Converting global presence into global competitive advantage

Global presence by itself does not confer global competitive advantage. Glo bal presence makes available to the firm's managers five value-creation opp ortunities to adapt to local market differences, to exploit economies of gl obal scale, to exploit economies of global scope, to tap optimal locations for activities and resources, and to maximize knowledge transfer across loc ations However, each of these opportunities is associated with significant obstacles and challenges that often prevent firms from exploiting them opti mally. To overcome these challenges, managers need to adopt a two-step appr oach for analysis and action. They should first evaluate the optimality of the firm's global network for each value-chain activity along the dimension s of activity architecture, competencies at the locations, and coordination across locations. Based on this evaluation, they should then design and ex ecute actions to mitigate or eliminate the suboptimalities.