LO 7.

6 The difference between

regional companies and truly global
companies
What is Globalization?
-the increase in international
exchange, including trade in
goods and services as well as
exchange of money, ideas and
information.

-Growing similarity of laws rules
norms values and ideas across
countries.
Foreign Sales
-------------------
Total Sales
Misleading???
Why??
Factors
Geography
Culture
Government
-distance
-land area
-population

-language
-tradition
-religion

-economy
-legal and political
-taxation

Regionalization
Increasing international
exchange of goods, services,
money, people ideas, and
information; and the
increasing similarity of
culture, laws, rules, and
norms within a region
REGIONAL AND
GLOBAL
STRATEGIES OF
MULTINATIONAL
ENTERPRISES
(2001)



Alan M. Rugman and Alain Verbeke
Top 500 largest
MNEs(2001)
Wal-Mart Stores- 1
st

General Motors- 3rd
Ford Motor-5th
General Electric- 9th
Criteria
The Triad Power Concept
Kenichi Ohmae
North America
Europe
Asia
Major Economic Regions
@least 20 percent
of the total sales
in each of the region
Global MNEs
500
Rank Company Region
Revenues
in bn U.S.$
North
America
% of total
sales
Europe
% of total
sales
Asia
Pacific
% of total
sales
19
Intl. Business
Machines
North
America 85.9 43.5 28.0 20.0
37 Sony Asia Pacific 60.6 29.8 20.2 32.8
143
Royal Philips
Electronics Europe 29.0 28.7 43.0 21.5
147 Nokia Europe 27.9 25.0 49.0 26.0
162 Intel
North
America 26.5 35.4 24.5 40.2
190 Canon Asia Pacific 23.9 33.8 20.8 28.5
239 Coca-Cola
North
America 20.1 38.4 22.4 24.9
388
Flextronics
International Asia Pacific 13.1 46.3 30.9 22.4
446 Dior (Christian ) Europe 11.3 26.0 36.0 32.0
459 LVMH Europe 11.0 26.0 36.0 32.0
@least 20 percent
of the total sales
in @least 2 of
the 3 regions
25/500
Companies

Reasons why only FEW GLOBAL?
Geography
Culture
Government
distance
True distance
Reasons why MORE Regional?
True distance
Trading Blocs
-Group of countries agreeing to increase
-trade between them by lowering trade barriers.
7-14
Entry Modes of International
Expansion
Exporting
Producing goods in one country to sell to
residents of another country.
-Low investment risk
Benefits
-Low investment cost
-Low degree of ownership
and control
Risks and Limitations
-relationship between the
Multinational company and
the local distributor