2 management - School of International Business and ...

133 The Puzzle of Globalization
1. Competing with MNCs from emerging economies: Intensified price competition that may
shorten the product life cycles and speed up the race for innovation.
2. Exploring a currently unfamiliar territory beyond Europe: »Culture matters«, new markets and
political risks.
3. Establishing cost saving global production networks: Intensified competition for attractive pro-
duction locations.
4. Coping with logistics in sourcing, production, distribution, sales: Optimization between
distance and proximity, quality and cost saving, offshore outsourcing and insourcing.
It goes without saying that an important pre-requisite for successful international management
is the transformation of external changes into internal adaptations in the organizational structure
of the company. Furthermore, technological advances have to be applied without time lags in all
functions that are contributing to the performance of the company. With respect to the interna-
tional manager the competence that is necessary to guarantee the company’s sustainable per-
formance has to be built on one side on experiences in the wider global market place and on the
other side on knowledge acquired from theories that deal with the phenomenon of globalization
(Figure 4). The more the international manager is succeeding in structuring analytically theories
and empirical data according to their contribution to catch and clarify respectively the essence of
globalization, the more puzzles to solve will emerge. This results from the complex inter depen-
dencies:
– between the economic, political, sociological theories that deal with globalization,
– between global markets for buying inputs and selling outputs, cultural hemispheres, polit-
ical landscape, locations for manufacturing, innovating, financing, and last but not least
locations of competing MNCs,
– between theories and empirical facts (causation problem). In the end, the international
manager’s entrepreneurial spirit may be the unique asset to solve the puzzle of global-
ization. The international manager needs a broad picture of global economic trends that
lays the foundation for developing innovative global strategies.
The remaining part of this chapter is structured as follows: The following sub-chapter deals with
the empirical nature of globalization. It is structured according to vertically interdependent »land-
scapes«that are hidden behind macro- and microeconomic data and statistics. Volume, direction
and structure of cross-border flows result from short- or long-term unequal distribution of natural,
man-made and human resources (level 1, figure 4), from the diversity of cultures (level 2), the
political landscape (level 3), the availability of technologies (level 4), and the organizational struc-
tures of MNCs (level 5). The latter are results as well as drivers of the flows of goods, services,
knowledge, capital, human resources. Sub-chapter III sketches economic theories that help ex-