is prohibited.
In Figure 2 we see that a business unit has two capabilities P2 and P3. P2 has three
modules: P5 which is the management module of P2 (and P3) and is atomic, P8
from an external partner, and P1. P1 itself has as capability two modules: P4, P9,
and P1-M (the management module of P1). P4 has three modules: its management
module, P7 and P6. So each capability can be decomposed until it reaches atomic
modules or modules serviced by partners, this is why we call this the Matryoshka
representation.
For example, a Chinese business unit XYZ has two capabilities (P2 and P3) to produce
goods, but not simultaneously. Module P1 (production) and P5 (management)
form the capability P3 to produce a good for the domestic market.
If XYZ wants to export a similar type of good to the U.S. market then XYZ needs
module P8 from a partner to adapt the product to the U.S. regulations. However in
this case, XYZ is capable of producing an additional product.
Module P1 is the main production process, which besides the management module,
is composed of P9 (assembling) and P4 (delivering parts).
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