Segment VII: Emerging Issues

Chris Calagis, Eric Elliott,

Jay Mathias, Mike Maulone,

and Serge Svarovsky

The Regional Alternative

• Regional Pressures– Rise of regional trading blocks

– Removing tariffs

– Removing fiscal, physical, and technical barriers

• Regional Competition– companies are pressured to become more regionally

focused

– “globalized” companies downscale to become more competitive regionally

New Organizational Challenges

• Parent– Stay abreast of local market conditions

– Be aware of subsidiary strengths and weaknesses

– Shift autonomy to regional managers

• Subsidiary– Prepare to take strategic initiatives

– Exploit existing strengths, create new strategies

– Manage structural mechanisms more effectively

Summary

• “Miniature replica” strategy– central control, minimal input from local managers– rigid and non-responsive

• Globalization strategy– tight central control– low morale, internal opposition, lost opportunities

• Regionalization strategy– autonomous subsidiaries– better service “insider advantage”– presents compromise between “miniature replica” and global

strategies

Globalization vs. Regionalization

• Why should companies globalize?• A large number of competitors are using global

strategies to compete• Performance can be improved by pursuing global

strategies, especially in industries which have global structural characteristics

• Globalization assumptions• What works at home will work abroad• Exportation and subsidiaries will create global success• Miniature replicas work all of the time

• Strategic Keys to be Globally Successful• Ability to cope with diverse industry standards

• International consumers demand differentiated products

• Being an insider is critically important

• Global organizations are difficult to manage and companies should enter slowly

• Research • A study showed that instead of developing

global strategies, companies should first strengthen regional competitiveness

It Pays to Be Green

• The Managerial Incentive Structure– The Traditional View

• Pollution Pays, Pollution Prevention Doesn’t

• Green Management can be profitable– Cost Reduction– Limits– Recycling and Reusing– Substitution

Environmentally Sound Strategies

• The Supply Side: Efficiency and Optimal Management– Implementation of Cost-Effective

Environmental Strategies

• The Demand Side: Gaining and Maintaining Market Shares– Active and Reactive dimensions to business’s

response to the environmental challenge

Environmentally Aware Companies

• Green Companies– Green Consumerism

• Rent Seeking – Environmentalism is Power

• Niches

• Oligopolies

• Financial Incentives– Greater Investment

Environmentally AwareCompanies (Cont)

• Risk Management– Know the Laws

• A New Business Ecosystem– The Environment - a main business goal– Managers must encourage green strategies– Green manager = Best manager

Chapter 23: Resolving the ConflictSustainable Development (SD)

• Critics say it is simply “permanent financial aid” for the LDCs

• Supporters see it as a way to increase the standard of living

• It will take vast amounts of resources to build the infrastructure, capital equipment and consumer goods in these LDCs.

• How do we raise the standard of living w/o a huge increase in energy consumption?

Global Warming

• Increases in CO2 and other greenhouse gases must be controlled

• Present industrialized countries created most of the CO2 emissions while consuming huge amounts of energy to become industrialized

• LDCs won’t have the same luxury

• May not be a problem– There is no real scientific proof that there is such a

thing as global warming.

What do we do?

• The best solution to this problem involves technology and politics

• The present industrialized countries can give LDCs the technology needed to raise the standard of living quickly enough that population growth will slow rapidly

• The LDCs must have leaders that allow knowledge to flow freely in the market– Corruption will only lead to a wider gap between rich

and poor

THE END