Advanced Corporate Strategy

ST104x

Vertical scope

Scale decisions have to be made along with decisions on vertical scope in new market entry.
Vertical scope decisions center around choosing which activities would the MNE perform in
international markets. Some firms may only offshore specific activities in the value chain to
foreign countries, while some others may offshore a wide variety of activities.

Take for instance, Apple that only outsources manufacturing to Asian countries, whereas
firms like Hyundai Motors entered India with a wide range of activities. Hyundai India
performs a full range of activities – from product design; specific to the Indian market,
engineering, sourcing, manufacturing, and marketing. These products designed for India, in
India are also exported to other countries with similar customer requirements.

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