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A Examination of Globalization and Regionalization

A. Johnson Reyte On Publishing

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Globalization Globalization 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 countries where new business will be established. With dwindling markets in a single country, businesses are looking for global presence through alliances with foreign market industry leaders. Many are also looking to buy out or merge with businesses already established within 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 gain ground as a Internet telecommunications resource. It formed AOL Europe in the attempt to get ahead of other U.S. telecommunication companies (Deresky, 2007). Example of Globalization and Expansion The 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 have started to build and expand into more countries. Government regulations can cause heavy restrictions to corporations. Therefore they seek global solutions that can bring relief. Another success was Cemex cement manufacturers in Mexico that have expanded into Australia. Though the housing market in the U.S. is the main market where the products are sold, the company has spread its operations globally to reduce costs and restrictions as to labor and other resources (Deresky, 2007). Regionalization Focusing on a regional expansion is less cumbersome than a global front due to the reduced level of complexity. For example the multicultural barriers alone can be a challenge. As in the case of Wal-Mart attempting to move into Germany. Due to cultural differences such as packaging meats and having greeters were not acceptable behaviors in that area of the world. These and several other cultural and regional differences between the U.S. and Germany cost Wal-Mart millions of dollars as they had to pull out of the country (Deresky, 2007). The regionalization strategy allows the locals within a foreign country to run the business locally within a multinational corporate strategy. In this way local suppliers, management, and employees are able to bring input from their experience with the local markets and customers to the success of the outside company attempting to enter. An excellent example being the successes of Samsung Tesco which is British owned, yet managed 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 overall global strategy of expansion.

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References Deresky, H. (2007). International Management: Managing Across Borders and Cultures. Ed. 6 P. 242. E. Malkin. (2006). Mexican Cement Company Bids for Australian Concern. New York Times Oct 28, 2006 Seok, Na H. (2006) Business Analyst in Seoul, Korea. Wal-Mart Landler, Mark.Wiesbaden, Germany, Wal-Mart Finds that its Formula Doesn’t Fit Every Culture. New York Times August 2, 2006.

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