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Globalization in the age of Trump (Two laws that govern, respectively, the…
Globalization in the age of Trump
A full-scale retreat eat or an overreliance on localization would hamper companies abiity to creat valeu across borders and distance using the rich array of globalization strategies that are still effective and will continue to work well in to the future
People belive that teh world is a lot more globalized than it actually is
When businesspeople think the world is more globalized than it really is, they tend to underestimate the need to understand and respond to differences across countries when operating abroad
In the public policy sphere, the leaders tend to underestimate the potential gains from additional globalization and to overestimate its harmful consequences for society
The DHL Global Connectedness Index shows that globalization slowed down in 2105 but did not go in to reverse
A global trade war would hurt virtually every national economy but some countries are more at risk than others
Two laws that govern, respectively, the depth and breadth of globalization:
The law of semi globalization
International business activity, while significant, is much less intense than domestic activity
The law of distance
International interactions are dampened by distance along cultural, administrative, geographic, and, often economic dimensions
Two lessons
Although trade dropped precipitously in 1930´s, it did not dry up entirely .
The drop off in value reflected a fall more in prices than in quantities
The distance of various sorts continued to dampen international business activity
As the political environment shifts, business leaders need to keep a careful eye on how their home countries are realigning their international ties, and engage in their own corporate diplomacy
Trade can occur whitout multinationalization, and this is whats some tout as the wave of the future, but e-commerce is still significantly less internationzalized than off-line commerce
This seems like a particularly inauspiciois time to think that one can go global just by setting up a website or joining an on line platform
Firms should look for oppotunities to amp up their adaptation efforts because becoming more responsive to differences can help reduce the impact of protectionism
The most obvious way for a company to adapt is to vary products, policies, market positioning, and so on to suit local markets.
However, each variation increases costs and complexity
Therefore, smart adaptation typically involves limiting the amount of variation as well as finding ways to improve the effectiveness and efficiency of any changes that are introduced
Even with rising prosperity in large emerging markets, US. GDP per capita is still 7 times that of China, and 33 times that of India
As a companies from advanced and emerging countries joust for global leadership, each has to shore up its traditional weaknes
for incumbents, that´s arbitrage
for insurgents, it´s aggregation
Companies have historically treated interactions with governments, media, and the public as an afterthought in setting strategy
As Martin Reeves of BCG points out, “In many cases companies are seeing bigger impacts from political and macroeconomic factors than from competitive considerations.”
Those factors, he says, include Brexit-driven exchange rate movements, share price fluctuations in response to policy pronouncements, and the cost of changing investment plans in light of anticipated shifts in trade policy.
He backlash against globalization is also—in part—a backlash against big business
Nadia Andrea Hernández Garzón