Dealing with the Hidden Effects of Global Business Systems

Companies are actively seeking competitive advantage through their choice of location and ownership of manufacturing processes. This has, however, increased the distance between the headquarters and the increasingly dispersed operations network. The purpose of this paper is to identify how companies may reduce this distance through reorganization and development of adequate global business systems solutions. The paper draws on a case study of a Danish industrial equipment firm. The paper describes and analyzes the company’s operations network configurations, which lay at the foundations of the company’s global business system. It is demonstrated how the operations configurations have been changing over time and affecting the overall business system. The paper identifies the key determinants and outcomes of this change and hidden effects of this change. Moreover, it proposes how the design of operations configurations can be improved through the development of a distinct systemic approach to control and coordination, which emphasizes not only short-term operational efficiency, but also increasingly longer-term strategic effectiveness. The findings provide a basis for dealing with hidden effects of global business systems and improving the integration of such systems.