Lenovo's ThinkPad laptop computers is designed in the United States, the case, keyboard, and hard drive are made in Thailand; th
e display screen and memory in South Korea; the built-in wireless card in Malaysia; and the microprocessor in the United States. In each case, these components are manufactured and sourced from the optimal location given current factor costs. In this example, Lenovo has:a. Vertical integration advantagesb. A global web of value creation activitiesc. High local responsivenessd. Learning effects
Multinational companies can benefit from creating a global network of value creation activities. With this strategy various phases of the value chain are distributed in several global locations where the cost of value creation is greatly reduced and value maximized. In this scenario Lenovo strategically chooses locations for the manufacturing of components for their ThinkPad laptops, while factoring costs involved and ensuring they are at a minimum. As with any strategy, it has its limitations that can reduce effectiveness such as trade barriers and other political risks.
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