The Impact of Globalization in Business

Essay by liedetectorCollege, UndergraduateA+, August 2006

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Both the globalization/localization issue, and the question of the nature of the interactions between firms can be considered in light of a distinction between the production of the good and the market in which it is sold. Kay (1990,p. 7), writing on the strategic market, states that "confusion of the dimensions of the industry with the dimensions of the market is potentially a serious strategic error". Jacobs and de Jong (1991) similarly distinguish between the geographical scope of markets and production networks and using 11 Dutch industries show that `geographical scope differs between industries'. The cocoa and cut flower industries, for example, have regional production but supply a global market, and machinery for the dairy industry is produced in the Netherlands and sold on the domestic market. In contrast, in the recorded discs industry both production and the market are global. To their examples we would add that many economic activities are both produced and marketed locally, though mostly not in the transportable goods industries.

House building and such consumer services as hairdressing are often local in both senses. Thus it is possible for an industry to have both global and local aspects. The distinctions between industry and market and local and global has important implications in terms of strategic development, marketing and the way the firm functions.

An example of success in such re-invention in the context of the evolving network of firms around the software MNE subsidiaries in Ireland is Mount Salus. With Microsoft's decline in demand for printed manuals came a reduction in the number of preferred suppliers. In mid-1996 Mount Salus lost the Microsoft account. It was almost forced to close down, and layed off more than 50% of its workers. However, Mount Salus had been taken over by a larger printing company, Adare, and had...