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This model shows the whole range of activities (valueadded activities in Porters, 1985 terminology)
performed within the production system (i.e., a chain of
linked functions: see Chapter 3 on the value chain). The
way in which the chain of transactions is organized and
co-ordinated determines the international businesss
internal and external network of relationships. At one
extreme, the chain of transactions can be performed
entirely within the business itself (i.e., internalization).
At the other extreme, each function could be the
responsibility of individual, independent businesses
(i.e., externalization). A wide variety of relationships
may exist between these two extremes.