The purpose of this article is to address critical issues on how a global enterprise establishes an effective supply network. The example of a Japanese firm operating in China illustrates a supplier portfolio entry model that has not previously been examined in the literature.
This paper proposes a research model based on theories of resource dependency and supplier networks. The model shows how profit optimization is achieved through a series of decisions that build an effective supplier network.
The concept of portfolio management is useful in optimizing profits through a supplier network.
This research is based on a single case in one country, so it has limited validity. Further studies are also needed to examine more complex cases in multiple countries.
The leading enterprise (e.g. original equipment manufacturer) may effectively build its global network by strategically applying the key features of the supplier portfolio model.
Practitioners and academics may gain new insights into how a global enterprise was able to build an effective supplier network in China.
