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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.