Environment, Conservation and Sustainability Issues

China’s and India’s rapid growth and push toward economic progress and better lifestyles for their citizens will cause the ongoing depletion of natural resources. Consequently, control of raw materials will be a vital strategic issue, often leading to preferential bilateral agreements that might contradict multilateral arrangements. Governments will attempt to put more land into grain production and use subsidies and price controls. Scarcity will also drive up the price of consumer alcohol. Protecting materials from theft (e.g., cutting electrical wires to steal copper) will become a priority. Recycling and recovery will be strong business opportunities. As fuel production from food accelerates, farming will become attractive and profitable. The global shortage of potable water will be rediscovered as a priority issue and constraint on global advancement and well-being. Government investment in desalination and reverse osmosis technologies will grow along with emphasis on water conservation.

In light of public concern over climate change, interest in energy-saving technologies will grow. Unusual natural phenomena will be attributed to global warming, a relationship that will be supported by a stream of scientific and nonscientific proof. Public perceptions will lead to changes in living patterns. For example, the population of dry, arid and hot  climate areas might shift due to water shortages and limitations on the use of air conditioning. Such changes will occur even if it becomes generally accepted that global warming is only slightly dependent on human activity.

Africa might offer the most opportunity for green investments and accumulation of carbon credits. Eventually, as governments frown on the transfer of resources resulting from carbon trading, wealthy countries and international operating companies will make agreements (both multilateral and bilateral) that create a framework to protect the environment. Key sectors for industry creation and expansion include public health; sustainability; saving energy, water and natural resources; biotechnology, genomics and nano-technology; and the creation and promotion of eco-products, services and processes. For example, sustainable water recycling technologies will spawn new industries, and governments will adopt and encourage more advanced pollution-control policies, particularly for heavy metals and engineered (non-naturally occurring) substances.

This is an excerpt from Dr. Czinkota’s book Global Business: Positioning Ventures Ahead, co-authored by Dr. Ilkka Ronkainen.

Michael R Czinkota and Ilkka A Ronkainen, Global Business: Positioning Ventures Ahead (New York: Routledge, 2011), pg. 229-230.

What Drives Globalization? Part 1/4

Globalization is driven by four factors:

  1. Cost
  2. Market
  3. Environment
  4. Competition

Cost:

Maximizing their investment is a motivator for many global companies. Single-nation markets might not be large enough to offer a company’s country subsidiaries all possible economies of scale and scope, especially given the dramatic changes in the marketplace. The goal, then, is to get the most mileage from the investment cost. At the same time, advertising and promotion can bleed across borders, so it makes sense to make the product available where people are going to hear or learn about it.

A realistic, objective assessment of global opportunities and costs will probably lead to tough decisions about which markets, customer segments, or product positioning to focus on and which ones to bypass as well as appropriate strategies. In pursuing price leadership, for example, the global marketer offers a product or service that is nearly identical to the competition’s, but at a lower price. This often means investing in scale economies and controlling costs that typically include overheads, research and development, and logistics.

The alternative strategy, product differentiation, takes advantage of the marketer’s real or perceived superiorities on value elements such as design or technical support. Cost leadership and differentiation are not mutually exclusive, of course, and should be balanced appropriately. For instance, product components manufactured to one worldwide standard on one production line can be assembled into different final products backed by unique positioning and brand differentiation to meet local customer tastes. And the “mass customization” product design movement that emerged two decades ago still permits low-cost tailoring of manufactured goods to individual customer specifications. Most global marketers combine high differentiation with cost containment so their global activities contribute to economies of scale in production and marketing.

Marketers who opt for high differentiation cannot forget to monitor costs, though, because customer value perceptions rely at least in part on the price paid for the quality obtained. Knowing this, Nissan introduced the sub-$10,000 Versa in the U.S. in late 2008, as the economic recession was just being acknowledged. The small vehicle lacks frills – there is no air conditioning or power steering – but its target market does not expect luxurious touches in a car in that price range.

This is an excerpt from Dr. Czinkota’s book Global Business: Positioning Ventures Ahead, co-authored by Dr. Ilkka Ronkainen.

Michael R Czinkota and Ilkka A Ronkainen, Global Business: Positioning Ventures Ahead (New York: Routledge, 2011), pg.90-91.

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