Beruflich Dokumente
Kultur Dokumente
by Alan Rugman
Executive Summary
• Globalization is misunderstood—it does not, and has never, existed in terms of a single world market
with free trade.
• Triad-based business is the past, current, and future reality.
• Multinational enterprises operate within triad markets and access other triad markets; they have
regional, not global, strategies.
• National governments strongly regulate most service sectors, thereby limiting free market forces; the
extent of regulation is not decreasing.
• Businesses need to think local and act regional; they should forget global.
Data for Asia were calculated using information for exports from Japan, China, India, Indonesia, South
Korea, Malaysia, Singapore, Thailand, and Australia to the Asian region and the world. Data for the EU are
for intra-EU exports in 2000 and 2005 and intra-EEC exports in 1980.
According to data for 2005 in Table 1 66 % of EU exports are internal. The EU exports relatively less to
NAFTA and to Asia. The internal NAFTA trade, at 56%, is surprisingly high, given that Canada is only one-
twelfth the economic size of the United States and Mexico only about one-twentieth the economic size of the
United States. Most Asian trade is also intraregional, at 53%.
In summary, the majority of world trade in the European and Asian triads is within their internal markets, and
for North America just over half of its trade is also intraregional. Most of the rest of world trade is between
triad members. Given the dominance of the triad in world trade (and direct investment data show the same
picture), the appropriate strategies for individual multinationals need to be regional rather than global.
Conclusion
It is possible to offer some practical strategies for managers who want to increase their company’s
international revenues and profits. Some of the most useful lessons are these:
• Be prepared to design strategies which take into account regional trade and investment agreements
such as NAFTA and the single market of the EU.
• Also learn to deal with different cultures and become nationally responsive when necessary.
• Develop new thinking and knowledge about regional business networks and triad-based clusters, and
assess instead of always developing pure global strategies.
• Make alliances and foster cross-cultural awareness in your senior managers.
• Develop analytical methods for assessing regional drivers of success rather than globalization drivers;
regional drivers may be more useful in the future in gaining and holding market share.
• Encourage all your managers to think regional, act local—and forget global!
More Info
Books:
• Friedman, Thomas L. The World is Flat: A Brief History of the Twenty-first Century. Updated and
expanded ed. New York: Farrar, Straus & Giroux, 2006.
• Giddens, Anthony. Runaway World: How Globalization is Reshaping our Lives. New York: Routledge,
2003.
• Rugman, Alan M. The End of Globalization: Why Global Strategy is a Myth & How to Profit from the
Realities of Regional Markets. New York: AMACOM, 2001.
• Rugman, Alan M. The Regional Multinationals: MNEs and “Global” Strategic Management. Cambridge,
UK: Cambridge University Press, 2005.
• Rugman, Alan M., and Simon Collinson. International Business. 5th ed. London: FT Prentice Hall,
2009.
• Rugman, Alan M., and Joseph R. D’Cruz. Multinationals as Flagship Firms: Regional Business
Networks. Oxford: Oxford University Press, 2000.
• Yip, George S. Total Global Strategy II. 2nd ed. Upper Saddle River, NJ: Prentice Hall, 2003.
Website:
• UNCTAD World Investment Report: www.unctad.org/WIR
Notes
1 See Rugman and Collinson (2009), Chapter 1. The definition of “globalization” is a subject of intense
academic debate. Most business school scholars would adopt the definition of economic integration used
here, where integration across national borders yields the potential for firm-level economies of scale and/or
global brand name products. Contingent on this definition of “pure” economic globalization is the need for
products to be uniform across markets. A much broader definition of globalization is used by other writers,
such as Anthony Giddens, a sociologist. He defines globalization as “the worldwide interconnection at the
cultural, political and economic level resulting from the elimination of communication and trade barriers,”
and he states that “globalization is a process of convergence of cultural, political and economic aspects
of life” Giddens (2003). Again, convergence (of cultures, tastes, regulations, etc.) is an extreme version of
homogeneity of products and services. The thesis of this article is that such convergence and homogeneity
has not occurred; instead of globalization we observe regional/triadic production and distribution. Therefore,
MNEs do not need global strategies; regional strategies are more relevant.
2 Yip (2003) and Friedman (2006).
3 For more on these firms, see “The world’s top non-financial 100 TNCs, ranked by foreign assets,” World
Investment Report, New York: United Nations, annual. Available from: www.unctad.org
4 NAFTA consists of the United States, Canada, and Mexico. The European Union is now made up of 27
countries, but the data used here are for the EU’s 15 members up to 2003, namely Belgium, France, Italy,
Luxembourg, the Netherlands, Germany, Great Britain, Denmark, Greece, Ireland, Portugal, Spain, Austria,
Finland, and Sweden. The 12 major Asian economies included here are Australia, China, India, Indonesia,
Malaysia, New Zealand, the Philippines, Singapore, South Korea, Taiwan, Thailand, and Japan.
5 Rugman (2001), Chapter 1.
6 Data adapted from “The World’s Largest Corporations (2008) Fortune, Vol. 158, No. 2, pp. 165–182.
7 Rugman (2005) and Rugman and D’Cruz (2000).
8 This analysis is based on Rugman (2001), Chapter 7.
See Also
Best Practice
• Corporate-Level Strategy
• The Globalization of Inflation
• Multinationality and Financial Performance
• Toward a Total Global Strategy
• What Entrepreneurs and Small Business Owners Can Do to Increase Their Chances of Success in the
Global Economy
Checklists
• Comparative and International Financial Regulation
• International Comparisons of Company Law
• Understanding Strategy Maps
Finance Library
• The Competitive Advantage of Nations
• Globalization and Its Discontents
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