I read this article because of the amazing story of Sean Maloney’s stroke and recovery process (my sister had a similar stroke in February, 2010, and writes about it here).
Buried near the end of the article is this little nugget about Intel’s China strategy:
Early this year Intel’s top brass started talking about upgrading leadership in China. Intel is doing fine in China, but the three parts of the business — R&D, manufacturing, and sales and marketing — never got properly aligned. The stakes are higher than ever because next year China is expected to become the world’s largest computer market.
This reflects a common challenge among companies operating in the big emerging markets – they may have started there for global production arbitrage, expanded the kind of work they do in the country, and then began to see the huge potential market. In Intel’s case in China, perhaps their biggest market. Yet the organizational structure and strategy is still rooted in the original arbitrage model, so the different parts of the country’s operations are not “properly aligned.” Simply moving to the traditional MNC country-by-country model would lose the benefits of global arbitrage and perhaps aggregation for the rest of the company. What’s a company to do?
There are no easy answers here. To quote Pankaj Ghemawat in Redefining Global Strategy “Nobody has yet figured out the optimal way to organize a complex global economy, but much can be learned from looking at leading-edge companies.” (p. 218)
