Regionalisation and globalization are the two terms that are commonly used in case of businesses. Regionalisation in general is defined as the process of making divisions of a large area into smaller segments. This can be related to division of an entire nation into small provinces or states. Businesses use the concept of regionalization as a tool for management that can be used to meet particular areas in a unique way. Globalization on the other hands is referred to a change that takes place in the entire globe in which the people of the world are shifting from self-contained countries to an integrated world. In case of businesses, globalization is the change that takes place in the organization that operates within a single country and plans to expand and operate in multiple countries around the world. The business strategy assignment written below will focus on the concept of Regionalisation and Globalisation and its effects on the businesses around the world focussing on several current events.
Concept of regionalisation: Regionalisation is defined as the strategy of business that helps to focus on a particular area or region. This approach helps in the differentiation based on the regions. Companies when newly formed, establish their operations within one particular region before planning to expand in the international countries or becoming a multinational company. There business organizations operate in order to cater to the differences that exist in the market in which they carry out their works. In such cases, the organizations tend to adopt the regionalization strategy that will help them to manage their marketing, financing and other business functions. As for example, a company may make use of differentiated strategies for marketing in terms of advertising and packaging the products manufactured by them or they may even offer the different products and services manufactured by them to the different areas (regional markets) (Imf.org. (2018)).
Impacts of regionalization: The strategy of regionalization allows the local within an international country to operate the business locally within a multinational corporate strategy. This helps the local employees, suppliers and management to bring inputs from the experiences they posses with the customers of the local market into the foreign company, thus, benefitting the company externally. This is a strength of the strategy (Verbeke & Yuan, 2018). This can be explained with the help of a good example of Samsung Tesco merger. Tesco is a British owned company that is run by the local management of Samsung in Korea. The company hires local professionals, who are able to understand the culture, language and needs of the local customers. Therefore, the Samsung Tesco merger has been successfully able to infuse the concept of regionalization within its global strategy of expansion (Businesstoday.in. (2018)).
Concept of globalisation: Globalisation on the other hand is referred to as the strategy that is adopted by a company that operate in many international companies (multinational companies). Companies after establishing themselves and growing in a particular region or operating in the regional markets, may plan to expand their respective businesses internationally. The companies usually plan to expand in other countries around the world to gain knowledge about the current trends in the international market and at the same time to increase their sales. Globalization strategy helps the companies to spread their branches around the world and thus become popular among the international customers. As for example, companies, who intend to operate globally may sell the same products manufactured by them to the different countries (international markets) in which they wish to operate in (Cartwright, 2017).
Impacts of globalization: Globalization affects the business organizations in several ways. It leads to increased amounts of competition that is caused more due to the foreign investments that flow to the countries. Globalization leads to greater awareness in the market as the organizations come to know about the needs and requirements of the customers globally. The business, which expand globally acquire economies of huge-scale production and this factor makes them very competitive. The organizations expanding globally also gains an advantage of local flexibly as the modern techniques of production in the present times can be allocated anywhere around the world. The globalization strategies also lead to increased number of joint ventures and mergers, which in turn helps in accessing larger markets and provides many cost advantages (Shenkar, Luo & Chi (2014)).
However, some companies can make use of both the strategies in order to flourish and become popular in the regional as well as international markets. As for example, Twitter is a company that makes use of both globalisation as well as regionalization strategies. Twitter is a social media handle, which operates throughout the world and the page has similar functionalities when accessed by people from various countries around the world. However, the trending portion of the website’s page is sensitive to different regions and they display content that is more trending in the region from which a user is accessing it, which differs from others.
Connection between the external and internal environment of organizations: The external environment of a business organization is defined as the influences or the outside factors that tend to affect the operation of the organization. The organizations must react or act in order to maintain the flow of the organizational operations. The two parts of the external environment are macro environment and the microenvironment. The microenvironment comprises of the factors that affect the operation of the company in a directly. The microenvironment comprises of the general factors and the business organizations do not have any control over these factors. The success of all the organizations depends on the ability of it to adapt to the outside environments. In case a company expands globally, it needs to accept the new values and cultural aspects of the international country in which it has expanded (Hueske, Endrikat & Guenther, 2015).
The five factors that affect the microenvironment of an organization are customers, suppliers, public perceptions, financiers and marketing intermediaries. The factors that affect the macro environment of an organization are the socio cultural, legal, political, environmental and technical. The company needs to make a good research about the external environmental factors that may affect the operation of the company before expanding (Marandu, 2015).
The internal environment of an organization comprises of several factors that affect the decision-making, choices, activities and mostly the behaviour of the employees. The main factors that are considered as a part of the internal environment of an organization as the styles of leadership, structure of the organization, culture of the organization and the mission statement of the organization (Kuratko, Hornsby, & Covin, 2014). The mission statement of an organization defines the goals that the organization desires to achieve in the near future. A good mission statement comprises of the intents of the company that are important and needs to be considered. The mission statement comprises of the customers (whom the company will serve), services and products (that will be manufactured by the company), philosophy (ideology that needs to be followed by the company to carry on its operation) and the location (the place where the goods and services will be manufactured). The leaders need to motivate the employees, especially when they expand into foreign countries.
The concept of Globalization is a contextual factor that benefits both the external and internal environments of businesses in Australia. The companies expand globally in order to gain knowledge about the markets of the international countries, to find out about the needs and requirements of the customers around the globe. The companies expand to other countries with different cultural aspects and work accordingly (Abrmr.com., 2018).The business organizations hire the employees from the local regions, as they possess more knowledge about the demands of the local customers. This benefits the companies to take decisions about manufacturing new products and services that are trending in the international markets. The business organizations also adapt to the new cultural values that are present within the international country in order to reduce confusions and conflicts. This also motivates the employees, who now work with more potential to achieve the organizational goals. This factor helps the company to operate successfully within the international country and increase its margin of sales.
Theories and concepts of globalization:
Theory of liberalism: Liberalism views the concept of globalisation as a market extension of modernization. It is defined as the result of desires of humans for political liberty and economic welfare. Transplanetary connectivity is derived from the human drives that lead to maximization of material well-being. Following this theory the companies who plan to expand globally gains the knowledge of the needs of the local customers to maximize their production.
Theory of Marxism: The concept of Marxism is basically concerned with the social exploitation by unjust distribution and modes of production. According to Marx, the capital by its own nature drives beyond the barriers in order to conquer the market. According to this theory, connectivity among the countries (businesses) around the world increases the opportunities to make profits and surplus accumulation.
Theory of Constructivism: According to this theory, the companies that are expanding globally need to communicate effectively. Effective communication is an essential part of managing the businesses. When the companies expand globally there comes various barriers to communicate effectively such as language, cultures and others.
Theory of Trans-formationalism: David Held and his fellow colleagues proposed the theory Trans-formationalism, according to which the concept of Globalization highly reflects the interconnection between the economic, cultural and political factors. This theory explains the concept of globalization as the a process that leads to a transformation in spatial organizations of the social transactions and relations, which are expressed in interregional flows, transcontinental flows and the networks of the activity, power and interaction. This theory impacts on the infrastructure of the organizations that plan to expand globally. This also helps in the growth and development of the organization (Citeseerx.ist.psu.edu. (2018)).
Globalization as transference: Globalization as transference is defined as the process of exchange between the boundaries that already exist between the system and units.
The terms globalization and regionalization are connected at the same time conflicting with each other. Many companies exist in Australia and in the other parts of the world, which use the concepts of both globalization and regionalization. The business strategy assignment has significantly highlighted the concept of globalization and regionalization in details. It has shed light on the impacts that the strategies of globalization and regionalization have on the business organizations. The business strategy assignment has also highlighted the term globalization as a contextual factor that affects the internal and external environments of the businesses that expand globally. Lastly, the business strategy assignment has focussed on the various theories and concepts of globalization. Business Strategy assignments are being prepared by our best management assignment help experts from top universities which let us to provide you a reliable assignment help australia service.
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