Individual components of a single product might be manufactured in several different locations and assembled into final products elsewhere. In this stage, companies start to disaggregate the production process and focus each activity in the most advantageous location. The third stage ( value chain disaggregation The stage in globalization in which firms start to disaggregate the production process and focus each activity in the most advantageous location.) represents the next step in the company’s globalization of the supply-chain infrastructure. Under this scenario, different locations begin to specialize in different products or components and trade in finished goods.
In the second stage ( product specialization The transfer by firms of the full production process of a particular product to a single, low-cost location and the export of the goods to various consumer markets.), companies transfer the full production process of a particular product to a single, low-cost location and export the goods to various consumer markets. To gain access to local customers, however, they often need to establish a production presence, either because of the nature of their businesses (as in service industries like food retail or banking) or because of local countries’ regulatory restrictions (as in the auto industry).
In the first stage (market entry), companies tend to enter new countries using business models that are very similar to the ones they deploy in their home markets.
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