Palavras-chaves: local responsiveness, international operation strategy, structure of global commodity supply chain

THE IMPACT OF LOCAL RESPONSIVENESS IN THE STRUCTURE OF THE GLOBAL SUPPLY CHAIN OF COMMODITY OF A SUBSIDIARY: THE CASE OF TWO PETROCHEMICAL SUBSIDIARIES LOCATED IN BRAZIL. Daniela Didier Nunes Moser (PROPAD) danidnmoser@uol.com.br MARCOS ANDRÉ MENDES PRIMO (PROPAD) marcos.primo@dca.ufpe.br Ytauana Karine de Lima (PROPAD) ytauana@gmail.com Daniele Maria Vieira do Nascimento (PROPAD) danielemarian@yahoo.com.br Elidiane Suane Dias de Melo (PROPAD) elidianemelo@gmail.com This article deals with how the local responsiveness in the international operation strategy as defined by the main company affect the structure of global commodity supply chain of a petrochemical subsidiary located in the State of Pernambuuco, northeast of Brazil. The global commodity supply chains emphasize the need to look not only the extent of geographical dispersion of production arrangements, but also for their organizational scope. The research is qualitative and exploratory. It is multi-case study focusing petrochemical subsidiaries located in Pernambuco -Beta Company (old Gama Company), a German company, and Alpha Company, an Italian company. Data collection was based on semi-structured interviews and documentary research. The main results indicate that the way the main company define its policy of local responsiveness, involves in different ways to structure the global commodity supply chain of petrochemical subsidiary. Palavras-chaves: local responsiveness, international operation strategy, structure of global commodity supply chain

1 Introduction The petrochemical industry is the source of the most consumer items available in the modern world (BARBIERI, 2004). The petrochemical chain dates back to basic hydrocarbons industry extracted from underground land, especially oil and natural gas. The raw material plays an important role by representing around 95% of costs. Thus, access to raw materials with price, quality and quantity suitable for the optimization of production is essential to maintaining the competitiveness of the sector (SCHUTTE, 2004). The inherent risks in operating in competitive market affect both the producer and consumer. While the petrochemical industry requires petroleum derivatives to keep its production level, the refineries need to deliver the derivatives to users under penalty of being unable to maintain the production of other more noble products, such as gasoline and diesel. (SCHUTTE, 2004). The selection of the strategy for international insertion is strongly related to sector characteristics, being influenced by its base technology, marketing area and patterns of competition in the sector. Companies from different industries have different models of internationalization (ANDERSSON, 2004) and working with different modes of local responsiveness (LUO, 2001). The global supply chain of commodity refers to the entire range of activities involved in the design, production, and marketing of a product (GEREFFI, 1999). At supply chains of commodity driven by producers, manufacturers play the central roles by coordinating production chains (including linkages upstream and downstream of them) and technologyintensive products (GEREFFI, 1999b). To compete efficiently, companies need to setup their operations around the globe. this setup involves the location of their operations plants, logistics, marketing, human resources and information systems, aiming to meet the different conditions found around the world (PRASAD ; BABBAR, 2000), to coordinate them in an efficient and complementary (PRAHALAD; DOZ, 1987), not forgetting the local responsiveness to each customer or country it serves. Nevertheless, given the globalization of markets, one can no longer compete as an autonomous entity, but only as a chain (LAMBERT; COOPER, 2000). The overall structure of the supply chain of a business has an important relationship in their global competitiveness since it deals with management and strategic positioning of the different elements of your supply chain (PRATER; GHOSH, 2006). Develop suppliers locally or use their former suppliers, transferring its supply base in his country of origin to its affiliate, becomes a determinative factor in the formulation of international operating strategy of a company which choosing to make an foreign direct investment (FDI). The company also should develop strategies downstream of its supply chain, defining where and how their products will be marketed, who are going to be their customers, if old clients will be "transferred" from the array to its subsidiary or if new channels and customers will be prospected (CAMUFFO; FURLAN; VINELLI, 2007). In this context, we demonstrate the need to examine the impact caused by local responsiveness in the supply chain structure, emphasizing the two main exporters and importers of petroleum products in the State Alpha Company and Beta Company (formerly 2

Gama Company). XVI INTERNATIONAL CONFERENCE ON INDUSTRIAL 2 Theoretical background 2.1 Local responsiveness The globalization of the competitive environment requires companies that operate in the international market to balance its international operation strategy between global integration and local responsiveness, becoming this paradox a critical and decisive factor in competitiveness and corporate sustainability (PRAHALAD; DOZ, 1987). As one seen previously the global integration of the transaction seeks to build networks operating efficiently, getting the maximum benefits through the similarity between manufacturing plants and major customers (BARTLETT; GHOSHAL, 1991). On the other hand, local responsiveness means a specific and quick answer to the needs of clients in their various host countries (LUO, 2001). While global integration and local responsiveness are inversely related, its determinants are not necessarily the same. While overall coordination is determined by the need to internationalize defined by the matrix, the local responsiveness is mainly influenced by contingent situations to which the subsidiary unit is submitted (PRAHALAD; DOZ, 1987) Aiming to find the relevant factors in determining the local responsiveness of a company that operates in the international market, Yadong Luo (2001) developed a framework through a study on the emerging Chinese market which was split into three groups, namely: organizational factors, environmental factors and industrial factors. The representation of these factors can be seen in Figure 1. According to the typology developed by Luo (2001), environmental factors are composed by the environment complexity, the business specificity and cultural distance. 3

Figure 1 - Determinants of local responsiveness Source: LUO, 2001 p. 455 a) Environmental Complexity A complex environment increases the transaction cost of trading and hampers global integration (PRAHALAD; HAMEL, 1985). When a firm faces a complex environment, it faces major difficulties in taking strategic decisions and organizing their productive resources (BARTLETT; GHOSHAL, 1991). Correspondingly, the degree of global integration is generally low in a heterogeneous environment (BARTLETT, GHOSHAL, 1987). If the firm chooses to operate in a complex environment in an integrated manner, ie, not acting with local responsiveness, the complexity of the environment can squeeze the economy of scope, hindering potential business, and also could increase the costs of information (LUO, 2001). b) Business specificity To better understand the particular business practices of a host market is essential obtain specific knowledge of its business in that country (DUNNING, 1988). When a subsidiary operates in an unfamiliar business environment, must be adaptable and responsive. This will facilitate the acquisition of specific knowledge about the host country and facilitate the operation at this location. Without this knowledge, choose to operate with responsiveness may cause instability and undermine the momentum of the operation (LUO, 2001). c) Cultural distance The cultural distance implies differences in managerial values, ways of thinking and rules (LUO, 2001). Companies tend to be more responsive in markets where there is a greater cultural distance. However it becomes more complex transfer knowledge and products for this host country, which requires greater investment in knowledge acquisition (JOHANSON; VAHLNE, 1977). 4

The structural factors of the industry suffer interference of competitiveness, heterogeneity of demand and location (LUO, 2001). d) Competitive intensity When the degree of competition in a host country is high, foreign firms tend to act more responsive to customer needs; to develop better products and superior services (PORTER, 1989). e) Heterogeneity of demand Heterogeneous demands from host countries mean that companies will behave with low integration or high responsibility (YIP, 1989). To increase their competitiveness and sustainability, companies seek to meet the best possible customers. The different behaviors of their consumers around the world increase pressure on foreign subsidiaries to act in a locally responsive mode (LUO, 2001). f) Location At the moment of decision of the location of a subsidiary, the policies of the host country government are a major factor, since they may limit the power of choice of the firm (DUNNING, 1993). In order to stimulate economic development in his country, the host country government has a key role in the company's option to act in a locally responsive mode. These requirements are normative and institutional forces that increase transaction costs for foreign firms which do not get adjust. The organizational factors, another pillar developed by Luo (2001), are composed of market guidance, previous experience and established network. g) Market guidance Market guidance (local x export market) increasingly served as an organizational system that balances global integration and local responsiveness (PRAHALAD, DOZ, 1987). This is also an effective tool to adjust the vulnerability of a subsidiary to contextual hazards, enabling the maintenance of their strategic goals (BARTLETT, GHOSHAL, 1991). Manipulating the market guidance, a multi-domestic company can better monitor their foreign operations and maintain organizational control over its subsidiaries into an integrated chain. By adopting a decentralized form of coordination, the multi-domestic company boosts the ability of a subsidiary to respond quickly to changes that help to expand market. This freedom and great market knowledge of the matrix allow the subsidiary to export part of its production, which reduces the need for local responsiveness (LUO, 2001). h) Previous experience The internationalization model proposed by the Uppsala school assumes that the lack of experience is a major obstacle to the development of international operations and suggests the accumulation of expertise about the host country. By increasing commitment to the host country the company reduces operational uncertainty and increases economic efficiency (JOHANSON; VAHLNE, 1977). Companies can operate in the market in two ways: (a) efficiently, where cost is a major strategic factor in decision making, but without altering the quality and (b) so responsive, where the main strategic factors are quality, flexibility and lead time (Figure 2) (FISHER, 1997). 5

Operational Cost XVI INTERNATIONAL CONFERENCE ON INDUSTRIAL Objectives of Supplier Efficient Provide with the lowest possible cost Responsive Rapid response to changes and demands to minimize inventories Selection Cost Ability, agility and flexibility Process Inventory Lead-Time Product design High utilization average maintained Minimization of inventory throughout the chain to reduce costs Try to reduce lead-time, since this do not increase the cost Maximize performance and reduce costs Investment in capacity and flexibility of processes Developing of responsive systems, with gauges of stocks to ensure supply Aggressive investment to reduce the lead time of production Use of the product design to reduce the production time Figure 2 Efficient X Responsive Supply Chain Source: Adapted from FISHER, 1997. As shown in Figure 2, to act in a responsive mode, the company should operate and seeking to increase its capacity, agility and flexibility, factors which are dependent on suppliers who work quickly and efficiently, enabling rapid responses to changes, reducing the need for stock. By analyzing the international operations strategies of a company, Hill and Jones (1998) found that their behaviors were strongly related to two categories: cost and local responsiveness (Figure 3). By adopting an international strategy for global operation the company will emphasize cost reduction through standardization of its products with low inventory level, seeking to take advantage of scale, ignoring features such as flexibility, product customization. On the other hand, the international strategy for transnational operation, although emphasizing cost reduction, operates with a high local responsiveness, seeking to absorb the advantages and peculiarities of each host country. High Global Strategy Transnational Strategy Low Low International Sttrategy Flexibility and responsiveness Multinational Strategy High Figure 1 - The four operation strategies Cost x Responsiveness 6

Source: HILL; JONES, 1998, p. 254 The international strategy for international operation, in its turn, does not seek to reduce costs, nor the local responsiveness. This type of enterprise looks for reaching distant markets, through export and / or licensing of its products. Finally in the international strategy of a multinational operation aims high local responsiveness, regardless of cost reduction. A company that operates with a configuration that offers to their customers and suppliers high flexibility, seeking a steady reduction in their lead-times. 2.2 Global supply chain of commodity The global supply chain of commodities is an important tool for the investigation of the organizational format of international supply chains and the ability of companies to take ownership of the benefits generated along the chain (GEREFFI, 1999). To a supply chain be managed in an integrated, logistics should be treated as a system, i.e., a set of interconnected components, working in a coordinated manner with the aim of achieving a common goal (CHOPRA; MEINDL, 2003). According to "The Global Supply Chain Forum," managing the supply chain means the integration of key processes from the raw materials supplier to final consumers and other stakeholders. The supply chain management upstream (the focal firm) evolved from the traditional functions of purchasing and supply management. At this perspective, the suppliers work on product development, in the pursuit of materials with better cost and performance, in the definition of the technologies being used in the design of services and inventory management (LAMBERT; COOPER, 2000). The supply chain management downstream (the focal firm) came from efforts to better manage the transportation and logistics functions, involving inventory management, interface with vendors, transportation, distribution, warehousing and delivery services (LAMBERT; COOPER, 2000). The prospect of global supply chain of commodity emphasizes the need to not look only to the geographical dispersion of production arrangements, but also for their organizational scope, trying to analyze and understand their various stakeholders - suppliers of raw materials, factories, traders and retailers (GEREFFI, 1999). The way the global supply chain of commodity is structured is an important factor in defining how it should be managed, these aspects will be discussed in the next section. 2.2.1 Structure of Global Supply Chain of Commodities The structure of the supply chain refers to the identification of significant links both upstream (suppliers of inputs and capital goods) and downstream of the company (second and third processors and industrial channels of distribution of final products). Understanding the contribution of each of the agents belonging to these links to the creation of value for products coming to market is a key element to understanding supply networks (SLACK; CHAMBERS; JAHNSTON, 2008). According to Slack et al (2008), the design decisions of the structure of the supply chain are related to the degree of vertical integration that the company should take, the location and capacity of the physical facilities that serve the physical flow and also the support communication between different members of the supply chain. 7

Firms seek the best ways of acting and performance of its various activities in the value chain to ensure better competitive advantages within the industrial sector in which they operate. To do so, these firms can adopt coordinated strategies abroad from which all or a significant part of their value chain (such as sales activities, technical assistance, research and development, etc..) can be executed outside their country of origin, seeking for these competitive advantages (PORTER, 1989). Thus, the globally integrated enterprise is that whose competitive local advantage affects the firm's competitive advantage globally. The decision to enter a particular foreign market leads the company to acquires major advantages in cost, quality and lead-time and even in developing innovations. However there is a need to redefine their processes and their strategies for purchasing and distribution seeking to align them with the new scenario, requiring a new configuration of its suppliers / distributors networks (SCULLY; FAWCETT, 1993). The supply chain management starts from the assumption that companies should define their competitive and functional strategies through placements (both with suppliers and with customers) in their supply chains. The strategies and decisions cease to be formulated and signed from the perspective of a single company and become part of the production chain as a whole (PARRA; PIRES, 2003). The model of supply network must be defined from the focal firm, seeking to manage their suppliers and their customers to get better integration (SLACK; CHAMBERS; JAHNSTON, 2008). The competitiveness will be increasingly related to the performance of interorganizational networks rather than individual companies, which reaffirms the importance of collective efficiency (FLEURY; FLEURY, 2003). The formation of these networks could be associated with the movement towards the internationalization of the operations of large corporations since the benefits of global exploitation (eg. economies of scale and scope) increase the need for integration and coordination of international activities (LAMBERT; COOPER, 2000). The global value chain focuses on the activities and the strategic role of relationships between firms and actors. From the literature of transaction cost, Gereffi et al (1994) developed a framework which overlaps the concept of value chain directly to the organizations global industries. The authors state that a value chain can be local or global (national or international), which can characterizes it as a global supply chain of commodity (GEREFFI, MEMODOVIC, 2003). Gereffi (1999b) notes the existence of two basic formats of the global supply chain of commodity. First, the author highlights the chains driven by the producer (producer-driver commodity chains), which relates to industries in which large integrated industrial enterprises, usually transnational, play a key role in controlling the production process. It is quite common in this structure the use of forms of international outsourcing, especially in stages with more intensive hand labor at the productive process (GEREFFI, 1999). 3 Methods 3.1 Type of research We performed an exploratory research using case studies from the perspective of the managers of foreign subsidiaries petrochemicals. Although this paper uses a theoretical already rich in terms of theories, propositions and empirical evidence, there is a lack of 8

attention given to them in the empirical literature on international operations strategy, especially, the global supply chain of commodity, which suggests the need to conduct an exploratory study. The use of the method of case study as research strategy was due to its better suitability to collect and analyze empirical evidence desired. This is because the case study allows an investigation that preserves the characteristics and meanings of the events of contemporary life (YIN, 2001). Therefore, the methodology used was qualitative multiple case study (MERRIAM, 1998) because it was deemed best suited to understand and analyze the cases in depth. This methodology led the researcher to describe and interpretative analysis of the phenomenon in a direction ex-post facto, with cross section from the installation of Alpha Company and acquisition of the Gama Company by Beta Company. The perspective of the executives was considered at the same time it was checked to be valid through documents and speeches by the directors of the array. Data analysis occurred through the formation of categories by constant comparison in order to condense the categories to be formed patterns consistent with the theoretical framework of this research. 3.2 Criteria for companies selection Regarding the selection of the sample, the type of sampling was non-probabilistic, purposive sampling, which was considered more appropriate in this type of study. Probabilistic sampling, according to Merriam (1998), is unnecessary and even not justifiable in qualitative research, since the purposive sampling allows researchers to select those participants that can be effectively useful and rich sources of information. This sampling strategy is based on the assumption that the researcher wants to discover, understand and gain insight and thus select a sample from which the more rich and dense information can be learned (MERRIAM, 1998). Therefore, we attempted to select the organizations according to three criteria: 1. Accessibility 2. Nationality of origin and 3. Import / export activity. Due to differences between the units of analysis (country of origin, market entry mode on Pernambuco, influence of main company in developing strategies and export and / or imports activity by the subsidiary), we chose to analyze each company individually then compare them based on categories. Thus, this study proposes to reveal peculiarities and similarities of the impacts resulting from the interplay between the international operations strategies and supply and sales strategies adopted by selected subsidiaries. Therefore, the cases can be described according to the following criteria (figure 4): 9

Company Alpha Company Beta Company Country of origin Italy Germany Sales strategy National/ international National/ international Supply strategy International National/ international Year of installation of subsidiary 2007 Acquisition in 2008 Manufacturing plants in the world 9 units in 4 countries 47 units in 21 countries Units in Brazil 5 3 Market entry mode on Pernambuco FDI - Acquisition /Greenfield Venture FDI Acquisition 3.3 Techniques of data collection Figure 4 - Description of cases Source: the authors Data collection was performed through seven interviews and extensive documentary research released by the company and available in digital media on the Internet by the institutional site of each company. The interviews were conducted in depth with an average of 100 minutes each and were recorded for later transcription and analysis. The interviewed were logistics managers and general director or production manager of each of the units selected. 3.4 Data analysis We conducted data analysis by describing the case of the studied company. Because this was an exploratory study with limited number of units of analysis (two companies), was not necessary auxiliary tools for data tabulation. Thus, the cases were structured in narrative form, using the information obtained during data collection. This moment was crucial to explore the wealth of details that one can provide with an in-depth interview. After this stage, there were the analyses of the cases in light of the literature presented. 4 Description and analysis of cases Beta Company, although founded in 2005, was born the fruit of Zeta Company, a company with more than a century and a half of experience, which has 47 Manufacturing plants and more than 14,500 employees around the world. On the other hand, Alpha Company, a relatively new company with just over half a century old, began his international expansion in the 90s and has only 14 plants in the world, even though enough to be a leader in its segment. Alpha Company focuses on its core product - PET, although it has small productive units of fibers and resins. Beta Company, in turn, is a world leader in synthetic rubber, working with 13 product units, subdivided into three major segments. Beta Company, especially the unit located in Cabo de Santo Agostinho - the unit of analysis in this research - works with the butadiene rubber (SBR) as the main product portfolio. 4.1 Local responsiveness Currently, both analyzed companies seek to practice the local responsiveness downstream, seeking to meet primarily Brazilian customers, followed by customers in South America. This feature supports the policy of non-aggression to the markets of other subsidiaries of the group. 10

Upstream Downstream XVI INTERNATIONAL CONFERENCE ON INDUSTRIAL Upstream, however, local responsiveness is not applied. In the case of Alpha Company this is due to the lack of suppliers in the nearby village. In the case of Beta Company, the local responsiveness is not applied upstream due to strategic policies in the sector of supply, which choose to purchase large quantities and distribute them to its subsidiaries. There are suppliers of butadiene in the nearby village, but their supplies are little used by Beta Company. Before becoming Beta Company (while still Gama Company), Delta Company located in the State of Bahia and ownership of Gama Company provided Butadiene through vertical integration. Figure 5 summarizes what has been stated above. Local Responsiveness Features Organizational factors Beta Company Guidance for the South American market. Alpha Company Guidance for the Brazilian market and excess production to South America. Environmental factors Industrial factors Organizational factors Prevent the entry of another provider in the Brazilian market. Location not favorable. Past experience suggests the use of foreign suppliers. Prevent the entry of Asian PET in Brazilian Markets. Location in development; Low competitiveness. Past experience suggests the use of foreign suppliers. Environmental factors Industrial factors Lack of suppliers with adequate production volume in the nearby village. Location not favorable. Lack of suppliers with adequate production volume in the nearby village Location in development; Low competitiveness. Figure 5 Cross Analysis Local Responsiveness Source: The authors, 2009 4.2 Structure of global supply chain of commodity Both Alpha and Beta Company practice the system of vertical coordination with its major suppliers of basic raw material. However, given the characteristics of the product, Beta Company states that it is possible to acquire these raw materials from other suppliers, since it has no dependency on infrastructure, as in the case of Alpha Company, where suppliers have port facilities to better deliver it their products. Regarding to customers, both Alpha and Beta Company seeking to work in a coordinated vertically, facilitating the sharing of information. However, the customer network of Alpha Company is being attracted to the nearby village, due to its strategic location, further enhancing this integration. Figure 6 shows the comparison which was made in the above text, facilitating the understanding of this research. 11

Global supply chain XVI INTERNATIONAL CONFERENCE ON INDUSTRIAL Features Beta Company Alpha Company Upstream Centered on the Matrix - three major suppliers - Centered on the Matrix two major suppliers - Easy change of supplier Hard change of supplier Downstream Centered on the Matrix Focus on Brazil and South America Centered on the Matrix Focus on Brazil and South America 5 Conclusions Figure 6 Cross Analysis Global supply chain Source: The authors, 2009 This study aimed to examine how the international strategy of operation, as defined by the matrix, affects the structure of the first level of the global supply chain of commodity. To accomplish this goal, the framework developed by Prahalad and Doz (1987) was selected, which analyzes the international operation strategy through three points: global configuration of activities, overall coordination of activities and local responsiveness. These three categories allowed the structural analysis of the global supply chain of commodity. The methodology used was the qualitative multiple case study (Merriam, 1998), because it was assumed here that this method is most suited to understand and analyze in depth the cases. This methodology led the researcher to a description and an interpretative analysis of the phenomenon in an ex-post facto direction, with cross section, from the installation of M & G Polymers, and acquisition of the Gama Company by Beta Company. The prospect of the executives was considered at the same time it was found to be valid through documents and speeches by the directors of the array. Data analysis occurred through the formation of categories by means of constant comparison in order to condense the categories until the formation of patterns consistent with the theoretical framework of this research. There were found evidences that the international strategy of operation, as defined by the matrix, directly affects the structure of the global supply chain of commodity in the petrochemical sector. In general, the global supply chain of commodity of the subsidiary is wholly owned and run by its matrix, due to how the international strategy is outlined. Hence, in order to answer the objectives of this research, the discussion and conclusion of this study is showed as follows. 5.1 Impact of local responsiveness in the structure of the global supply chain of commodity of a subsidiary. The local responsiveness is the third factor in the international strategy of operation. The limitations of the service area of a given subsidiary is a central issue in the relationship between the subsidiaries, headquarters, customers and suppliers. Alpha Company(Suape) chose to invest in a wholly-new subsidiary, clearly defining its market segment, selecting Brazil as the main focus - unlike Beta Company that needed to redefine its strategies. In the past, Gama Company used to have a vision of international expansion, sometimes giving preference to foreign customers, to the detriment of nationals; now Beta Company seeks primarily the Brazilian market, but may expand its area of reach throughout South America, a region that does not have production units of the products manufactured by Beta Company Cabo de Santo Agostinho. 12

Hence, today, for both subsidiaries and in particular to the Alpha Company (Suape) the sale of its products to international markets is a circumstantial matter, not its main politic, arising out of the surplus. The domestic market is their main target, where they seek to prevent the entry of similar products in the Brazilian market. In the view of the global supply chain of commodity, the subsidiary will seek to achieve a solid network with their customers, regardless of its location, acting in a responsive manner that will improve its relationship with the customer, reducing its lead-time delivery, and also reducing the stock of its client (FISHER, 1997). Because it is a chemical sector, where the optimal operation is achieved through the use of total production capacity, better demand forecasting will allow a better assessment of the benefits obtained through the sale of the surplus. Concerning the purchasing activities, the lack of raw materials in large scale and in location with easy access in the Brazilian market, forces them to import. If there were vendors at the nearby village, it would reduce the logistic costs although there would not be any direct improvement in product or process. Alpha Company, however, demonstrated no interest in having local suppliers. Its suppliers are the same for all units in the world (when possible), what provides benefits of scale in purchasing it. On the other hand, Beta Company, perhaps due to its bad geographical position, with high logistic costs, says suppliers in the nearby village would help it to improve the competitiveness of the company. Nevertheless, Beta Company replaced an old supplier of Gama Company for a global supplier what seems as a contradiction. This fact can partly be explained by the affirmative that in a market of a commodity the greater responsiveness required is the guarantee of supply in proper time and in the correct specification, avoiding disruptions in production of the subsidiary. In summary, in an industry driven by the producer, in particular commodity, the local responsiveness to the downstream focal firm is relatively high, as it seeks to serve its target market, generally the market where it is installed. However, given the characteristics of a global commodity enterprise, the selection of suppliers is carried out worldwide with a strong vertical coordination, in which the location of the plants does not matter, but a supply with the right volume and time. References ANDERSSON, S. A. Internationalization in different industrial contexts. Journal of Business Venturing. n.19, p.851-875. 2004. BARBIERI J.C. Organizações Inovadoras: Estudos e casos brasileiros. Rio de Janeiro: FGV, 2004. BARTLETT, C. A.; & GHOSHAL, S. Managing across borders: new strategic requirements. Sloan Management Review. v.4, n.28, p.7-17, 1987. BARTLETT, C. A.; & GHOSHAL, S. Global Strategic Management: Impacton The New Frontiers of Strategy Research. Strategic Management Journal. n.12, p.5-16, 1991. CAMUFFO, A.; FURLAN, A.; & VINELLI, P. R. Routes towards supplier and production network internationalization. International Journal of Operations & Production Management. v.4, n.27, p.371-387, 2007. CHEN, I. J.; & PAULRAJ, A. Towards a theory of supply chain management: the constructs and measurements. Journal of Operations Management. 2004. CHOPRA, S.; & MEINDL, P. Gerenciamento da Cadeia de Suprimentos: Estratégia,Planejamento e Operação. São Paulo: Prentice Hall, 2003. 13

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