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 Aware Companies (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 Conflict Sustainable 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 CO 2 and other greenhouse gases must be controlled Present industrialized countries created most of the CO 2 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