This paper explains how investments in flexible, advanced manufacturin
g technologies (AMT) have special properties that can transform organi
zation design and the economic bases of strategic flexibility. Investm
ents in AMT that provide significant economies of scope (i.e. low-volu
me/low-cost manufacturing) produce strategic options that allow the fi
rm to place a 'call' on related markets that it may potentially enter.
The value of AMT investments grow with the increasing changes in the
environment. In addition, CAD/CAM networks, a vital component of most
AMT systems, enable the firm to work selectively with external designe
rs, suppliers, customers and other firms to rapidly compress the produ
ct development and commercialization process. Firms seeking to maximiz
e economies of scope and the option value of AMT need to reconfigure t
heir organizations into loosely coupled systems with a modular, open s
ystems perspective. Flexible AMT systems facilitate the pursuit of eme
rgent, product-based strategies based on the selective exercise of the
process technology's option value. Furthermore, AMT helps firms devel
op more complex competitive strategies (e.g. integrated low cost and d
ifferentiation) necessary for strategic competitiveness in global mark
ets. Finally, AMT can facilitate the development of a learning laborat
ory in organizations.