in the production process; national image; proximity of the vendors, and many other. Based on the unique specific capabilities of the different international locations, management has to define the best possible configuration, using the local advantages for each location to full extent, and trying to minimize the related risks, that can be triggered by economic, financial, political, or military instability (Daniels, Radebaugh, & Sullivan, 2001).
Coordination
Strategic approach development and tactical placement of the manufacturing facilities on the global marketplace are just the first steps of the successful business establishment, for the management and shareholders satisfaction. The new factory should perform as to the preset manufacturing plan in coordination with the global manufacturing strategy. Coordination of stand-alone manufacturing facilities may be defined as a function of insuring that their behaviors are properly interconnected, sequenced, and timed so as to accomplish some joint activity and task completion (Mascarenhas, 1984). Therefore, while an overseas plant is up and running, management needs to oversee the flow of material, information, and finance among its various customers, suppliers, and distributors (Daniels, Radebaugh, & Sullivan, 2001).
Two general ways to achieve proper coordination might be defined: by programming behavior and by communication and feedback so that a necessary adjustment can be made. The objective of programming behavior is establishing rules and coordination guidelines based on the business and manufacturing predictability. This can be achieved by adequate forecasts-based planning of the activities in the global factories to synchronize their individual operations according to the master plan. However, the real life and rapid changes in the marketplace require constant updates of the initial plan, based on communication and feedback from the factories. Interactive communication between members of different subunits on the actual condition and deviation from the master plan allows making the proper adjustments (Mascarenhas, 1984).
Control
When the strategy is defined, international plant is successfully built, configuration and coordination processes are developed it comes to the ongoing control of the factory operations. A well-designed flexible control system is helping to preserve the consistency in reaching strategic goals by outlining the roles and responsibility of the employees in the company's manufacturing matrix. That ensures the quality and reliability of the technical aspects of the manufacturing process and smooth course flow in other areas of the plant's business operations in the global environment.
It is clear that designing effective internal control systems is an essential component of managing the complex operations for both domestic and multinational enterprises. However, establishing uniform control process in various countries may lead to dysfunctional behavioral consequences and unnecessary costs, due to the specific cultural values influence on the effectiveness of control system. Therefore, comparability between cultural values and organizational systems is important when designing effective control procedures for international factories (Chavan & Lamba, 2007).
References
Chavan, M., & Lamba, A.S. (2007, Summer). An international perspective on internal controls in small and medium enterprises. The Business Review, Cambridge
Daniels, J.D., Radebaugh, L.H., & Sullivan, D.P. (2001). Globalization and Business. New York Ch.
Gouvea, R. (2000, May 08). Global operations management and sourcing strategies. Retrieved August 19, 2008, from http://ping.fm/dWGGa
Masharenhas, B. (1984, Winter). The coordination of manufacturing interdependence in multinational companies. Journal of International Business Studies, 15(00003), pp. 91-106.
Supply Chain Digest (2008, May 29). Supply Chain Graphic of the Week - Global Sourcing Matrix. Retrieved August 19, 2008, from http://ping.fm/36LLi
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