**Abstract**

Industry 4.0 is the natural consequence of the techno-industrial development of the last decades. It has the huge potentiality to change the way globalization of manufacturing and consumption of goods and services that take place in the global markets. This chapter will focus on the evolution of Industry 4.0 and how this new technological framework will create values for firms and consumers, and how we can use it for a firm's competitiveness and save them from the fallout of its development. An extensive literature review shows that the multi-faceted technology will hugely impact the global value chain, global supply chain, and new global division of labor (NGDL). It will reconfigure and re-distribute the business activities in the developing, emerging, and developed country markets and small and medium sizes firms and MNCs. The rapid development of technological and human capabilities can allow firms to reap benefits from this technology. At the same time, there are many challenges related to skill shortages, technological issues, business ethics, and values that need to be overcome to reap a profit from this new technological advancement.

**Keywords:** industry 4.0, cyber-physical system (CPS), global value chain (GVC), global supply chain (GSC), big data

### **1. Introduction**

Industry 4.0 has both expanded the possibilities of digital transformation and increased its importance to manufacturing, with an emphasis on globalization, international trade, and foreign direct investments. Industry 4.0 combines and connects digital and physical technologies including artificial intelligence, the Internet of Things, additive manufacturing, robotics, cloud computing, and others to drive more flexible, responsive, and interconnected enterprises capable of making more informed decisions [1]. The infusion of digital technologies in the value chain processes of research and development, design, production, marketing, distribution, and customer services will drive efficiency in production, thereby increasing the ambits of international trade.

Developed in Germany, currently, Industry 4.0 has become the most discussed issue in the industrial arena in the world. Both managers and policymakers from developed, emerging, and developing countries are debating this issue about how

they can participate in this fourth industrial revolution as well as save them from the fallout of this advancement. The issue is still evolving, and experts from all spheres of industry and markets are debating on it. The objective of this chapter is to participate in this debate and explore how Industry 4.0 will evolve in the coming years and how it might affect international trade and the global value chain. We will take an in-depth look into what exactly is Industry 4.0 in our globalized context, what it brings to the table when it comes to international businesses and how international organizations can benefit from Industry 4.0 in their globalization strategies? As a matter of fact, Industry 4.0 outperforms the previous industrial revolutions we have gone through during the past centuries. The fourth industrial revolution is the result of the combination between the real and the virtual world, in which deep learning encourages and challenges human capacities and frontiers, particularly, with the increase of cyber-physical systems. Indeed, the new industrial revolution which develops deep learning is not limited to the use of automation systems based on machine learning, but autonomous ones that do not systematically depend on human beings and which can learn and act by themselves. Industry 4.0 refers to many concepts such as artificial intelligence, smart technologies, smart factories, smart automation, or smart management like the implementation of enterprise resource planning and automation of robotized processes. The global business environment has already started to enhance efficiency with futuristic and high-value-added technologies, from which we are not able to see the frontier clearly for now.

Firstly, we will undertake a brief literature review to explain how we structured our work. We will then be having a great detailed analysis of Industry 4.0 and its main components and how it is changing the way corporations do business in an increasingly connected world. Parallelly, we will explore the opportunities that the fourth industrial revolution brings as well as the challenges which emerged from this new revolution in order to counterbalance and give a realistic view of the latter. Finally, we will illustrate the major strategies that can enable the organization to avail opportunities emanated from Industry 4.0.

### **2. Opportunities and strengths of Industry 4.0**

Industry 4.0 contributes to the virtualization of a physical production environment that facilitates connectivity and interaction between the machines as well as man and machines in real-time. The automation and connectivity as well as machine learning facilitate the inter-connectivity and improve the production process and bring several benefits to the organization. Some of them are presented in the following sections.

#### **2.1 Generator of efficiency**

Industry 4.0 is a generator of efficiency. Indeed, the great use of technologies within the different steps in the supply chain helps with optimizing the latter. It is, therefore, cost-effective, time-effective and it globally enhances productivity as well as flexibility and quality of outputs, which also raises the overall reliability of the firm and so the value of the company and its competitiveness. Industry 4.0 is not only about using high technology machines to produce more rapidly. There is indeed much more to that. Industry 4.0 can contribute to streamlining the value chain thanks to its transformation of every aspect of the production process from the logistics, passing through the managerial issues, to the networks, and more generally, the whole structure of firms in the network.

#### *Evolution of Industry 4.0 and Its Implications for International Business DOI: http://dx.doi.org/10.5772/intechopen.101764*

First of all, firms can benefit from *advanced planning and controlling with relevant, real-time data* [2]. Indeed, the collection and great use of data help with a greater inner and outer communication and organization, even from an international perspective: from a headquarter in Quebec City (Canada) to a manufacturer in Dhaka City (Bangladesh), for instance. Planning is simple and effective, and accessible for all employees who need to access it, and can be easily changed. The improvement of communication also implies a greater control of the organization thanks to easy access of the information, anywhere, anytime.

Data is the basis of all the improvements around artificial intelligence and the comprehension of the opportunities that can be taken in the organizations. Used correctly, data and communication tools can help firms to better respond to customers' demands and allow a better accuracy of forecasts too. Data within the industry can help to see what should be improved in terms of production methods to gain efficiency. In that sense, they can also more easily identify bottleneck products which would result in better opportunity costs. Firms can also benefit from greater management and control thanks to adapted software within the firm. Data can be used to analyze production time and costs, as well as comparisons of portfolios of suppliers and materials to get the best of their interest. It allows a rapid reaction to changes and errors. It also allows a quick adaptation when it comes to stock levels, wherever it is from the production or the purchasing teams' perspectives. Finally, data is the base of artificial intelligence. Thanks to machine learning, data is used to learn from mistakes and successes, which is crucial to be exponentially improving.

Thanks to data, programs are elaborated to improve the business networks such as suppliers with industries or with clients, or from clients to employees when they make a requirement for a change in the process of making an order. The communication is smoother, quicker, and easier to take action. Technologies also allow better safety of work conditions. The efficiency of new technologies allows companies to be more sustainable thanks to smart production facilities, which allows a better allocation of resources and vertical networking of smart production systems. The vertical networking of smart production systems can be defined as *Smart factories and smart products, and the networking of smart logistics, production and marketing, and smart services, with a strong needs-oriented, individualized and customer-specific production operation* [3]. Most firms affirm that Industry 4.0 and its innovations contribute to efficiency and profitability [4]. Industry 4.0 gives companies a better competitive advantage. This has a great impact on a company's profitability. This is partially due to a reduction of costs from the efficient use of resources. On top of this, we can observe the benefits of Industry 4.0 through its four main components [3]:

• *The vertical networking of smart production systems:* Vertically integrated Smart productions use deeply integrated data in order to rapidly orient the production in a customer-specific direction depending on the demand and the stock levels. The production is monitored by cyber-production systems (CPS) and smart sensor technologies (SST) that automatize the organization, making it autonomous. As a result, maintenance and management of production systems are optimized. All the processes at all stages and the resources that come with them are logged, which helps to perpetually update the fluctuations and adapt quickly to any movement of these factors. In a nutshell, the goal of this vertically integrated system is the efficiency of resources, and the satisfaction of specific, individual requirements of customers. These advanced systems allow firms to communicate in real-time with their supply chain partners across the globe, from producers to the clients and suppliers, and consequently to adjust their global supply chain on a continuous basis.

	- a.*Autonomy*: Artificial Intelligence allows automation systems to be highly cognitive and autonomous thanks to advanced robotics and sensor technology that can perfect each individual production process.
	- b.*Safety and quality*: Nanomaterials and nano-sensors allow the close monitoring of production for better quality assessment and safer collaboration of humans with next-generation robots.
	- c.*Automated logistics:* The use of AI programmed machines like drones to make inventories, driverless vehicles in factories and warehouses to deliver components is particularly efficient thanks to their ability to function day and night under any weather conditions. These logistics solutions of smart factories allow for cost-cutting, flexibility, reliability, and time savings.
	- d.*3D printing*: Additive manufacturing (3D Printing) brings new functionalities and higher complexity of products without additional costs and new inventory management solutions thanks to delayed differentiation of products allowing for smaller stocks, and supply chain risk pooling between different factories. There are, however, still challenges to overcome before additive manufacturing can make an impact on manufacturing sectors given the fact that this technology is still expensive and unit cost of production is high, and do not follow economy of scale principles.
