Globalization vs. Regionalization

Segment VII: Emerging Issues Chris Calagis, Eric Elliott, Jay Mathias, Mike Maulone, and Serge Svarovsky

The Regional Alternative • Regional Pressures – Rise of regional trading blocks – Removing tariffs – Removing fiscal, physical, and technical barriers

• Regional Competition – companies are pressured to become more regionally focused – “globalized” companies downscale to become more competitive regionally

New Organizational Challenges • Parent – Stay abreast of local market conditions – Be aware of subsidiary strengths and weaknesses – Shift autonomy to regional managers

• Subsidiary – Prepare to take strategic initiatives – Exploit existing strengths, create new strategies – Manage structural mechanisms more effectively

Summary • “Miniature replica” strategy – central control, minimal input from local managers – rigid and non-responsive

• Globalization strategy – tight central control – low morale, internal opposition, lost opportunities

• Regionalization strategy – autonomous subsidiaries – better service “insider advantage” – presents compromise between “miniature replica” and global strategies

Globalization vs. Regionalization • Why should companies globalize? • A large number of competitors are using global strategies to compete • Performance can be improved by pursuing global strategies, especially in industries which have global structural characteristics

• Globalization assumptions • What works at home will work abroad • Exportation and subsidiaries will create global success • Miniature replicas work all of the time

• Strategic Keys to be Globally Successful • Ability to cope with diverse industry standards • International consumers demand differentiated products • Being an insider is critically important • Global organizations are difficult to manage and companies should enter slowly

• Research • A study showed that instead of developing global strategies, companies should first strengthen regional competitiveness

It Pays to Be Green • The Managerial Incentive Structure – The Traditional View • Pollution Pays, Pollution Prevention Doesn’t

• Green Management can be profitable – – – –

Cost Reduction Limits Recycling and Reusing Substitution

Environmentally Sound Strategies • The Supply Side: Efficiency and Optimal Management – Implementation of Cost-Effective Environmental Strategies

• The Demand Side: Gaining and Maintaining Market Shares – Active and Reactive dimensions to business’s response to the environmental challenge

Environmentally Aware Companies • Green Companies – Green Consumerism

• Rent Seeking – Environmentalism is Power • Niches • Oligopolies

• Financial Incentives – Greater Investment

Environmentally Aware Companies (Cont) • Risk Management – Know the Laws

• A New Business Ecosystem – The Environment - a main business goal – Managers must encourage green strategies – Green manager = Best manager

Chapter 23: Resolving the Conflict Sustainable Development (SD) • Critics say it is simply “permanent financial aid” for the LDCs • Supporters see it as a way to increase the standard of living • It will take vast amounts of resources to build the infrastructure, capital equipment and consumer goods in these LDCs. • How do we raise the standard of living w/o a huge increase in energy consumption?

Global Warming • Increases in CO2 and other greenhouse gases must be controlled • Present industrialized countries created most of the CO2 emissions while consuming huge amounts of energy to become industrialized • LDCs won’t have the same luxury • May not be a problem – There is no real scientific proof that there is such a thing as global warming.

What do we do? • The best solution to this problem involves technology and politics • The present industrialized countries can give LDCs the technology needed to raise the standard of

living quickly enough that population growth will slow rapidly • The LDCs must have leaders that allow knowledge to flow freely in the market – Corruption will only lead to a wider gap between rich and poor

THE END