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Global or Regional?
LO 7.6 The difference between regional companies and truly global
companies
What is Globalization?-the increase in international
exchange, including trade in goods and services as well as exchange of money, ideas and information.
-Growing similarity of laws rules norms values and ideas across countries.
Measure• Foreign Sales• -------------------• Total Sales
Misleading???Why??
•Factors• Geography
• Culture
• Government
-distance-land area-population
-language-tradition-religion
-economy-legal and political-taxation
Regionalization
• Increasing international exchange of goods, services, money, people ideas, and information; and the increasing similarity of culture, laws, rules, and norms within a region
REGIONAL AND GLOBAL
STRATEGIES OF MULTINATIONAL
ENTERPRISES (2001)
Alan M. Rugman and Alain Verbeke
Top 500 largest MNE’s(2001)
• Wal-Mart Stores- 1st
• General Motors- 3rd• Ford Motor-5th• General Electric- 9th
Criteria
The Triad Power ConceptKenichi Ohmae
North America
EuropeAsia
Major Economic Regions @least 20 percent of the total sales in each of the region
Global MNEs
500Rank Company Region
Revenuesin bn U.S.$
NorthAmerica
% of totalsales
Europe% of total
sales
AsiaPacific
% of totalsales
19Intl. Business Machines
North America 85.9 43.5 28.0 20.0
37 Sony Asia Pacific 60.6 29.8 20.2 32.8
143Royal Philips Electronics Europe 29.0 28.7 43.0 21.5
147 Nokia Europe 27.9 25.0 49.0 26.0
162 IntelNorth America 26.5 35.4 24.5 40.2
190 Canon Asia Pacific 23.9 33.8 20.8 28.5
239 Coca-ColaNorth America 20.1 38.4 22.4 24.9
388Flextronics International Asia Pacific 13.1 46.3 30.9 22.4
446 Dior (Christian ) Europe 11.3 26.0 36.0 32.0459 LVMH Europe 11.0 26.0 36.0 32.0
@least 20 percent of the total sales in @least 2 of the 3 regions
25/500 Companies
Most companies are REGIONAL, not GLOBAL ,
even today.
Reasons why only FEW GLOBAL?
GeographyCultureGovernment
distance
“True distance”
Reasons why MORE Regional?
“True distance”Trading Blocs
- Group of countries agreeing to increase - trade between them by lowering trade barriers.
7-14
Entry Modes of International Expansion
Exporting Producing goods in one country to sell to residents of another country.
-Low investment risk
Benefits
-Low investment cost
-Low degree of ownership and control
Risks and Limitations
-relationship between the Multinational company and the local distributor