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
– “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
• “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.
• 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
• Miniature replicas work all of the time
• Strategic Keys to be Globally Successful
• Ability to cope with diverse industry standards
• International consumers demand differentiated
• 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
Recycling and Reusing
Environmentally Sound
• 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
Environmentally Aware
• 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