MNE’s Manufacturing Trends And Issues Related To Global Network Implementation

Over the past decades MNEs have dramatically reshaped their global network organizations. One of the major reasons for this phenomenon has been the aim to funnel internal resources toward the core activities of the company and at the same time to outsource the less strategic tasks to external providers. Furthermore, companies have sought the opportunity to offshore part of their activities in foreign locations where labor market, natural resources or institutional framework offer a competitive advantage. These trends have progressively brought the disaggregation of companies’value chain in finer slices and the geographical dispersion of the operations all over the world. Globalization and technological developments have substantially contributed to enable a faster transportation and communication systems.On one hand MNEs have been able to exploit the benefits of refocusing their assets in the most critical activities; on the other hand, this new reconfiguration has brought higher risks to enter developing countries and has lessened the control over the outsourced/offshored activities.The first section of this work is a theoretical framework that explains how MNEs’global network has evolved over time up to the latest reshoring trends. The focus will be in particular on manufacturing activity and the period of reference is between’60s and nowadays. Furthermore, the value chain is analyzed with a specific focus on the most relevant issues that companies are struggling with when implementing a global network.The second section is the presentation of a case study related to the Italian textile company Benetton Group, with a specific focus on its sourcing activity in Asia.The third section applies the theoretical framework to Benetton case, in order to understand what will be the future location decision of the company and which are the major issues that have undermined the implementation of its global network.Finally, in the last part, I will provide a series of recommendations in order to forecast the future strategic decisions of Benetton and improve its current global network.