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The Myths of Globalization, Part 3

Part 3

THE ROLE OF THE CANADIAN MANAGER Finally, let us turn to the most important group, the multinational managers. Governments and educators play pivotal roles in providing the appropriate infrastructure and macroeconomic climate, and in education. But little will come of that effort unless business plays its role well. We suggest that business fully and formally recognize that the world consists of four entities: city clusters, nations, regions and the world. Corporate strategies will be more successful if businesses become aligned with this new reality. The end of globalization, as it has been presented here, requires new thinking by managers of MNEs and other organizations.

Trying to design and implement a global strategy is no longer appropriate. Instead, a strategy based on a triad approach is required. This will include a large element of localization, as regional barriers to investment and trade make it difficult to grow outside of your home in the triad.

Once managers realize that there is not a single global market, and that customers are not alike, then many decisions must be rethought. Distance matters. Geography rethinks their strategies. Smaller firms and entrepreneurs should be careful not to leap into foreign markets: They are risky and the risks need to be addressed.

To reduce risk, smaller businesses should hook up with a regional triad producer. For example, it could become a key supplier to a Bombardier or a Pratt & Whitney, or a distributor and/or an intermediary in the health system for an MNE pharmaceutical producer. For these firms, we offer what is perhaps a surprising slogan: Think regional, act local, forget global. CEOs of Canadian subsidiaries of foreign MNEs have a special role to play as they seek to enhance the role of the Canadian sub in the global network of their parent MNE.

Take advantage of your cluster and develop subsidiary-specific advantages that allow your sub to win global or regional responsibilities within your worldwide parent. Keep in mind that the United Nations World Investment Report estimates that as much as 60 percent of the trade and investments in which Canada has a significant presence (e. g. , autos, chemicals, petroleum, pharmaceuticals) is intrafirm. Winning larger responsibilities within the parent firm has proven to be a powerful strategy for Canadian subsidiaries over the last decade.

The most obvious first step is to earn the ability to compete for North American-wide responsibilities. Later, add other regions as your subs demonstrate their ability to record positive performance and demonstrate their competence. Don't let the frequent anti-government rhetoric of our neighbours to the south impress you too much; rather, work with local, national and regional governments to secure your success in the Canadian market and have them help open up other triad markets. For large Canadian-based MNEs, like Bombardier, Alcan, SNC Lavalin and Nortel, and smaller emerging MNEs, we recommend that they develop internal organizational structures that allow the top management team to develop on a cluster, national and regional basis. When expanding to another triad, use managers from that region and promote them quickly to the top management team. Their knowledge of the new triad's culture and markets is likely to be the key ingredient for success in the new region. This may require that you hire more seasoned managers who have the background to handle bigger responsibilities rapidly.

Globalization, as many have presented it, does not exist, nor has it ever existed, in terms of a single world market with free trade. Today's reality of triad-based production and distribution, we believe, will remain the reality long into the future. MNEs operate largely within triad markets and access other triad markets; they have regional, not global, strategies. The future for international business is more of the same. There is not a trend toward globalization, but rather strong evidence that the triad blocs are hardening. We offer these points in order to encourage Canadian executives to recognize today's realities and work within them for a better future for their firms and their country.

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Part 3

THE ROLE OF THE CANADIAN MANAGER Finally, let us turn to the most important group, the multinational managers. Governments and educators play pivotal roles in providing the appropriate infrastructure and macroeconomic climate, and in education. But little will come of that effort unless business plays its role well. We suggest that business fully and formally recognize that the world consists of four entities: city clusters, nations, regions and the world. Corporate strategies will be more successful if businesses become aligned with this new reality. The end of globalization, as it has been presented here, requires new thinking by managers of MNEs and other organizations.

Trying to design and implement a global strategy is no longer appropriate. Instead, a strategy based on a triad approach is required. This will include a large element of localization, as regional barriers to investment and trade make it difficult to grow outside of your home in the triad.

Once managers realize that there is not a single global market, and that customers are not alike, then many decisions must be rethought. Distance matters. Geography rethinks their strategies. Smaller firms and entrepreneurs should be careful not to leap into foreign markets: They are risky and the risks need to be addressed.

To reduce risk, smaller businesses should hook up with a regional triad producer. For example, it could become a key supplier to a Bombardier or a Pratt & Whitney, or a distributor and/or an intermediary in the health system for an MNE pharmaceutical producer. For these firms, we offer what is perhaps a surprising slogan: Think regional, act local, forget global. CEOs of Canadian subsidiaries of foreign MNEs have a special role to play as they seek to enhance the role of the Canadian sub in the global network of their parent MNE.

Take advantage of your cluster and develop subsidiary-specific advantages that allow your sub to win global or regional responsibilities within your worldwide parent. Keep in mind that the United Nations World Investment Report estimates that as much as 60 percent of the trade and investments in which Canada has a significant presence (e. g. , autos, chemicals, petroleum, pharmaceuticals) is intrafirm. Winning larger responsibilities within the parent firm has proven to be a powerful strategy for Canadian subsidiaries over the last decade.

The most obvious first step is to earn the ability to compete for North American-wide responsibilities. Later, add other regions as your subs demonstrate their ability to record positive performance and demonstrate their competence. Don't let the frequent anti-government rhetoric of our neighbours to the south impress you too much; rather, work with local, national and regional governments to secure your success in the Canadian market and have them help open up other triad markets. For large Canadian-based MNEs, like Bombardier, Alcan, SNC Lavalin and Nortel, and smaller emerging MNEs, we recommend that they develop internal organizational structures that allow the top management team to develop on a cluster, national and regional basis. When expanding to another triad, use managers from that region and promote them quickly to the top management team. Their knowledge of the new triad's culture and markets is likely to be the key ingredient for success in the new region. This may require that you hire more seasoned managers who have the background to handle bigger responsibilities rapidly.

Globalization, as many have presented it, does not exist, nor has it ever existed, in terms of a single world market with free trade. Today's reality of triad-based production and distribution, we believe, will remain the reality long into the future. MNEs operate largely within triad markets and access other triad markets; they have regional, not global, strategies. The future for international business is more of the same. There is not a trend toward globalization, but rather strong evidence that the triad blocs are hardening. We offer these points in order to encourage Canadian executives to recognize today's realities and work within them for a better future for their firms and their country.