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Organizational Dynamics

ncreasingly, I managers are confronted by calls for dramatic change in the way their businesses should compete internationally. Nowhere is this more apparent than in so-called “global” industries, where managers have been urged to introduce offshore manufacturing, cut costs through worldwide economies of scale, standardize products internationally, and subsidize national market-share battles through international cash flows or other support activities. These actions form the basis of “global strategies” that have been suggested as the emerging pattern of international competition. Two fundamental assumptions drive this thinking. The first is that a sizable number of competitors are indeed using global strategies to compete; the second is that performance can be improved by pursuing global strategies, particularly in an industry that has global structural characteristics. For managers in global industries the message has been, “Either quickly adopt a global strategy or see your competitiveness diminish.” In fact, some observers have gone so far as to suggest that the imperatives to globalize are so great and the benefits so pronounced that globalization is fast becoming the strategic norm rather than the exception. Although such comments are directed toward managers in the front-line global industries (for example, semiconductors, aircraft parts, pharmaceuticals, and heavy machinery), they are also being heard by senior managers in numerous other industries that are beginning to face greater and greater levels of international competition.

Globalization versus regionalization: Which way for the multinational?