Regional and global strategy
Regional and global strategy
• )oda*+s international en#ironment
• lo!ali-ation and strategic management
• rame(or/ 'or this !oo/.
Objectives
• Define the terms international business and MNE . • Discuss the t(o rimar* (a*s in (hich international
!usiness occurs& trade and FDI . • Examine the imact o' the triad on international trade
and in#estment. • Describe the current state o' (orld economies and the
role o' go#ernment and trade regulations in the conduct o' international !usiness.
• Discuss the imortance o' technolog* and the role o' SEs in the international !usiness arena.
• Examine ho( Es use triad/regional strategies to comete e''ecti#el* in the international mar/etlace.
 
Introduction
 
orld business: a brie! overvie"
 
• ost E acti#it* can !e classi'ied into t(o ma"or
categories&  17 #rade (e$ports and i%ports)& ore than 508 o' all trade is made !* the (orld+s largest 500 Es.
27 &oreign direct invest%ent (&'I)& 908 o' all :$ is made !* the (orld+s largest 500 Es.
MNE activity
#rade and invest%ent
• #rade consists o' e<orts and imorts&
 = E$ports: goods and ser#ices roduced in one countr* and then sent to another countr*.
 = I%ports: goods and ser#ices roduced in one countr* and !rought in !* another countr*.
 
Rugman and Collinson, International Business, 6th Edition, © Pearson Education Limited 2013
)a!le 1.1 %orld )rade, 2009 Note& :ata 'or Euroean >nion include intra?E> trade. E<orts are calculated !* including 'reight and insurance, (hile imorts do not include 'reight and insurance. @s a result, data might not !e consistent (ith other data in this !oo/.
 
Rugman and Collinson, International Business, 6th Edition, © Pearson Education Limited 2013
)a!le 1.2 $ntra?regional trade in the triad, 1A90=2009 Note& @sia data (ere calculated using in'ormation 'or e<orts 'rom Baan, China, $ndia, $ndonesia, South orea, ala*sia, Singaore, )hailand and @ustralia to the @sian region and the (orld. :ata 'or E> are 'or intra?E> e<orts in 2000 and 2009 and intra?EEC E<orts in 1A90.
 
Rugman and Collinson, International Business, 6th Edition, © Pearson Education Limited 2013
)a!le 1.3a oreign direct in#estment in the >nited States, 2009 !* >SD si-e ran/ing7 Note& :ata are on a historical?cost !asis. um!ers might not add u due to rounding.
 
Rugman and Collinson, International Business, 6th Edition, © Pearson Education Limited 2013
 
#he triad
 
#he triad: the nited tates ()
• )he >S has the largest econom* in the (orld (ith a :P o' o#er D1.1 trillion 200A estimate7.
• )he >S is art o' the orth @merican ree )rade  @greement @)@7 (ith Canada and e<ico.
 
#he triad: the European nion (E)
• )he E> or E>2;7 is comosed o' the countries in the E>15 @ustria, Gelgium, :enmar/, inland, erman*, reece, rance, $reland, $tal*, Lu<em!ourg, the etherlands, Portugal, Sain, S(eden and the >7 and 12 ne(, mainl* Central Euroean, countries that "oined in 200 and 200;.
• )he collecti#e :P o' the E> is greater than that o' the >S and Baan.
 
#he triad: *apan
• Baan is the largest econom* in @sia.
 
#oday+s international environ%ent
 
Rugman and Collinson, International Business, 6th Edition, © Pearson Education Limited 2013
• )he international !usiness en#ironment has changed raidl* in recent *ears as a result o'&
 = an o#erall slo(do(n o' triad economies
 = increased trade li!erali-ation through trade agreements
 = imro#ements in technolog*
 = the emergence o' SEs.
International business environ%ent
lo"do"n o! triad econo%ies
 
International trade regulation
•  @n imortant international !usiness trend has !een the emergence o' regional and glo!al trade and in#estment li!erali-ation and international regulation.
 = )he %orld )rade rgani-ation %)7.
 = eneral @greement on )ari''s and )rade @))7.
 
#he orld #rade Organi,ation
• Esta!lished on Banuar* 1, 1AA5.
•  @n international organi-ation that deals (ith rules o' trade among mem!er countries.
• En'orces the ro#isions o' the eneral @greement on )ari''s and )rade @))7.
•  @cts as a disute?settlement mechanism.
 
#he -eneral .gree%ent
on #ari!!s and #rade (-.##) • Esta!lished in 1A; to li!erali-e trade and to
negotiate trade concessions among mem!er countries.
• )oda*, the %) is en'orcing the ro#isions o' the @)).
 
I%proved technology
 
%all and %ediu%/si,ed
enterprises (MEs) • )he de'inition o' SEs #aries according to the
nation. $n general, it re'ers to comanies (ith !et(een 11 and 500 emlo*ees (ith sales o' less than D5 million.
 
Regional triad strategies
Misconceptions about MNEs
Co%%on misconceptions a!out Es&
 = Es ha#e 'ar?'lung oerations or earn most o' their re#enues o#erseas.
 
In fact ,
ho%e regions.
 = )he largest 500 Es are not sread around the (orld !ut are clustered around the triad.
 = )hese Es engage not in glo!al cometition !ut in triadIregional cometition this ri#alr* e''ecti#el* eliminates enduring olitical ad#antage.
 = Es adat their roducts 'or the local mar/et.
Misconceptions about MNEs
Maintaining econo%ic co%petitiveness
 
0orter+s deter%inants o! 
national co%petitive advantage • %h* are some 'irms a!le to inno#ate consistentl*
(hile others are notJ
 = irm strateg*, structure, and ri#alr*.
 
&ro% general to strategic e%phasis
#he study o! international business
 
Rugman and Collinson, International Business, 6th Edition, © Pearson Education Limited 2013
 
&ra%e"or !or this boo
 
igure 1.1 odel 'or this !oo/