Assessing International Allocation Strategies

Allocating the operations of multinational enterprises to geographic locations where performance can be optimized has become an important strategic issue. In view of the continuing growth of international trade and foreign direct investment, managers need systematic procedures to determine global allocation strategies. Available frameworks on global business strategy are typically abstract and generalized, making them less suited for the development of tailor‐made allocation strategies. Quantitative allocation models in operations research tend to be biased towards optimizing mathematical algorithms, making them less suited to support managerial decision making. This paper bridges the gap between generic strategy frameworks and highly quantitative operations research models by presenting a scanning tool to support decision making on strategic allocation issues. An important feature of this tool is to systematically filter available data, intended to quality and quantify critical product, process and market characteristics for specific product classes. The scanning tool has been applied in two cases, involving allocation decisions of a European multinational in the fast moving consumer goods industry.