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THE INTERNATIONAL CONTEXT

Dimensions of globalization
Worldwide scope (Patel & Pavit, 1991)
Global can simply be used as a geographic term. Definition of global is employed,
globalization is the process of international expansion on a world scale.

Worldwide similarity (Levitt, 1983)


Global can also refer to homogeinity around the world. Definition of global is
employed, globalization is the process of declining international variety.

Worldwide integration (Porter, 1986)


Global can also refer to the world as one tightly linked system. Definition of global is
employed, globalization is the process of increasing international interconnectedness.
Level of globalization
Globalization of companies
Globalization of businesses
Globalization of economies
International composition
International scope
International distribution

Figure 10.2
International management
International integration mechanism :
- Standardization
- Coordination
- Centralization

Organizational model :
- Dezentralized federation
- Coordinated federation
- Centralized hub
- Integrated network
International management
Requisite conditions for global
standardization

Availability of an
Synergies associated international
Existence of global
with global communication and
market segments
standardization distribution
infrastructure
Organizational model
The demand for global synergy
Synergy by aligning position
- Dealing with cross border customer
- Dealing with cross border competition

Synergy by integration activities


- Reaping scale advantages
- Reaping location advantages

Synergy by leveraging resources


- Achieving resource reallocation
- Achieving resource replication
Forms of cross-border synergies
Figure 10.5
The demand for local
responsiveness
The most importence differences between countries
include
- Market: structure - Media structure
- Customer needs - Infrastructure
- Buying behaviour - Supply structure
- Subtituties - Government regulations
- Distribution channels
Exhibit 10.1 :
Exhibit 10.2 : the global convergence perspective
Exhibit 10.3 : the international diversity perspective
Reading 10.1 The globalization of market
by Theodore Levitt
Technology is the major force that drives the world toward a converging
commonality

The result of this force is the emergence of global markets for standardized
consumer products on a previously unimagined scale of magnitude

This trend toward globalization is the beginning of the end for


multinational corporations, only global firms will survive

Our age can be characterized as The Republic of Technology (whose)


supreme law is convergence, the tendency for everything to become
more like everything else (Daniel. J. Boorstin)
Reading 10.2 The myth of globalization
by Susan Douglas & Yoram Wind
Underlying Assumptions and Pitfalls
Homogenization of the worlds wants
Lack of evidence of homogenization. Some industries developed indeed global products, but most
Pitfalls
did not.
Growth of intracountry segmentation price sensivity. There still exists considerable diversity within
and between countries.

Universal preference for low price at acceptable quality


Lack of evidence of increased price sensivity. There is no evidence that customers are willing to
Pitfalls

trade off specific product features for a lower price.


Low price positioning is a highly vulnerable strategy. Low price strategy in international
markets offers no long-term competitive advantage.
Standardized low price can be overpriced in some countries and underpriced in others.

Economies of scale of production and marketing


Pitfalls

Development in flexible factory automation. Recent developments in flexible factory automation


methods have lowered the minimum efficient scale of operation.
Production costs are often a minor component of total costs. In many consumer and service
industries, production costs are a small fraction of the total sum.
The standardization philosophy is primarily product driven. It ignores key strategy variables
Reading 10.3 The competitive advantage of nations
by Michael Porter
Competitive Advantage of Nations
The Diamond
Reading 10.4 Transnational management
by Christoper Bartlett & Sumantra Ghoshal
Transnational Management
Integrated Network Model