1)Provide a brief assessment of the strength of the globalization drivers (market drivers, cost drivers, government drivers, competitive) for the following industry

Industry Globalization Drivers

Yip identifies four sets of “industry globalization drivers” that underlie conditions in each industry that create the potential for that industry to become more global and, as a consequence, for the potential viability of a global approach to strategy.George S. Yip first developed this framework in his book Total global strategy: Managing for worldwide competitive advantage (1992), chaps. 1 and 2. Market drivers define how customer behavior distribution patterns evolve, including the degree to which customer needs converge around the world, customers procure on a global basis, worldwide channels of distribution develop, marketing platforms are transferable, and “lead” countries in which most innovation takes place can be identified. Cost globalization drivers—the opportunity for global scale or scope economics, experience effects, sourcing efficiencies reflecting differentials in costs between countries or regions, and technology advantages—shape the economics of the industry. Competitive drivers are defined by the actions of competing firms, such as the extent to which competitors from different continents enter the fray, globalize their strategies and corporate capabilities, and create interdependence between geographical markets. Government drivers include such factors as favorable trade policies, a benign regulatory climate, and common product and technology standards.

Market Drivers

One aspect of globalization is the steady convergence of customer needs. As customers in different parts of the world increasingly demand similar products and services, opportunities for scale arise through the marketing of more or less standardized offerings. How common needs, tastes, and preferences will vary greatly by product and depend on such factors as the importance of cultural variables, disposable incomes, and the degree of homogeneity of the conditions in which the product is consumed or used. This applies to consumer as well as industrial products and services. Coca-Cola offers similar but not identical products around the world. McDonald’s, while adapting to local tastes and preferences, has standardized many elements of its operations. Software, oil products, and accounting services increasingly look alike no matter where they are purchased. The key to exploiting such opportunities for scale lies in understanding which elements of the product or service can be standardized without sacrificing responsiveness to local preferences and conditions.

Global customers have emerged as needs continue to converge. Large corporations such as DuPont, Boeing, or GE demand the same level of quality in the products and services they buy no matter where in the world they are procured. In many industries, global distribution channels are emerging to satisfy an increasingly global customer base, further causing a convergence of needs. Finally, as consumption patterns become more homogeneous, global branding and marketing will become increasingly important to global success.

Cost Globalization Drivers

The globalization of customer needs and the opportunities for scale and standardization it brings will fundamentally alter the economics of many industries. Economies of scale and scope, experience effects, and exploiting differences in factor costs for product development, manufacturing, and sourcing in different parts of the world will assume a greater importance as determinants of global strategy. At bottom is a simple fact: a single market will no longer be large enough to support a competitive strategy on a global scale in many industries.

Global scale and scope economics are already having far-reaching effects. On the one hand, the more the new economies of scale and scope shape the strategies of incumbents in global industries, the harder it will be for new entrants to develop an effective competitive threat. Thus, barriers to entry in such industries will get higher. At the same time, the rivalry within such industries is likely to increase, reflecting the broadening scope of competition among interdependent national and regional markets and the fact that true differentiation in such a competitive environment may be harder to achieve.

Competitive Drivers

Industry characteristics—such as the degree to which total industry sales are made up by export or import volume, the diversity of competitors in terms of their national origin, the extent to which major players have globalized their operations and created an interdependence between their competitive strategies in different parts of the world—also affect the globalization potential of an industry. High levels of trade, competitive diversity, and interdependence increase the potential for industry globalization. Industry evolution plays a role, too. As the underlying characteristics of the industry change, competitors will respond to enhance and preserve their competitive advantage. Sometimes, this causes industry globalization to accelerate. At other times, as in the case of the worldwide major appliance industry, the globalization process may be reversed.

Government Drivers

Government globalization drivers—such as the presence or absence of favorable trade policies, technical standards, policies and regulations, and government operated or subsidized competitors or customers—affect all other elements of a global strategy and are therefore important in shaping the global competitive environment in an industry. In the past, multinationals almost exclusively relied on governments to negotiate the rules of global competition. Today, however, this is changing. As the politics and economics of global competition become more closely intertwined, multinational companies are beginning to pay greater attention to the so-called nonmarket dimensions of their global strategies aimed at shaping the global competitive environment to their advantage (see the following section). This broadening of the scope of global strategy reflects a subtle but real change in the balance of power between national governments and multinational corporations and is likely to have important consequences for how differences in policies and regulations affecting global competitiveness will be settled in the years to come.

Minicase: Global Value Chains in the Automotive Industry: A Nested StructureSturgeon, Van Biesebroeck, and Gereffi (2009).

From a geographic perspective, the world car industry, in the same way as other others, is amidst a significant progress. Since the mid-1980s, it has been moving from a progression of discrete public businesses to a more coordinated worldwide industry. In the car business, these worldwide ties have been joined by solid local examples at the operational level.

Market immersion, significant levels of mechanization, and political weights on automakers to "construct where they sell" have supported the scattering of conclusive get together, which presently happens in a lot a greater number of spots than it completed 30 years prior. As per Automotive News Market Data Books, while seven nations represented about 80% of world creation in 1975, 11 nations represented a similar offer in 2005.

The far and wide desire that markets in China and India were ready for touchy development created a flood of new interest in these nations. Customer inclinations necessitate that automakers change the plan of their vehicles to fit the attributes of explicit business sectors. They likewise need their reasonable architects to be near "tuners" to perceive how they change their creation vehicles. These inspirations drove automakers to set up a progression of subsidiary plan habitats in spots, for example, China and Southern California. By and by, the weighty designing work of vehicle improvement, where applied plans are converted into the parts and subsystems that can be gathered into a drivable vehicle, stay concentrated in or close to the plan groups that have emerged close to the base camp of lead firms.

The car business is along these lines neither completely worldwide, comprising of a bunch of connected, particular groups, nor attached to the tight geology of country states or explicit areas, similar to the case for some social or administration ventures. Worldwide reconciliation has continued at the degree of plan and vehicle improvement as firms have tried to use designing exertion across locales. Models incorporate right-versus left-hand drive, more rough suspension and bigger gas tanks for agricultural nations, and shopper inclinations for get trucks in Thailand, Australia, and the United States.

The essential car configuration focuses on the planet are Detroit, Michigan, in the United States (GM, Ford, Chrysler, and, all the more as of late, Toyota and Nissan); Cologne (Ford Europe), Rüsselsheim (Opel, GM's European division), Wolfsburg (Volkswagen), and Stuttgart (Daimler-Benz) in Germany; Paris, France (Renault); and Tokyo (Nissan and Honda) and Nagoya (Toyota) in Japan. This is only nine items sold in numerous end markets.

As providers have taken on a bigger part in plan, they have, thus, settled their own plan habitats near those of their significant clients to encourage cooperation. On the creation side, the prevailing pattern is provincial joining, an example that has been strengthening since the mid-1980s for both political and specialized reasons. In North America, South America, Europe, Southern Africa, and Asia, territorial parts creation will in general take care of conclusive get together plants delivering to a great extent for local business sectors. Political weight for nearby creation has driven automakers to set up definite gathering plants in a significant number of the major set up market territories and in the biggest developing business sector nations, for example, Brazil, India, and China. Progressively, as a precondition to being considered for another part, lead firms request that their biggest providers have a worldwide presence.

Since halfway planned vehicles are fabricated in different districts, purchaser provider connections regularly length numerous creation locales. Inside districts, there is a progressive venture move toward areas with lower working costs: the U.S. South and Mexico in North America; Spain and Eastern Europe in Europe; and Southeast Asia and China in Asia. Amusingly, maybe, it is basically neighborhood firms that exploit such cost-cutting ventures inside districts (e.g., the speculations of Ford, GM, and Chrysler in Mexico), since the political weight that drives internal venture is possibly diminished when occupations are made inside the biggest objective business sectors (e.g., the ventures of Toyota and Honda in the Unites States and Canada).

Car parts, obviously, are more vigorously exchanged between locales than completed vehicles. Inside nations, car creation and work are regularly bunched in one or a couple of mechanical areas. Sometimes, these groups represent considerable authority in explicit parts of the business, for example, vehicle plan, last get together, or the assembling of parts that share a typical trademark, for example, electronic substance or work power.

Due to profound interests in capital gear and abilities, local car bunches will in general be extremely enduring. To summarize the complex monetary geology of the car business, we can say that worldwide coordination has continued the farthest at the degree of purchaser provider connections, particularly among automakers and their biggest providers. Creation will in general be coordinated territorially or broadly, with massive, substantial, and model-explicit parts creation focused near definite get together plants to guarantee convenient conveyance, and with lighter, more nonexclusive parts delivered a good ways off to exploit scale economies and low work costs. Vehicle improvement is packed in a couple of configuration focuses. Thus, neighborhood, public, and local worth chains in the car business are "settled" inside the worldwide authoritative structures and business connections of the biggest firms. While bunches assume a significant part in the car business, and have "pipelines" that connect them, there are additionally worldwide and territorial structures that should be clarified and guessed in a manner that doesn't limit the intensity of restriction.