Regional Strategy

4 April 2017

Regional strategies for global leadership As the rising tide of globalization, some companies may lost the way or make mistakes to set out to create a worldwide strategy. In fact, better results come from strong regional strategies, which is the bridge that connect the local and global initiatives, and can significantly boost a company’s performance. The role and importance of regions

According to the article, an increasing number of companies regard regions as enabler of cross-border integration because high level of cross-border integration usually accompany with high level of regionalization. Besides the geographic proximity, the cultural, administrative and economic proximity also become an important competitive advantage in regionalization and contribute a significant weight of sales. The regional strategy menu Nowadays, companies usually adopt several strategies simultaneously to increase economic integration and promote globalization.

The Home Base Strategy—serving nearby foreign market from home base, which is efficient and permit rapid interactions with other departments, especially work well when economics of concentration.

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However, it limits a company to its local region. The Portfolio Strategy— setting up or acquiring operations outside the home region that report directly to the home base. It leads to lots of favorable performances and outcomes in non-home regions, but it takes time to implement and require the abilities to compete with outside rivals.

The Hub strategy— build regional bases or hubs to support local operations. It is simply a multiregional version of the home base strategy to share resources and add value at the regional level. However, companies have to balance the customization and standardization carefully to avoid risks. The Platform Strategy — utilizing the common platforms to delivery variety that more cost-effectively and achieve greater economies of scale and scope through customization. It will get risk if managers take standardization too far.

The Mandate Strategy — focusing on economies of specialization and scale, and ward certain regions broad mandates to supply particular products or perform particular roles for the whole organization. All five strategies represent a new strategy—global network. These strategies make important roles in the contemporary companies, one of the reasons why Toyota can be the leader in the motors market is to combine and apply these strategies thoroughly. Therefore, these strategies are on the right orientation.

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