Page 76 - DMGT401Business Environment

Unit 2: Industrial Policy and Regulatory Structure

then collapsing with the crisis of gold standard in the late 1920s and early 1930s. Countries that Notes
engaged in that era of globalisation, including the European core, some of the European periphery
and various European offshoots in the Americas and Oceania, prospered. Inequality between
those states fell, as goods, capital and labour flowed remarkably freely between nations.
The 20th century was also governed by economic nationalism. Most of the European nations
followed this policy. After the Second World War economic nationalism became the key for
most nations in Asia and Europe. Even nations like the US and France were not untouched with
the phenomenon of economic nationalism.
When the US started losing jobs because of globalisation it reacted sharply. Not only this, in the
20th century itself it took various measures to protect its domestic industry like automobiles
and motorcycles. It imposed quantitative restrictions on the imports of automobiles from Japan.
Similarly, when in 2006 a Britain-based NRI made a bid for Europe's largest steel maker France
reacted sharply.
Economic nationalism is a term used to describe policies which are guided by the idea of
protecting domestic consumption, labour and capital formation, even if this requires the
imposition of tariffs and other restrictions on the movement of labour, goods and capital. It
opposes globalisation in many cases, or at least it questions the perceived benefits of unrestricted
free trade. Economic nationalism may include such doctrines as protectionism and import
substitution.
Corporations are today changing their strategies and are reorganizing their functions to cope
up with the changed scenario. Whether it is their production process or location, Product strategy,
Marketing, Finance, HR policies etc. Organizations have incorporated the following changes:

Designing in Global Environment

If managing product development processes was a challenge before, it is not getting any easier
as companies continue to adopt global design strategies. Global designing has cost benefits that
are very attractive to today's manufacturer, but it also adds new Product Lifecycle Management
(PLM) challenges and intensifies existing problem areas like that of protecting intellectual
property.

Production Location Selection

Jeffrey Immelt of GE Medical Systems (GEMS), pushed for acquisitions to build up scale because
for leading global competitors, an R&D-to-sales ratio of at least 8 percent represents a significant
source of scale economies. But he also implemented a production strategy that was intended to
arbitrage cost differences by concentrating manufacturing operations and, ultimately, other
activities – wherever in the world they could be carried out most cost effectively.

Rationalised Production

Companies produce different components or different portions of their product line in different
parts of the world to take advantage of low labour costs, capital, and raw materials. This is
rationalised production. In a new, global world, rationalised production is easier. Now
organizations can outsource or can establish their own production units in those areas where it
is more economical.

Example: GE, for instance, used Mexico as a manufacture base for labour-intensive
operations. Today, Japanese are selling their cars made in America to the American consumers,
while Americans are selling American cars made in Japan.

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