Magazine article New Zealand Management

INTOUCH : Ita[euro][TM]s Not a Flat World!

Magazine article New Zealand Management

INTOUCH : Ita[euro][TM]s Not a Flat World!

Article excerpt

Byline: Ruth Le Pla

Biff out the notion of a flat globalised world. International business is more partitioned than many of us care to admit.

Thata[euro]s according to professor Alan Rugman, who was in Auckland recently as part of the University ofA Auckland Business Schoola[euro]s Deana[euro]s Distinguished Speakers Series. Rugman has spent years fossicking through big companiesa[euro] annual reports trying to unearth their global aspirations.

Hea[euro]s director of research at the Henley Business School, University of Reading, in the UK. His research shows that even Fortune 500 companies, the giants of international business, stick surprisingly close to home. To Rugmana[euro]s mind, a truly globalised firm makes at least 20 percent of its sales in each of the three regions of Europe, North America and Asia. They score less than half of their sales on home turf.

Yet, thata[euro]s not what the Fortune 500 are doing.

a[euro]Ita[euro]s pretty surprising. These are our global enterprises. They are our best bet to be global firms and yet only nine of them are pulling it off. These Fortune 500 firms average 77 percent of their sales in their home regions. Theya[euro]re not truly global players.

a[euro]The typical large firm is home-region oriented. Ita[euro]s not a global firm. Theya[euro]re getting the benefits of integration and scale by growing in their home market.a[euro]

Arguments used to centre around whether business should be local or global. a[euro]I say ita[euro]s regional versus global,a[euro] says Rugman, a[euro]and you can forget global. …

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