Describe the strategies of globalization and regionalization essay…………………
Globalization can be defined as the process of expansion of economics business to international markets from the country of origin. That is to say globalization in the production area means moving out economic relations across borders say of one country or region to the other. On the other hand regionalization aids in the growth of globalization in that it provides free integration across borders within a given regions. There are many strategies that are involved in globalization and regionalism, there strategies can be categorized into two; defensive strategies and aggressive strategies.
Defensive reasons for globalization include; Global competition, the main purpose of companies is to reduce expenses thus maximizing profit hence for them to do this they must compete with other countries outside their country of origin which specialize in the same area to avoid lagging behind thus, an example of such company which has employed this strategy and has worked is German’s Adidas and Volkwagen which have moved to Spain.
Trade barriers is another defensive reason that has lead to globalization and regionalism in that the market’s nature and accessibility can become a barrier of trade within a country as compared with the improved telecommunication sector globally that helps to determine the demand of individual products globally.
Regulations and restrictions put by home come countries, is another strategy of globalization and regionalism in that the home country governments put many regulations and conditions say for starting or running a company thus local investors prefer going international with lesser restrictions, an example Toshiba company(Paik & Sohn,2007) Customer demands also aid globalization and regionalization in that due to lack of enough local demand companies tend to go across borders where the demand is high a very good example of such company is the Nike Company that moved to Mexico where the demand for its products was high.
Aggressive strategies are those strategies that encourage companies to go international. These strategies include; opportunities for growth, here you find that the company has exploited the home country and hence can’t grow anymore hence need for growth which opportunity it can get globally. A good example is the Samsung Company which deals in electronics, has a good reputation since it sponsored the 1004 Olympic Games in Athens.
Accessibility to resources is another working strategy of globalization and regionalization in that companies want to maximize resources therefore need to cut cost ,this makes them to move close to the source of the resources for reducing the cost involved especially in transportation. Another strategy that has proved to be working is that the intention of shifting production to cross borders really improves competition in the home country .this competition is good for the consumers either globally or in the home country since the quality of products they get is good. An example of such company is The AOL which deals with telecommunication that has expanded from the U.S.to lager Europe (Deresky,2007)
Developing countries’ Governments that are looking for latest technology and capital for their growth and development tend to give incentives to investor companies, these incentives tend to pull many companies thus this acts as a strategy of globalization and regionalization
For globalization and regionalization these strategies have to be planned well and for them to work a good political climate between countries involved has to exist.
Deresky,H. International Management; Managing across borders and cultures.ed6 pg.242 2007
Paik & Sohn, J.H.D. “Striking a Balance between Global Integration and Local
Responsiveness: the Case of Toshiba Corporation in Redefining Regional Headquarters’ Role”,
Organizational Analysis, vol. 12, no. 4, pp. 347-359.2004
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