Building global supplier networks: a supplier portfolio entry model

Purpose – 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. Design/methodology/approach – 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. Findings – The concept of portfolio management is useful in optimizing profits through a supplier network. Research limitations/implications – 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. Practical implications – 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. Originality/value – Practitioners and academics may gain new insights into how a global enterprise was able to build an effective supplier network in China.