Much of today's world trade takes place within three regional free-trade blocs (Western Europe, Asia, and North America), called the TRIAD market, grouped around the three dominant currencies (the euro, the yen, and the dollar).7 One researcher summarizes the impact this new order has had on our perception of national boundaries in the following way:
Today, if you look closely at the world TRIAD companies inhabit, national borders have effectively disappeared and, along with them, the economic logic that made them useful lines of demarcation in the first place.
The European Union
We are very conscious about the euro because our main market is Europe; we told clients that as soon as they are ready, we will be ready [by pricing his products in euros].
WILLY LIN, MILOS MANUFACTURING, HONG KONG (FAMILY-OWNED KNITWEAR COMPANY) FAR EASTERN ECONOMIC REVIEW, SEPTEMBER 3, 1998
With 12 of the 15 member states of the European Community adopting a cmmon currency and monetary policy, the EU'a single, borderless western European market'is now a reality. And, as negotiations continued in 2001, voting rights were being negotiated for up to 13 new members to join the EU.9 With the euro now as legally tradable currency, Europe's business environment is being transformed. Legislative measures have been adopted to create an internal market with free movement of goods and people among the European Union (EU) countries, creating the largest and most integrated common market in the world, with 376 million consumers. However, the elimination of internal tariffs and customs, as well as ffnancial and commercial barriers, has not eliminated national pride. While most people in Western Europe are being thought of simply as Europeans, they still think of themselves first as British, French, Danish, or Italian. They are wary of giving up too much power to centralized institutions and of giving up their national culture.
Global managers face two major tasks. One is strategic (dealt with more fully in Chapter 6.'how firms outside of Europe can deal with the implications of the EU, of what some have called a 'fortress Europe,' that is, a market giving preference to insiders. The other is cultural'how to deal effectively with multiple sets of national cultures, traditions, and customs within Europe, such as differing attitudes about how much time should be spent on work versus leisure activities.
Asia
Japan and the Four Tigers'Singapore, Hong Kong, Taiwan, and South Korea, each of which has abundant natural resources and labor'provide most of the capital and expertise for Asia's developing countries.10 Economists observe a growing integration of the region, with Japan as a catalyst and a dominant, but welcome, partner.
In the 1980s and early 1990s, much of Asia's economic power and competitive edge was attributed to Japan's keiretsu and South Korea's chaebol. Both are large conglomerates of financially linked groups of companies that play a significant role in their countries' economies. Japanese keiretsus'Mitsubishi and Toyota, to name two of the most powerful'are regarded in Washington as forms of trade barriers.' Recently, however, Japan's economic slide has been partially attributed to the closed system of the keiretsu, including political protection and influence for the keiretsu and dubious financial backing. As a result, such conglomerates have been forced to break up and restructure. As an example, in March 2000 Toshiba Corporation announced a three-year reorganization plan.
In all, the economic woes in Southeast Asia have severely slowed the growth in the region, and in fact have had a ripple effect on the sales and earnings of companies around the world. However, in 2001, Washington and Tokyo renewed efforts toward a more open marketplace.
North America
The goal of the North American Free Trade Agreement (NAFTA) between the United States, Canada, and Mexico, was to bring faster growth, more jobs, better working conditions, and a cleaner environment for all as a result of increased exports and trade. This 'one America' trading bloc has 360 million consumers and the potential for expansion in South America as trade liberalization among the Latin American countries progresses.14
Reflecting optimism about investment opportunities resulting from the NAFTA, foreign companies have invested billions in Mexico. To take advantage of increased trade, American companies have set up new manufacturing facilities in Mexico or extended their manufacturing and assembly operations in the maquiladoras'U.S. manufacturing facilities that have operated just south of the Mexican'American border since the 1960s under special tax concessions. Many Mexican and American companies have set up joint ventures, such as the one be tween Wal-Mart and Cifra, the largest retailers in the United States and Mexico, respectively; in fact, as of 2001, WalMex is the country's biggest chain.15 Already known as 'Detroit South,' the car industry south of the border is taking over more and more factory production for the Big Three carmakers in the United States, taking advantage of lower Mexican wages. However, recurring problems with the infrastructure and the declining value of the peso continue to depress trade.
Regional Trading Blocs-The TRIAD : Economic article from Global Management Catagory Regional Trading Blocs-The TRIAD
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