Arbitrage Factor Costs

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1. Define arbitrage factor costs Arbitrage factor costs are costs that an MNE suffers when the company cannot resolve the issues without arbitration. These costs factors can injure a company in various ways, from time and funds to the loss of competitive advantages. 2. “Today’s challenge is to build transnational organizations that can sense an emerging consumer trend in one country, link it to a new technology or capability it has in another, develop a creative new product or service in a third, then diffuse that innovation rapidly around the world”. With this in mind, identify a company who has demonstrated this ability including a brief description of each step they took. Benetton is a perfect example of a company that was able to…show more content…
Zara, is using the best from both and using the knowledge to its advantage. Zara is being locally responsive by making communication from customers all the way up to designers and production managers as easy and quickly as possible. This allows for market needs and opportunities to be identified quickly and produced centrally. By keeping information central they use the knowledge of being locally responsive to develop ideas at the center and disperse them as needed. 6. Define the center-for-global process. In the center-for-global process, companies risk market sensitivity for efficiency; therefore, companies learned to develop three capabilities for the central-to-global process to work: I. Incorporate Inputs of subsidiaries into centralized activities a. In order for a global company to be more locally responsive, it must allow for local managers of subsidiaries to have more input in central activities. II. Ensuring that all functional tasks are linked to market needs a. Develop systems through which value adding functions like marketing, R&D, and production can be integrated with the different foreign subsidiaries. This will allow for central activities to be “regulated and directed” towards market needs. III. Integrating value chain functions by the transfer of responsibilities a. The transfer responsibilities from one value adding function to the next will ensure that there is an integration of knowledge. This integration
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