Relating the Firm’s Global Production Network to Its Strategy

This chapter provides a high-level review of the literature on global production networks and suggests that this area offers a fertile ground for future research. An important issue deserving attention is the relationship between the firm’s strategy (particularly its manufacturing strategy) and the structure of its global production network. The chapter offers a model for this analysis. The model allows delayering the production network into clusters of plants based on the characteristics of the products they produce and the production processes they use to produce them, and gauges whether each cluster has the appropriate level of resources to carry out its strategic mission. The chapter also reviews the literature on transfer of know-how in global production networks. This is another area that deserves attention, particularly the choice of appropriate mechanism for this transfer under different conditions.

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