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Understanding Globalization and Regionalization

Understanding Globalization and Regionalization

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Understanding terms Globalization, Regionalization, through Examples. References
Understanding terms Globalization, Regionalization, through Examples. References

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Published by: Reyte on Publishing A. Johnson on Feb 02, 2010
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07/12/2013

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A Examination of Globalization and RegionalizationA.JohnsonReyte On Publishing
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GlobalizationGlobalization is the process of expanding a business or service outside of the country of origin into international markets. Examples include eBay, and Sony among many others.The benefits of globalization include the opening up of free trade among the countrieswhere new business will be established. With dwindling markets in a single country, businesses are looking for global presence through alliances with foreign market industryleaders. Many are also looking to buy out or merge with businesses already establishedwithin a country. Competitive disadvantage was a reason AOL decided to make a bid for Europe. The AOL marketshare in the United States has continued to dwindle and in order to survive AOL felt it had to expand outside the US. AOL has lobbied hard to gainground as a Internet telecommunications resource. It formed AOL Europe in the attemptto get ahead of other U.S. telecommunication companies (Deresky, 2007).Example of Globalization and ExpansionThe automotive industry in the U.S. has faced major setbacks, layoffs, and plant closings.However foreign automakers have experienced success, such as Toyota, and Honda havestarted to build and expand into more countries. Government regulations can cause heavyrestrictions to corporations. Therefore they seek global solutions that can bring relief.Another success was Cemex cement manufacturers in Mexico that have expanded intoAustralia. Though the housing market in the U.S. is the main market where the productsare sold, the company has spread its operations globally to reduce costs and restrictionsas to labor and other resources (Deresky, 2007).RegionalizationFocusing on a regional expansion is less cumbersome than a global front due to thereduced level of complexity. For example the multicultural barriers alone can be achallenge. As in the case of Wal-Mart attempting to move into Germany. Due to culturaldifferences such as packaging meats and having greeters were not acceptable behaviors inthat area of the world. These and several other cultural and regional differences betweenthe U.S. and Germany cost Wal-Mart millions of dollars as they had to pull out of thecountry (Deresky, 2007).The regionalization strategy allows the locals within a foreign country to run the businesslocally within a multinational corporate strategy. In this way local suppliers,management, and employees are able to bring input from their experience with the localmarkets and customers to the success of the outside company attempting to enter. Anexcellent example being the successes of Samsung Tesco which is British owned, yetmanaged by local Samsung management according to Mr. Na Hong Seok, from Seoul,Korea (Seok, 2006). By hiring local professionals that understand the language, culture,and business, Samsung Tesco has been able to infuse regionalization within its overallglobal strategy of expansion.
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