"Regional Strategies for Global Leadership."
Harvard Business Review 83, no. 12 (December 2005): 98-108.
The leaders of such global powerhouses as GE, Wal-Mart, and Toyota seem to have grasped two crucial truths: First, far from becoming submerged by the rising tide of globalization, geographic and other regional distinctions may in fact be increasing in importance. Second, regionally focused strategies, used in conjunction with local and global initiatives, can significantly boost a company's performance. Regionalization is apparent in trade within regions, in foreign direct investment, companies' international sales, and competition among the world's largest multinationals. Ghemawat says that the most successful companies employ five types of regional strategies in addition to--or even instead of--global ones: home base, portfolio, hub, platform, and mandate. Some companies adopt the strategies in sequence, but the most nimble switch from one to another and combine approaches as their markets and businesses evolve. Toyota's exports from the home base continue to be substantial even as the company builds up an international manufacturing presence. Toyota achieves economies of scale and scope with a strong network of hubs, where the company also pursues economies of specialization through interregional mandates. Regional strategies requires flexibility and creativity where a company must decide what constitutes a region, choose the most appropriate strategies, and mesh those strategies with the organization's existing structures.