Case Studies 1

SUPPLY CHAIN MANAGEMENT WEEK 5-LECTURE 1

CHAPTER 9

DR. ISMAIL CIVELEK

REGIONAL STRATEGY

• A company first needs to have a clear global strategy.

• Next, the company needs to decide on the overall role of the region within the global strategy.

• The next level is that of a country where decisions such as entry mode, partner selection, and business strategy have to be decided.

• Finally, the issue of implementing the strategy at the operational level must be considered.

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REGIONAL STRATEGY

• Some countries belong to multiple regional entities, and many regions offer multiple organizations.

• Regions can be identified by using various factors (culture, physical environment, history, language, etc.) to address the issue of similarity.

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REGIONAL STRATEGY

• For MNCs, the European Union (EU) provides the most clear-cut region in the world. With the adoption of the Euro as its currency, this region has become even more integrated.

• Most MNCs treat countries such as Poland, Hungary, and Romania as members of the Central and Eastern Europe region.

• Countries of the former Soviet Union (Russia being the principal one) form a region. So do countries of the Middle East (the Islamic countries).

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DIAGNOSING INDUSTRY REGIONALIZATION POTENTIAL

• Potential regional commonalities (culture, history, etc.) can be strong drivers to create regionally common needs and tastes.

• Products and services that have strong cultural roots in their use can be candidates for cultural commonality.

• Transportation, trade, or other barriers can prevent many customers and channels from going fully global.

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REGIONAL STRATEGY

• Regional agreements that create common marketing regulations can have powerful implications in specific industries.

• Regional entities can be just as protectionist as national governments, and with even more power.

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THE CASE OF EUROPEAN UNION

• The EU can be used as a case in point to show how industry globalization drivers can be analyzed for an entire region across all its industries.

• Various governmental globalization drivers – favorable trade policies, outlawing of subsidies, and compatible technical standards – have helped these nations to coalesce, although other factors such as lack of common marketing regulations, the presence of governmental competitors and customers are still present.

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THE CASE OF EUROPEAN UNION

• Europe 1992 increased the strength of each of the competitive globalization drivers.

• Exports and imports within the EU increased.

• The number of competitors from different European countries in each country increased, the large market size attracted competitors from outside the region, and the competitive interdependence of companies has increased.

• Companies are increasingly adopting pan-European strategies.

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REGIONAL STRATEGY

• Many companies now build region wide activity networks that are easier than global networks to operate because of limited time zones, limited geographic distance, and minimal or zero regional tariffs.

• Convergence of regional needs and tastes, growth of regional media and channels of distribution and harmonization of regional marketing regulations all can make regional marketing feasible relative to multi local marketing and much easier than global marketing.

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