1. THE MYTH OF
GLOBAL
STRATEGY
(ALAN M. RUGMAN, 2001)
Presented by Sharandeep K Nijher, Siddharth Sanghai and
Yi Ping Shieh

2. INTRODUCTION: THE MYTH
OF GLOBAL STRATEGY

Business activity in large firms takes place in ‘regional blocks’

Global markets are neither homogenising, nor becoming dominated by US
market capitalism

Government regulations and cultural differences have
divided the business world into the triad blocks
 Multinational national firms are
competing for regional market share within
N. America
EU

Global strategies suit very few sectors; for the majority integration
strategies are required

Concept of globalisation is driven by network managers, but strategies
tend to be triad/regional, not global and unvarying

Only the ‘unsuccessful’ multinationals pursue global strategies further
Japan

3. SOME COMMON GLOBAL
MISUNDERSTANDINGS
1. Globalisation is providing the same output to countries
everywhere.
 Business professionals claim to recognise the
emergence of globalisation by MNE’s that sell uniform
products
Yet little emphasis that the majority of revenue is
generated from the ‘triad-region’
Over 90% of cars produced in the EU are sold there too
Over 90% of paint, steel, heavy electrical equipment,
energy and transportation are made and used within
triad-based MNE’s
Services sector, 70% employed within triad, are
essentially local or regional activity based

4. SOME COMMON GLOBAL
MISUNDERSTANDINGS
2. That MNE’s are globally monolithic and excessively
powerful in politic terms
 Research does not support
 Such process of regional competition reduces chances
of sustainable long- term profits, and ability to build a
strong, sustainable political advantage
198
NAFTA
500
EU
156
Japan
125

5. SOME COMMON GLOBAL
MISUNDERSTANDINGS
3. That MNE’s develop homogenous products for the world
market, and can dominate local markets everywhere
through their efficient production techniques.
 Truth: products are adapted to local markets.
Hence, no standardised global car for all
Triad-based factories, with support system from local
suppliers
What is popular in one geographic region may be
rejected in another
Even ‘universal products’ are modified to satisfy
different laws and markets
Increasing the economic difficulty
of centralised production and
worldwide distribution

6. WORLD TRADE IS HIGHLY
REGIONAL
Despite growth, continues to be dominated by the triad

Accounts for 57.3% of world
exports

Accounts for 56.5% of world
imports
The core triad members do not rely on each other, they rely on other members
of their own triad.

7. WORLD TRADE IS HIGHLY
REGIONAL
‘Core’ Triad consists of
- NAFTA; USA, Canada and Mexico
-ASIA; Japan, Australia, New
Zealand,
Hong Kong...
- EU
Confirms that the World’s trade
is controlled by the triad.
NAFTA
Intra-NAFTA:
49.1%
22.4%
ASIA
Intra- Asia:
53.1%
21.1%
8.7%
15.4%
14.7%
9.4%
Majority of trade in the European and
Asian triads is within their internal markets
Nearly half of North America’s trade is intra-regional
Thus, what strategies are appropriate for individual
multinationals?
EU
Intra-EU:
60.6%

8. CONCLUSIONS
Ultimately examining from a business perspective, not philosophical.
1. Do not assume an integrated global market.
 Deeper than worldwide economies of scale, strategies should
consider regional trade and investment agreements
 Adapt to different culture, recognising when to become ‘nationally
responsive’
2. Organisation structures should acknowledge triad-based capabilities
and competencies
 Less reliance on international divisions or global product divisions
3. Develop research and knowledge of triad-based networks, clusters,
attributes and competitors.
 Foreign markets will have varying behaviours from home markets
 Make alliances and deploy cross-cultural awareness in managerial
levels
4. Develop analytical methods for assessing regional drivers of success
 May prove useful to gain and hold market share in the future
5. Encourage managerial levels to ‘think regional, act local’.