Global Value Chains, Operations, and Functional Strategy

Introduction and Context

International business creates value through activities distributed across countries. A product may be designed in one country, financed in another, manufactured through several supplier tiers, marketed globally, and serviced locally. This configuration is a global value chain (GVC): the sequence of activities through which inputs are transformed into products or services and delivered to customers across borders.

Global value-chain management is not simply a search for the lowest-cost location. Managers must coordinate cost, quality, speed, innovation, risk, compliance, sustainability, tax, capital, and talent. A decision to source from a distant supplier may reduce purchase price but increase transport time, inventory, carbon emissions, working-capital requirements, and exposure to disruption. Conversely, local or regional production may cost more per unit while improving responsiveness and resilience.

Functional strategy translates corporate and business strategy into coordinated decisions in operations, procurement, logistics, marketing, finance, treasury, taxation, and human resources. The central managerial challenge is fit: each function must support the firm’s competitive priorities without optimizing one activity at the expense of the whole system.

Learning Objectives

By the end of this chapter, students should be able to:

1. Explain global value chains and distinguish them from supply chains.
2. Configure international sourcing, production, logistics, and marketing systems.
3. Evaluate global decisions using total cost, risk, service, and strategic criteria.
4. Explain working capital, treasury, transfer-pricing, and international tax issues.
5. Design policies for international talent mobility and human-resource coordination.
6. Assess resilience, regionalization, reshoring, and digital technologies.
7. Integrate functional decisions in an ethically and legally responsible manner.

1. Global Value Chains and the Logic of Configuration

A supply chain emphasizes the flow of materials, information, and products between suppliers and customers. A value chain emphasizes where economic value is created, captured, and governed. Value-chain analysis therefore includes research and development, intellectual property, procurement, production, logistics, branding, sales, after-sales service, and supporting activities.

A firm’s international configuration reflects three related choices:

• Geographic dispersion: whether activities are concentrated, regionalized, or globally distributed.
• Governance: whether activities are performed internally, purchased from independent suppliers, or coordinated through contracts and strategic partnerships.
• Location advantage: whether a country offers cost, skills, infrastructure, market access, resources, institutional reliability, or innovation capability.

Porter’s value-chain logic distinguishes primary activities—such as inbound logistics, operations, outbound logistics, marketing and sales, and service—from support activities such as technology development, procurement, human resources, and firm infrastructure. In international business, these activities may be located in different institutional environments, creating coordination costs and regulatory exposure.

Global integration and local responsiveness

A global strategy seeks scale economies, standardized processes, and consistent quality. A multidomestic strategy adapts products and activities to national markets. A transnational strategy attempts to achieve global efficiency while retaining local responsiveness and learning. These are not purely alternative labels; many firms use different configurations by product, market, and function.

For example, a pharmaceutical company may centralize research and production of active ingredients, regionalize packaging to meet regulatory requirements, and localize sales and patient-support programs. The appropriate design depends on customer needs, regulation, technological intensity, transport economics, and the strategic importance of knowledge.

Make-or-buy and internalization

The make-or-buy decision compares internal production with external sourcing. Transaction-cost economics suggests that firms are more likely to internalize activities when transactions involve high asset specificity, uncertainty, frequency, or risk of opportunism. Resource-based reasoning adds that firms should protect and develop activities that create valuable, rare, difficult-to-imitate, and organizationally embedded capabilities.

Outsourcing is therefore not automatically strategic. A low-cost supplier may become a source of dependency, quality risk, intellectual-property leakage, or reputational harm. A balanced portfolio may combine internal capability, approved suppliers, dual sourcing, and contingency capacity.

2. International Sourcing and Procurement

International procurement includes supplier discovery, qualification, negotiation, contracting, ordering, monitoring, and relationship management. A professional sourcing process begins with a clear specification and separates price from total economic value.

Supplier selection criteria

Important criteria include:

• delivered cost and payment terms;
• quality capability and process maturity;
• capacity, lead time, and flexibility;
• financial strength and continuity;
• intellectual-property and cybersecurity controls;
• labor, environmental, and human-rights performance;
• logistics infrastructure and geopolitical exposure;
• regulatory certifications and traceability.

A supplier scorecard can convert these criteria into a weighted decision. If quality is weighted at 30%, cost at 25%, resilience at 20%, sustainability at 15%, and innovation at 10%, each supplier receives a score for each category. The weighted total is:

where S_i is supplier i’s total score, w_j is the weight of criterion j, and r_ij is supplier i’s rating on that criterion. Weights should sum to 1, and ratings must use a consistent scale. The model supports judgment; it does not replace due diligence.

Total landed cost

Purchase price alone can mislead. A practical total-landed-cost model is:

where TLC is total landed cost per unit; P is supplier price; F freight and insurance; I import duties and tariffs; D domestic distribution; C compliance and transaction costs; Q expected quality-related cost; R expected disruption and inventory cost; and B applicable benefits or credits. All terms must be expressed in the same currency and per-unit basis. The model is an estimate and should include sensitivity analysis for exchange rates, freight, tariffs, and disruption probabilities.

Worked example. Supplier A quotes $48 per unit. Freight and insurance are $4, duty is $3, domestic distribution is $2, compliance is $1, and expected quality cost is $2. Supplier A’s estimated landed cost is $60. Supplier B quotes $52, with freight of $2, duty of $1, distribution of $2, compliance of $1, and quality cost of $1. Supplier B’s landed cost is $59. If resilience and strategic capability are otherwise comparable, B is economically preferable despite its higher quoted price.

Contracting and supplier governance

International contracts should specify product standards, inspection rights, delivery terms, governing law, dispute resolution, currency, force-majeure treatment, sanctions compliance, data protection, audit rights, and termination procedures. Incoterms clarify the division of transport responsibilities, costs, and risk transfer, but they do not determine every issue in a sales contract, such as ownership, payment, or product liability.

3. Production, Operations, and Network Design

Production configuration involves plant location, capacity, process technology, inventory policy, postponement, and coordination across facilities. The central trade-off is between efficiency and flexibility.

Concentrated production can create scale economies, specialized skills, and consistent quality. Regional or distributed production can reduce lead times, tariff exposure, and disruption impact. Managers should examine:

• proximity to customers and suppliers;
• labor skills and productivity;
• energy, land, and infrastructure costs;
• tax incentives and regulatory conditions;
• political and natural-hazard exposure;
• capacity scalability;
• availability of critical components;
• knowledge protection and quality control.

Capacity and inventory

Capacity should be evaluated under expected demand and uncertainty. A plant operating at full theoretical capacity may have no practical ability to absorb demand surges or equipment failure. Firms therefore consider capacity buffers, overtime, subcontracting, and alternate plants.

Safety stock protects against demand and supply uncertainty. A common service-level formulation, under simplified assumptions of independent, normally distributed demand during lead time, is:

where SS is safety stock in units, z is the standard-normal service factor, and σ_LT is the standard deviation of demand during lead time. If daily demand variability and lead-time variability are both material, σ_LT must be calculated using an appropriate demand–lead-time model rather than an oversimplified formula. The equation is not universally valid: seasonality, correlated uncertainty, intermittent demand, and non-normal distributions require alternative methods.

Postponement delays final customization until demand information is clearer. A firm may manufacture a common platform centrally and add language, packaging, or configuration near the customer. This reduces forecast error and supports local adaptation.

Process performance metrics

Common operational measures include:

• On-time-in-full (OTIF): orders delivered by the promised date and in the promised quantity;
• lead time: elapsed time from order initiation to delivery;
• yield: acceptable output divided by total input;
• overall equipment effectiveness: a composite measure of availability, performance, and quality;
• inventory turnover: cost of goods sold divided by average inventory;
• cash-conversion cycle: days inventory outstanding plus days sales outstanding minus days payable outstanding.

These measures must be interpreted together. High inventory turnover may reflect efficiency, but it may also indicate understocking and lost sales. A short cash-conversion cycle can result from strong operations or excessive pressure on suppliers.

4. International Logistics and Supply-Chain Resilience

Logistics coordinates transportation, warehousing, customs, documentation, and reverse flows. Mode selection involves a trade-off among cost, speed, reliability, capacity, and environmental impact. Ocean freight is generally economical for large, non-urgent shipments; air freight is faster but costly and emissions-intensive; rail and road may support regional networks; multimodal transport can balance these characteristics.

Resilience is the capability to prepare for, absorb, recover from, and adapt to disruption. It differs from efficiency, which emphasizes resource use under normal conditions. Resilience practices include:

1. mapping suppliers beyond the first tier;
2. identifying single points of failure;
3. qualifying alternate materials and suppliers;
4. holding strategically located buffers;
5. using regional or dual-source networks;
6. creating crisis playbooks and communication protocols;
7. monitoring financial, geopolitical, climate, and cyber indicators;
8. testing recovery plans through simulations.

Redundancy is not always optimal. Maintaining two suppliers may increase cost, but may be justified when failure consequences are severe. A useful decision compares the incremental resilience cost with the expected avoided loss. Expected loss is conceptually estimated as probability of disruption multiplied by financial consequence, although probabilities and consequences are uncertain and should be scenario-tested.

5. Global Marketing and Commercial Coordination

Global marketing decisions concern segmentation, targeting, positioning, product, price, distribution, and promotion. Standardization can create economies of scale and consistent brand meaning. Adaptation may be required because of language, culture, purchasing power, regulation, infrastructure, and local competition.

A useful distinction is between core value proposition and market expression. The core promise may remain consistent while packaging, channels, service levels, payment methods, advertising appeals, and product features vary. Excessive standardization can create cultural or legal failure; excessive localization can fragment the brand and raise complexity.

International pricing must account for customer willingness to pay, exchange rates, tariffs, channel margins, taxes, and competitive structure. Managers should distinguish price changes caused by currency movements from genuine changes in market value. Digital channels provide data for experimentation, but privacy, consumer-protection, algorithmic bias, and cross-border data rules must be addressed.

Marketing and operations must be coordinated. A campaign promising next-day delivery is strategically defective if the logistics network cannot fulfill it. Demand forecasts should be shared with procurement and production, while marketing should understand capacity constraints and supply risk.

6. International Finance, Treasury, and Taxation

Working capital and cash flow

International operations tie cash into inventory, receivables, and supplier payments. Currency conversion, payment delays, customs timing, and transfer restrictions increase complexity. Treasury manages liquidity, banking relationships, foreign-exchange exposure, interest-rate exposure, and financial risk controls.

The cash-conversion cycle is:

where DIO is days inventory outstanding, DSO is days sales outstanding, and DPO is days payable outstanding. Each component is measured in days. A lower cycle generally means less cash is tied up, but aggressive reductions may damage service, supplier health, or customer relationships.

Foreign-exchange exposure

Transaction exposure arises when a known foreign-currency receipt or payment changes in domestic-currency value. Translation exposure arises when foreign subsidiary accounts are consolidated. Economic exposure concerns the longer-term effect of exchange rates on competitiveness and cash flows.

Firms may use natural hedges—matching revenues and costs in the same currency—or financial instruments such as forwards, options, and swaps. Hedging should follow a documented policy specifying exposure identification, hedge objectives, authorization, limits, counterparty controls, and accounting treatment. Speculation unrelated to operating exposure increases risk.

Transfer pricing

Transfer pricing is the pricing of transactions between related entities, such as the sale of components from a manufacturing subsidiary to a distribution subsidiary. Tax authorities generally expect an arm’s-length principle: related-party terms should approximate those that independent parties would have agreed under comparable conditions.

Common methods include comparable uncontrolled price, resale price, cost-plus, transactional net margin, and profit-split approaches. The appropriate method depends on functions performed, assets used, risks assumed, comparables, and the availability of reliable data. Transfer prices affect the allocation of profit among jurisdictions, but they should not be treated as a mechanism for arbitrary profit shifting. Documentation, consistency, local rules, treaty provisions, customs valuation, and dispute-resolution procedures are essential.

A transfer-pricing policy should answer:

• Which entity owns or licenses intellectual property?
• Which entity bears inventory, credit, market, and product-liability risks?
• What services are actually provided?
• What evidence supports the selected method?
• How are customs and tax consequences reconciled?

International taxation and governance

International tax planning must comply with domestic law, tax treaties, anti-avoidance rules, controlled-foreign-company rules, withholding taxes, customs requirements, and evolving global minimum-tax arrangements. Tax efficiency cannot be separated from reputational, legal, and ethical risk. Boards should require transparent governance, documented substance, qualified advice, and controls against bribery, evasion, and aggressive artificial arrangements.

7. International Human Resources and Talent Mobility

Global HR aligns people systems with the firm’s geographic strategy. Key decisions include staffing, recruitment, expatriate assignments, compensation, training, performance management, labor relations, and repatriation.

Staffing approaches are often described as:

• ethnocentric: key positions filled by home-country employees;
• polycentric: subsidiaries managed largely by host-country employees;
• regiocentric: staffing organized within regions;
• geocentric: talent selected globally according to capability.

No approach is universally superior. Ethnocentric staffing can transfer knowledge but may be expensive and culturally narrow. Polycentric staffing builds local legitimacy but can limit cross-border integration. Geocentric staffing supports global learning but requires sophisticated mobility, immigration, compensation, and succession systems.

Talent mobility involves visas, tax residence, social security, payroll, benefits, family support, health and safety, data protection, and repatriation. A technically successful assignment can still fail if the employee’s family cannot adapt or if the return role is unclear. Firms should define assignment objectives, provide cultural preparation, monitor well-being, and plan knowledge transfer.

Ethical HR requires respect for local law and universal principles concerning forced labor, child labor, discrimination, freedom of association, privacy, and workplace safety. Compliance with local law is a minimum, not always a complete ethical standard.

8. Reshoring, Nearshoring, and Regionalization

Reshoring returns activities to the firm’s home country. Nearshoring relocates activities to a nearby country. Regionalization organizes value chains around major geographic markets. These strategies may follow disruption, automation, geopolitical tension, rising wages, customer expectations, or public incentives.

The correct comparison is not foreign purchase price versus domestic factory cost. It is the full strategic cost of each configuration, including:

• labor and automation investment;
• logistics and inventory;
• tariffs and compliance;
• quality and warranty costs;
• working capital;
• disruption exposure;
• carbon and environmental costs;
• intellectual-property protection;
• speed to market;
• government incentives and their conditions.

Reshoring may improve control and resilience but reduce access to specialist suppliers or low-cost ecosystems. It may also create transition costs and labor shortages. A staged approach—dual sourcing, regional final assembly, postponement, and selective automation—often provides greater flexibility than an abrupt relocation.

9. Digital Technologies and AI in Global Operations

Enterprise-resource-planning systems integrate transactions across procurement, production, sales, finance, and HR. Supply-chain platforms can improve visibility, while sensors and Internet-of-Things devices support condition monitoring and predictive maintenance. Digital twins can model network changes before implementation. AI can assist demand forecasting, anomaly detection, route planning, supplier-risk monitoring, and customer service.

However, digital tools do not remove managerial responsibility. Data may be incomplete, biased, inconsistent across countries, or manipulated. AI systems require clear accountability, cybersecurity, access controls, explainability appropriate to the decision, human review, and compliance with privacy and employment rules. A forecast that improves statistical accuracy but systematically disadvantages a supplier or labor group may be operationally efficient yet ethically unacceptable.

10. Integrated Functional Strategy: An Illustrative Case

Background

The following is a fictional illustrative case. Meridian Appliances, a mid-sized manufacturer of energy-efficient kitchen equipment, sells in North America, Europe, and Asia. Its product design is centralized, electronic controls are sourced from one country, metal components from another, and final assembly occurs near its largest market.

Problem

A shipping disruption and sudden demand increase caused stockouts. Airfreight restored supply but erased much of the margin. Finance reported rising inventory and foreign-exchange losses. Marketing had promised rapid delivery, while procurement focused mainly on unit price. The board is considering a second assembly site and partial reshoring.

Analysis

A cross-functional team mapped the chain to tier-two suppliers and found that both approved electronic-control suppliers depended on the same specialized chip producer. Thus, apparent dual sourcing did not create genuine redundancy. Total landed cost analysis showed that the distant supplier remained cheaper in normal conditions, but its long lead time required substantial safety stock. Scenario analysis identified three vulnerabilities: concentrated chip supply, port dependence, and currency mismatch between costs and revenues.

The team also reviewed transfer pricing. The manufacturing subsidiary performed routine assembly, while the regional distribution subsidiaries owned local marketing relationships and bore customer-service costs. The existing policy allocated unusually high profit to the assembly entity without adequate functional analysis or documentation. Tax, customs, and accounting advisers were asked to reconcile the policy with applicable arm’s-length requirements.

Approach and solution

Meridian adopted a portfolio design:

1. qualify a genuinely independent chip source in a different region;
2. retain the lowest-cost supplier for predictable base demand;
3. create regional final-assembly capacity for strategic markets;
4. use postponement so common units are configured locally;
5. revise demand sharing between marketing, operations, and suppliers;
6. hedge committed foreign-currency purchases under a treasury policy;
7. establish supplier-risk dashboards covering financial, climate, cyber, and geopolitical indicators;
8. conduct a documented transfer-pricing review;
9. introduce mobility and succession plans for engineers moving between plants;
10. set service, cost, working-capital, emissions, and resilience targets jointly.

Outcome

The redesigned network increased normal unit cost modestly but reduced lead time and dependence on one route. Inventory was repositioned rather than simply increased. The company retained global scale for design and core components while regionalizing final configuration. Its board approved the approach because it balanced resilience with financial discipline instead of treating reshoring as an all-or-nothing decision.

Learning points

The case demonstrates that functional optimization can be misleading. Procurement savings may be offset by logistics and inventory. Marketing promises create operational obligations. Treasury decisions affect sourcing economics. Tax policies must follow real functions and risks. HR capability determines whether a new network can operate. Most importantly, resilience is a system property created through coordinated design, not a single emergency measure.

Challenges and Limitations

Global value-chain analysis has several limitations. Cost estimates may omit social and environmental externalities. Risk probabilities are difficult to establish for rare events. Supplier data beyond the first tier may be unavailable. Weighted scorecards can create false precision. Country rankings can conceal regional variation and firm-specific capabilities. Transfer-pricing analysis involves judgment and contested comparables. Technology can improve visibility without improving decision quality if governance is weak.

Managers should therefore use scenario analysis, sensitivity testing, independent challenge, pilot programs, and post-decision review. They should distinguish reversible from irreversible commitments and avoid assuming that the most efficient configuration under average conditions is best under uncertainty.

Best-Practice Checklist

An internationally coordinated functional strategy should:

• define the customer value proposition and strategic priorities;
• map activities, dependencies, and profit pools across tiers;
• evaluate total landed cost rather than quoted price alone;
• combine efficiency, resilience, service, sustainability, and compliance metrics;
• maintain meaningful, not merely nominal, supplier alternatives;
• align operations and marketing commitments;
• govern currency and liquidity exposures through treasury policy;
• document transfer pricing using functions, assets, and risks;
• protect employee rights and manage international mobility responsibly;
• use digital and AI tools with human accountability;
• review the network after major shocks, regulatory changes, and technological shifts.

Chapter Summary

Global value chains distribute value-creating activities across countries, requiring coordination among sourcing, production, logistics, marketing, finance, taxation, treasury, and HR. International configuration should be based on strategic fit rather than labor cost alone. Total landed cost incorporates purchase, logistics, duties, compliance, quality, inventory, and disruption considerations. Production and logistics decisions balance scale against flexibility, while resilience requires visibility, alternative capacity, and tested recovery processes.

Marketing must coordinate promises with operational capability. Treasury manages liquidity and foreign-exchange exposure, while transfer pricing should reflect arm’s-length principles, documented functions, assets, and risks. International HR addresses staffing, mobility, capability transfer, compliance, and employee welfare. Reshoring, nearshoring, and regionalization are options within a portfolio, not automatic solutions. Digital technologies and AI can improve visibility and prediction, but require governance and human accountability. Effective global functional strategy integrates these decisions into a coherent, ethical, and adaptable system.

Key Terms

Global value chain: Cross-border sequence of activities through which value is created and delivered.

Supply chain: Network coordinating the flow of materials, information, and products.

Global integration: Coordination and standardization across countries to gain scale and consistency.

Local responsiveness: Adaptation to national customer, regulatory, cultural, and market conditions.

Transaction-cost economics: Theory explaining governance choices through transaction uncertainty, frequency, and asset specificity.

Total landed cost: Full per-unit cost of acquiring and delivering an item to its destination.

Postponement: Delaying final configuration until demand or market information is clearer.

Safety stock: Inventory held to protect against uncertainty in demand or supply.

Resilience: Capacity to absorb, recover from, and adapt to disruption.

Dual sourcing: Use of two qualified suppliers for an input or activity.

Working capital: Short-term operating funds invested in inventory, receivables, and payables.

Cash-conversion cycle: Time between cash payment for inputs and cash collection from customers.

Transaction exposure: Currency risk associated with contracted foreign-currency cash flows.

Transfer pricing: Pricing of transactions between related entities.

Arm’s-length principle: Expectation that related-party terms resemble those independent parties would agree.

Ethnocentric staffing: Filling key international positions with home-country employees.

Geocentric staffing: Selecting talent globally according to capability.

Reshoring: Returning an activity to the firm’s home country.

Nearshoring: Relocating an activity to a geographically close foreign country.

Functional strategy: Coordinated plans that translate business strategy into departmental action.

Review Questions

Short Answer Questions

1. How does a global value chain differ from a supply chain?
2. Identify four elements that should be included in total landed cost.
3. What is the purpose of postponement?
4. Distinguish transaction exposure from translation exposure.
5. Why is nominal dual sourcing not always genuine resilience?

Long Answer Questions

1. Explain how global integration and local responsiveness influence international network design.
2. Discuss the advantages and limitations of outsourcing in a global value chain.
3. Explain how treasury and transfer-pricing decisions affect international operations.
4. Compare ethnocentric, polycentric, regiocentric, and geocentric staffing approaches.
5. Evaluate the strategic arguments for and against reshoring.

Analytical / Application Questions

1. A supplier offers a lower unit price but has long lead times, high duties, and weak continuity. Construct a total-landed-cost and risk assessment to determine whether it should be selected.
2. A company’s marketing division promises next-day delivery in three countries, but production is concentrated in one distant plant. Recommend an integrated operations, logistics, and marketing response.
3. Design a resilience plan for a firm whose two approved suppliers depend on the same upstream component producer. Explain the trade-offs among cost, inventory, regionalization, and supplier development.

Multiple Choice Questions with Answers

Question 1

Which measure best captures the full economic cost of obtaining and delivering an imported unit?

A. Quoted purchase price

B. Total landed cost

C. Inventory turnover

D. Operating margin

Correct Answer: B. Total landed cost

Question 2

Postponement primarily enables a firm to:

A. Eliminate all inventory

B. Delay final customization until demand information improves

C. Avoid complying with import regulations

D. Transfer all production to customers

Correct Answer: B. Delay final customization until demand information improves

Question 3

Which condition most strongly supports internalizing an activity under transaction-cost reasoning?

A. Low uncertainty and standardized inputs

B. High asset specificity and opportunism risk

C. Many interchangeable suppliers

D. Very infrequent transactions with no specialized investment

Correct Answer: B. High asset specificity and opportunism risk

Question 4

In the cash-conversion-cycle formula, increasing days payable outstanding, all else equal, generally:

A. Shortens the cash-conversion cycle

B. Lengthens the cash-conversion cycle

C. Eliminates receivables

D. Increases inventory demand automatically

Correct Answer: A. Shortens the cash-conversion cycle

Question 5

A foreign subsidiary’s accounts changing in domestic-currency value during consolidation create:

A. Transaction exposure

B. Translation exposure

C. Only operating leverage

D. Supplier concentration

Correct Answer: B. Translation exposure

Question 6

The arm’s-length principle concerns whether:

A. Employees receive identical salaries worldwide

B. Related-party prices resemble terms independent parties would agree

C. All countries use the same tax rate

D. A firm uses only domestic suppliers

Correct Answer: B. Related-party prices resemble terms independent parties would agree

Question 7

Which action most directly improves genuine supply-chain resilience?

A. Relying on two suppliers that share the same upstream bottleneck

B. Mapping deeper supplier tiers and qualifying an independent alternative

C. Removing all safety stock regardless of demand variability

D. Selecting suppliers solely by quoted price

Correct Answer: B. Mapping deeper supplier tiers and qualifying an independent alternative

Question 8

Geocentric staffing means that a firm:

A. Uses only home-country managers

B. Uses only host-country managers

C. Selects talent globally according to capability

D. Avoids international employee mobility

Correct Answer: C. Selects talent globally according to capability

Question 9

If supplier price is $48, freight is $4, duty is $3, distribution is $2, compliance is $1, and quality cost is $2, what is total landed cost per unit?

A. $52

B. $56

C. $60

D. $64

Correct Answer: C. $60

Question 10

Which statement best describes regionalization?

A. Concentrating every activity in the lowest-wage country

B. Organizing value chains around major geographic markets

C. Eliminating all cross-border trade

D. Replacing strategy with automation

Correct Answer: B. Organizing value chains around major geographic markets