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Globalisation, internationalisation and worldwidedevelopment : concepts to be clarified

Gérard-François Dumont

To cite this version:Gérard-François Dumont. Globalisation, internationalisation and worldwide development : conceptsto be clarified. Geostrategics, 2001, pp.5-22. �halshs-01504083�

GLOBALISATION. INTERNATIONALISATION

AND WORLDWIDE DEVELOPMENT :

Concepts to be clarifiedBy the rector Gérard-François DUMONT*

At the threshold of XXIst century, the that would correspond perfectly to theirworld context is dominated by three new expectations: on the one hand, thephenomena or of a new nature in the increased freedom of trade on the planetHistory of humanity; globalisation, inter- would enable them to choose placesnationalisation and universalisation. To allowing them to achieve the lowest costwonder about the current and future plan- prices: the price of labor, the price of cap-etary situation supposes a preliminary ital, the price of real estate, the price ofclarification of these three concepts with- taxes and social contributions; on theout which it is impossible to understand other hand, this freedom of trade wouldthe contemporary world and the current enable them to unceasingly widen theirg e o p o l i t i c a l c h a n g e s . m a r k e t t o c o n s u m e r s p r e v i o u s l y l o c k e d, . » u - 1 f • 11 t i p i n p o l i t i c a l s y s t e m s w h i c h h a d o r g a n -M o r e o v e r , t h i s c l a n fi c a t i o n i s a l l t h e . , , , , , . ^ .~ i z e d t h e c l o s u r e ( t o t a l o r p a r t i a l ) o f t h e i rmore necessary as the definitions, implic-it or explicit, used for these three concepts are often fuzzy, leading to mingled According to a number of speeches, theand impenetrable representations which slightest hindrance appearing in the lifedo not make it possible to enlighten the of our contemporary companies - ill-evolution of the world. Thus, many development in various areas and coun-analyses and comments present the tries, mad-cow disease, Erika black oil"globalisation" (globalization) as the slick, agricultural product price-cut,result of an insatiable appetite of multina- removal of industrial employment due totional firms. In their will to always want productivity needs... - lead to denounceto increase their profits, the companies "universalisation", i.e., according to thewould be the heralds of this globalisation implicit sense given to this term, firms

♦ Gérard-François Dumoni, Professor at the Paris-Sorbonne University

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behavior thinking only of globalisationprofits. These reflexes are often conditioned by the great media result, forexample in being pleased with the failureof the Seattle Summit, in the perspectivethat it should put a brake to the multinational firms' voracity, when it is in fact apolitical failure.

Reality seems to be completely contraiyto this analysis. If there has always beencurious entrepreneurs eager to know otherworld environments, if international tradehas developed itself, especially since theend of the XVth century, to enable necessary products to circulate everywhere butonly available in certain areas (considering salt, spices, sugar cane...), globalisation which organizes permanent competition on world-wide markets, has neverbeen and shall never be an objective forthe firms, even less a project. The ideal fora firm is not to be subjected to an increasingly keener international competition,but in the contrary to dispose of competing advantages enabling it to take over theleast competitive sectors or niches on themarkets, hence as captive as possible. Thefirm's ideal is not to be subjected to constant pressure from financial analysts withvoracious temperaments and endlessrequirements, but would rather be to havethe insurance to maintain a high profitability thanks to preponderance on a protected market. All the firms' strategies aimthus at acquiring competing advantages,preferably captive niches, and are failingin the opposite case. The strategy ofRenault does not consist in wishing to becompeted by Ford or Toyota for its customers, but in the contrary to put on themarket products and an image of its products leading to the removal of competitionfrom its customers.

Rather than to cite the well-known exam

ple of Microsoft that has not ceased to bepositioned in a situation of quasi-monop-oly, which American justice has ended upby condemning in the year 2000; let ustake instead, the example of theMcDonald's firm: its objective is not tostrive for globalisation of the markets, i.e.for markets increasingly opened to otherexisting rapid catering companies or newones. Quite on the contrary, its objectiveis of trying to obtain as much as possiblea strong position, one of quasi-monopolyon the rapid catering market to limit tothe maximum risks arising from theopening of the markets. That theFrenchman José Bové should destroy inAugust 1999 a McDonald's restaurant inconstruction at Millau (in Aveyron) orthat he should plead for the quality of theRoquefort cheese in Seattle, hardlyaffects McDonald's. However, if JoséBové should use his media notoriety tocreate a rapid catering chain founded ineach country on the culinary originalitiesof each soil, McDonald's would have toreconsider.

The firm's objective consisting in ensuring a certain economic safety facilitatingits profitability and its perpetuity is sometimes difficult to realize alone. Hence, thecompany seeks for example to obtainsupport from the public authorities: delegation of an exclusive concession, obtaining a monopoly, conditions of alleviatedcompetition... Another method consists infinding support from other companies inthe same sector that also want to limit therisks of competition and ensure the returnon the i r investments : whereof a l l iances

allowing to stabilize tariff, technological,or commercial competition; joint ventures, to draw benefits from complemen-

Geostrategics n° 2 • March 2001 - 6 -

tarities and to share the costs and risks ona given project; the subcontracting andthe transfer of licenses, to limit the cost incapital of international development; ormergers and acquisitions to acquire critical sizes rendering competition morebearable.

Contrary to the generally accepted andoften widespread idea, the firms are practically foreign to the activation and extension of the globalisation process, whichthey generally did not ask for by theirwishes. In reality, globalisation rises frompolitical decisions, which, arriving in acontext of geographical changes, that werefer to by the term of internationalisation, have been able to operate quicklyand force the firms to re-examine thei r

strategies, by giving them a world dimension (a worldwide strategy).

The best proof that globalisation, whichis more pronounced since the last third ofthe XXth century, was undergone and notdesired by companies is the enormousshock it caused to giant firms whichseemed to be as strong and powerful aselephants. Some of these firms, as PanAm, have disappeared or have had toleave their place to others. As for thecompanies which were able to implementforced and then interactive strategies,these are found in completely new situations: the capacity to think world-widehas substituted a sequential approach ofthe markets, the enterprise-network hasreplaced the hierarchical company, the re-focusing on core competencies hasreplaced the crawling diversification orchosen without true logic; the search ofthe most powerful size succeeded to asimple will for power, and the question ofactivit ies localization became essential.

To clarify the above summary of ouranalysis, let us first specify the politicalshifts, which have fertilized "globalisation" then the geographical changes corresponding to internationalisation. Wewill examine finally how the enterprisesmodify their strategies to adapt themselves to this new international and global ized env i ronment .

1. POLITICAL MUTATIONS :" G L O B A L I S A T I O N "

Fruit of political decisions, globalisationr e s u l t s f r o m a w h o l e s e t o f d e c i s i o n staken at a world-wide level, at regionallevels, at national levels or at local levels.

The world-wide choices for globalisation

Shortly after the Second World War, theWestern world signed the GATT Treatywhose principles are the refusal of protectionism and a progressive opening ofdomestic markets. Starts then, initially ona modest quantitative level, a development of international trade; the annualg row th r a te o f i n t e rna t i ona l t r adebecomes superior to the annual averagerate of economic growth and representsan increasing proportion of the economicactivities. We are at the premises of globalisation, even if the term is not yet used,during a period when the relating decisions are modest.

The 1957 Treaty of Rome marks a verysignificant stage because it shows the waytoward globalisation of the markets inregional space and offers a model that willbe imitated in other areas of the world.The progress of this stage illustrates ouranalysis according to which globalisation

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is due to political decisions: thus, theFrench political leaders signed the Treatyof Rome against the opinion of the bodyrepresenting the firms leadership, thenational Council of French employers.This last one attempts to oppose itself tothe implementation of a Common Market,arguing officially that the French economy and enterprises are incapable of resisting sufficiently to the new competitorsattracted by the opening of the borders,and actually wishing to preserve the protected markets from which they profit.

What precedes justifies entirely definingglobalisation as the whole set of politicalprocesses aiming at the deployment of themarkets regional organisations and/orsingle planetary organisation, the latterbeing less and less segmented or rendered heterogeneous by the existing frontiers between national or regional spaces.

The consecutive years and decades following the Treaty of Rome confirm theveracity of this often occulted definition:while the Six' globalize their market, theUnited States worry about the economicprogress of a Europe which starts to unifyand realize that their share in the intema-

tional trade is very modest compared totheir economic weight in the world. Infact, this is not abnormal, because theUnited States benefit from a vast territoryhaving diversified resources, and are consequently practically self-sufficient.Contrary to Europe, which is dependenton the rest of the world for many rawmaterials and sources of energy, theUnited States hardly need to import, evenif they import for example oil in order toeconomize on their own reserves; consequently, they hardly need to export to balance their imports.

However, this reality is inappropriate fortheir power strategy. Also, underPresident Kennedy, the United Statesdecides to exert a major role in international trade. The Trade Expansion Act ispresented as the birth certificate of theworldwide globalisation, following theexample of the Treaty of Rome, the birthcertificate of the processes of regionalglobalisation. Indeed, preceding theKennedy Round (1964-1967), and byforming the premises, the TradeExpansion Act, voted for by the AmericanCongress in 1962, decides to reduce byhalf, and by annual stages, the customsduties on the whole set of imported products to the United States. It is followed atthe international level by the introductionof these discussions aiming at enlargingthe markets more, known under the nameof Kennedy Round. Then the TokyoRound ends up in a nonlinear reduction ofthe customs duties (the countries havingthe highest rights making the most significant effort) and dismantling non-tariffbarriers. Then, the Uruguay Round(1986-1993) approaches the negotiationof new aspects, as the trade of services(20% of world trade and including thefilm audio-visual industries), the investments, and the reinforcement of the intellectual property. This Uruguay Round,which runs up against the thorny questionof official aids and subsidies of exportsgranted to agricultural nationals, hasespecially lead to the implementation, in1994, of the World Trade Organisation(WTO) whose decisions have a completeand whole legal range. The WTO objectconsists indeed in promoting trade on anondiscriminatory basis, by setting up aninternational legal framework allowing tocontrol the markets and firms operations

Geostrategics n° 2 - March 2001 - 8 -

extended to several countries. Amongother things it is a question of modifyingthe sectional policies of protection inorder to eliminate them.

The failure of the Seattle negotiations,fall 1999, is only an adventure becauseglobalisation does not only come fromdecisions taken within a quasi-worldwideframework, like that of the WTO, but alsofrom regional, national and local decisions which were hardly hindered by theSeattle events.

Regional choices for globalisationSince the 1960s, the multilateral politicaldecisions resulting in widening thesphere of competition multiply themselves. The development of regional economic groupings like the EuropeanUnion results in new forms of liberty asthat of people and capital movements,consequently extending thereby the spatial sphere of economic competition. Theeconomic success of the EuropeanEconomic Community encouraged thecreation of institutions setting forthequivalent objectives: Mercosur, Alena...Moreover, these regional economicgroupings tend to increase as politicalupheavals lead more countries towardeconomic systems leaving larger spacefor market mechanisms. Thus, theEuropean Union an outcome of the 1957Europe of the Six, extended itself notablyto Denmark, Ireland and the UnitedKingdom in 1973, to Greece in 1981, tothe Iberian Peninsula in 1986, beforepassing to fifteen January 1 1995 with theaddition of Sweden, Finland and Austria.In a general way, these groupings areattracting for the countries not forming

part of them yet, wherefrom the enlargement of their geographical space.

Another regional level, which is takingshape, joins together non-bordering countries trying to define joint positions sothat the repercussions from globalisationon thei r economies are not unfavorableand rather advantageous. Thus, eightMoslem countries (Bangladesh, Egypt,Indonesia, Iran, Malaysia, Nigeria,Pakistan and Turkey) signed in February2001 the Cairo Declaration forming agroup baptized "D8" for the developmentwhose object is to defend a joint positionin the political negotiations of the WorldTrade Organisation. There again, this stepdoes not have as an aim to refute the

process of globalisation but, on the contrary, gives it their adherence, since theD8 countries wish «to double during thenext five years the volume of their commercial trade"^ with the whole planet.

National decisions opening globalisation

In accordance with the planetary globalisation or to regional forms of globalisation, internationalisation of the law unifies the legal trade context, limiting theimpact of the specific policies of theStates. Moreover, the majority of theStates display a will aiming at cuttingdown the economic frontiers and makingdecisions facilitating the increasing opening of national spaces to trade flows ofany nature with the exterior. In this spirit,the reduction of national monopoliessphere and the development of privatizations gradually lead toward entering acompetitive international market of thesectors previously protected, like water,electricity, telephone\ post-office... All

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this facilitates the international agreements, the crossed holding acquisitions,even mergers.

At the same time, the national legislationsare liberalized, increasingly openingnational markets. Thus France, still ratherhostile at the beginning of the 1980s tothe implementation of foreign companiesand in particular Japanese, changed attitude in 1984 by removing most of thepower of the State in the control of foreign establishments. The principle of apriori authorization for the investmentsof enterprises whose head office is in aMember State of the European Union has

been removed; it is practically the samefor the firms outside the European Union.As for the administrative formalities, theyhave been simplified and accelerated.The territories can thus openly inciteestablishments of foreign investors.

Among the national decisions enhancingglobalisation, it is necessary to quote theimplosion of communist regimes, generally replaced by political systems in favorof foreign trade development, or by thewill of economic openness of countriesl ike Mex ico wh ich adhered to GATT in

1986 or China that undertook to adhere toWTO in 1999.

1 - Political changes:" G l o b a l i s a t i o n "

- World choices for globalisation• Kennedy Round at the World Trade Organisation;• Internationalisation of the legal rules;

- Regional choices for globalisation• The creation and extension of regional sets: European Union,

ASEAN, Alena, Mercosur...;• The increasing commercial opening of the frontiers;

- National decisions opening globalisation• Reduction of national monopolies sphere;• Development of privatizations;• National economic regulations and Free-traders,

such as for example:+ Less framed international investments,+ Less constraining administrative formalities.

- Spaces enhancing globalisation

© Gérard-François Dumont

Geostrategics n" 2 - March 2001 - 1 0 -

new technologies and the geographicalmutations linked to them.

2. GEOGRAPHICAL MUTATIONS:I N T E R N A T I O N A U S A T I O N

Indeed, the economic effects of globalisation would undoubtedly have been slowerif the geographical context had not beenmarked by considerable changes in space-time, that one can indicate by the termin te rna t i ona l i sa t i on . I n te rna t i ona l i sa t i onis thus defined as the use of a set of techniques and processes reducing space-time, exchanges of resources, goods andservices between the planet territories. Itis convenient first to quote the revolutionof material and immaterial goods transport, facilitating the mobility of productive capital and men, as well as the concomitant use of a plurality of spaces. Thisinternationalisation of space should nevertheless not lead to think of a total spacestandardization, in particular due to theprocess of metropolisation and more generally due to a new hierarchical organisation of spaces.

Transports revolutionThe progress of communications isessential. They "represent the most outstanding leap forward" of the 1980s andthe most radical change in the systems ofrelations at all levels, local, regional,national and international, "with the epicof theTGV"^ the "triumph of the motorways", the "multiplication of air routes"or the "container ships".

At the same time, the economy's internationalisation was facilitated by the revolution of the telecommunications (gener

alization of the automatic dial telephoneand now portable, the lowering of international communications cost due to thediffusion of the telephone and the newresources for the t ransmiss ion o f mes

sages, diffusions of telex, telefax, numerical networks, Internet...). The debates onthe eventual return on investments of theM . U .T.S . (Mob i l e Un i ve rsa l Te lecommunication System), became difficult in Europe due to the States taxes,tends to omit an essential element, theconsequences of this new standardization(if it spreads) to facilitate internationalisation. Indeed, this standardization meansnot only the marriage of mobile telephony with the high flow Internet accesses,multiplying thus the possibilities of planetary communications, but even more soa compatibility between the Americanand European telephone networks, whilethe current European numerical standardG.S.M. (Global System for MobileCommunications), adopted in 1987, andsupplanted by the analogical system, isincompatible with the American network.This double revolution of the transports,material and immaterial, facilitates international mobility considerably.

Enlargement of the economic areaThe mobility of productive capital is wellhighlighted by the enlargement of theeconomic area. Two scaling changesmust be underlined: the first - the enlargement of the economic area - is of primarily national nature', with the mutation ofrelatively closed economic areas toinevitably open economic areas. An economic area is defined as "a heterogeneous space of which the various partsa r e c o m p l e m e n t a r y a n d m a i n t a i n

Gcostrategics n® 2 - March 2001 - 1 2 -

b e t w e e n t h e m m o r e t r a d e t h a n w i t h

neighboring areas However, a rupture, definitely emphasized in the 1970s,deeply modifies the relationship betweenthese two types of trade. Previously, in awor ld where the commun ica t ions cos tsand the displacements time lengths werestill high, the population privileges localproductions because in order to be feed,get dressed, improve its living conditions,it could only count on close resources:"Formerly the cost of communicationsobliged the establishments of the samechannels not to be too distant from oneanother. The cycles of transformationremained generally locked up withinnational spaces'" and often close to energy sources or ores.

Trade with the space outside, which hadbeen secondary, even marginal, may nowtake such an importance that any economic area fits from now on into a broader system to which it is linked. Trade concerns of course goods and services, butalso men.

The second change in scaling resultingfrom the transport revolution concernsthe mobility of men with the enlargementof life spaces and new migratory logics.

Life spaces enlargement.Diversification of urban transports, thedevelopment of motorway infrastructures,the high-speed trains enlarge the lifespaces by allowing peripheral urbanization* of the cities, then of the agglomerations. This peripheral urbanization is wellput into evidence in the case of Pariswhere one has passed from a purely community perspective, with a municipal towncouncil preventing the subway network

from leaving the twenty districts', to aregional perspective with the extension ofthe subway line, the creation of the RER(regional express train network), and thedevelopment of connections between thestat ions l ike EOLE and METEOR intendto connect the station of St Lazare with theEast station and to that of Austerlitz. In

September 1999, this regional will is symb o l i z e d w h e n t h e N a t i o n a l R a i l r o a d

Company S.N.C.F. decides to name thes u b u r b a n t r a i n s u n d e r t h e c o m m e r c i a l

generic term of "transilian" (neologismcreated from transport and francilian,meaning from the Ile-de-France).

Simultaneously, the car diffusion",encouraged by the networks' improvement, goes in the same direction byenabling to have a residence area furtheraway from the zone of employment,whether these be located in the down

town area or in the new activity spaceslocated in the peripheral urban areas.

The Peripheral urbanization of agglomerations, for which the term of "pro-urbanization" seems to be an appropriate neologism", which is expanding in particularthanks to the car, enlarges even more thedemographic scope of the economiccountries. At the international level, therevolution of transports contributes to thenew migratory logics and an increasingdiversity of the migratory types", ofwhich the managerial and entrepreneurialmigrations.

The concomitant use of a plurality ofspaces or "the plural city"To the process of the economic sphereenlargement, it is necessary to add that oftheir geographical diversity. Space did

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not only widen it has also become moreopen, because of the changes which haveoccurred in economics and transports. Inparticular, the concept of space-time, hasmore than ever replaced that of distance.People are less and less enclosed in a continuous circumscribed space defined bythe distance in kilometers that it cancover in a certain time", but in a discontinuous space formed by all the territoryaccessible by an unspecified mean ofcommunication (motor-, rail-, airway) ina limited amount of time". The conceptsof distance deeply changed. This changeis well symbolized in France by the heading of the association of the "cities anhour f rom Par is" " .

More and more individuals have a geographical mobility outside of the economic area concept polarized by a city,and register their activities in a pluralityof economic areas, and thus in a pluralityof cities: "a quiet urban revolution, theplural city"" has been emphasized sincethe 1980s. Whereas the space scale inmen's life was in general, limited to aunity of space corresponding to the territory of an economic area and in particularto his urban space, men live more andmore often in several cities and not anymore in only one: town of the residency,town of activity, town of consumption,town of leisures, town of second residency... It is besides this plural character ofthe "consumption" of the cities, whichleads each one of them to seek and to

develop its singularity. The five elementsof internationalisation previously quoteddo not mean economic unification ofspaces because one notices that processesof metropolisation and of new space hierarchies are taking shape.

TTie process of metropolisation

Indeed, in a more general way", a processof metropolisation is being developed,i.e. "the exercise of centripetal forcesleading to the concentration of men andactivities in urban spaces"". For example,the instal lat ion of the U.M.T.S. standardwill be initially in large cities, first possibility of return on investments, which canonly contribute to the continuation of theurbanization growth rate" due to metropo l i sa t i on .

This process is related to the need for abroad, qualified and flexible labor, to theneeds of various services, the need tomaintain exchanges with a multiplicity oftrade, and technical, institutional partners. Paul Claval interprets the metropolisation as the product of the "geographyof contacts" revealing new needs of theenterprises in connection with their partn e r s . H e n o t e s t h e t o t a l c o i n c i d e n c e

between the metropolises' map and theairports' map^.

New spatial hierarchies

The consequences of the economic areasscale enlargement are triple: on the onehand spatial diffusion of the activities andmore so of the inhabitants in a vaster ter

ritory, on the other hand the mobility^'revolution leading to the plural city, andfinally the growing importance of thespatial hierarchy concept. Indeed, thegrowing interdependence between spacesinevitably creates increased relations ofdependence.

The increasingly international characterof the world creates new spatial differentiations between territories possessing the

Geostrategics n® 2 - March 2001 - 1 4 -

bes t means o f communica t ion w i th the

world-economy and others, whose communication capacities are lesser andwhose economic activity is consequentlyl i m i t e d .

The means of communication create new

space distortions, spreading out some,retracting others. In the interurban relations, one notices a longitudinal retraction along the axes of communication,whose distance in time decreases because

of the interurban motorways, the air linksor the high-speed trains. In parallel, theterr i tor ies know a transversal retract ion:the zone of influence of the new transporta n d c o m m u n i c a t i o n i n f r a s t r u c t u r e s i slimited in space. The users of a teleportmust gather on the few hectares whereone can benefit from this equipment.

The mobility of pmductive capital

The development of the means of transportation and of their technology largelyundervalues the incidence of the transportcost in enterprises economic decisions.The facility and the transport time lengthare more significant than its cost strictlyspeaking. It becomes more important tomeasure the d is tances in t ime than in

kilometers. The revolution of transportsallows a considerable mobility, i.e. international, of the productive capital.Transport is not generally any more a factor determining localization. On the contrary, it is from now on a factor openingthe sphere of the localization's choice.

The territory, which benefits on itsground of the establishment from such orsuch an enterprise, is not protected anymore from a transfer to another territorydue to the distance's cost between this

other territory and the market. Even if thisis l ess t rue fo r some indus t r i es wh ich

require very specific locations (nuclearpower, transformation of heavy goods) orproximity services.Internationalisation resulting in the contraction of space and time, these involvemutations in the strategies and the organisation of the enterprises also forced toadapt to the decisions emphasizing thevarious levels of regional or worldwideglobalisation.

3 . E C O N O M I C T R A N S F E R S :W O R L D W I D E G L O B A L I S A T I O NO R E N T E R P R I S E S W O R L D D W I D E

STRATEGIES

Vis-a-vis globalisation and internationalisation of the factors of distribution and of

production, the enterprises are forced toimplement new strategies, worldwidestrategies, to react to the additional risksarising. It would be advisable to reservethe use of the term "worldwide globalisation" to define the actions of the finnsaiming at responding in any place andwithout particular discrimination of timeand price to the demand specifications,actions requiring the implementation ofworldwide strategies responding to global isat ion and in ternat ional isat ion. These

strategies are in conformity with the constant concern of every enterprise on amarket, to evolve more quickly than itscompetitors.

Add i t iona l r i sks

Vis-a-vis the political good will of globalisation, the enterprises initially had toface additional risks. The shock has even

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been terrible for several of them, to startwith the number one of air transport PanAm, that disappeared, which nobody hadever imagined. In 1989, IBM accumulates deficits and is at the brink of the

abyss; General Motors loses the equivalent of 9 400 Francs on each car sold inthe United States^^ Vis-a-vis the increas

ing instability of the environment, largecompanies deflate considerably theirmanpower to increase their productivity,and to develop their resort to subcontracting. IBM, General Motors, BritishAirways, British Telecom, BritishPetroleum, Renault, Peugeot... cut downon employment massively, within theframework of a strategy forced by globalisat ion.

Indeed, it is known that one can classifythe enterprise strategies into three categories: voluntarist strategies, when theenterprises decide to prod the environment's evolution; forced strategies, whenthe enterprises have no other choice thento adapt to a changing environment; andfinally the interactive strategies, consisting in drawing the best benefits from theenvironment mutations, turning theadvantages of globalisation to its ownprofit while turning its inconveniencesagainst its competitors. However, the current attitude of the enterprises consistingin deploying worldwide strategies (word-wide strategy) do not arise initially fromvoluntary choices, but more from the newconstraints of the world. The enterpriseshave had to and must adapt themselves tothe political decisions that organize globalisation and to the geographical mutations bom with new technologies. Then,the initial strategies of constraints leavethe place to interactive strategies consisting in thinking worldwide, to be focused

on its core competencies, to privilegereticular operations aiming at passingfrom a multi-domestic operation to a network enterprise.

Thinking worldwideThe need to think worldwide is imperative since the risks undergone by theenterprise have from now on regional orworld sources. For example, the Frenchenterprise in the 1970s worried mainlyabout the distortions of competition created by the French authorities to the benefitof the nationalized companies, fightingw i t h t h e F r e n c h a d m i n i s t r a t i o n w h i c h

controlled the selling prices of the products, worried about electoral programsanticipating the companies or providersnationalization... Today, the economicclimate depends also and sometimesespecially on decisions taken in Brussels,in New York, in Geneva (OMC), inTokyo, in Peking...

Focusing on the core competenciesTo want to do everything is to act badly.Globalisation requires to be terribly qualified on its market, and thus not to disperseits forces on various markets, all the moreso as it is also always necessary to retainthe maximum amount of forces availablefo r the inev i tab le re -o r ien ta t ions wh ichwill reveal themselves necessary. This iswhy firms sell profitable subsidiary companies too distant from their principalvocation. They re-focus on one or moretrades in which they have their best competitive position: for example, some chemical-pharmaceutical groups specialize inonly one of these two activities.

Geostrategics n' 2 - March 2001 - 1 6 -

E x t e m a l i z a t i o n

This re-focusing has a corollary: extemalization of all the productions which arenot the essence of the company's vocation; makes it possible for example tor e d u c e t h e i n t e m a l c o s t s w h i c h w e r e

related to the former hierarchical organisation of the firm. To the difference of traditional subcontracting, extemalizationconsists in entrusting to an extemal beneficiary person the responsibility of a function of the company (and not only themanufacture of a by-product), sometimesat the cost of having to also transfer thecredits and the personnel concerned.Hereby, the enterprises see the means ofbetter facing globalisation and economicshifts while becoming more flexible andmore reactive. Except for basic services,as catering or cleaning, the informationtechnologies (data processing departments) and telecommunications are currently the functions most often externalized on a worldwide scale". In the future,one could thus imagine that the largeautomobile companies are satisfied withthe core of their trade: to design cars andmarket them.

This extemalization of the activities ofthe firms consists in responding to another strategic element: to have an effectivesize.

The rise of the company-networks

As specified above, the worldwide strategies mean that the firms must seek torespond in any place and without particular time and price discrimination to thedemand requirements; the strategies arethus beyond the simple exports will of the1960s, which was managed by a single

center, and beyond the stage of the multinational corporations of the 1970s, organized according to a hierarchical stmcturearranged from the mother-company. Thew o r l d w i d e fi r m a n i m a t e s a n e t w o r k o festablishments drawing advantage from abroad autonomy of production and marketing.It is a question of moving toward theintemational company of the third type.The first type is created by addition offoreign subsidiaries that function in a relatively autonomous way within theframework of multi-domestic enterprises.Then, the idea - second type - consists inimplementing firms with simple integration: the holding of the group exerts amajor role for the strategic decisions, theoptions of research, the design of theproducts, however the activities in thevarious countries are narrowly coordinated so as to benefit the most from competencies and local resources. In the international company of the third type, thereis no a priori functional distribution; eachforeign subsidiary company can be seenentrusting a leading role for certain activities and a role of support for others insidethe firm. This last one functions in networks and the role of each node of thenetwork can evolve according to then e e d s .

Moreover, the quest for competitivenessconsists in optimizing researches, methods of management, sources of financing.Three research centers scattered in theworld functioning in a network are moreproductive than a single research centerrequiring a heavier and less capableorganisation to extract the richness fromdifferent locations. Seeking to adapt itselfto a globalized environment, the enter-

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prises rely at the same time on the worldwide d imension of the i r market and onthe advantages to be drawn from thetransnational networks of establishments.This is particularly true with regards tothe production facilities of the same firm,which from now on are put in competition. For example, the Peugeot factory ofMadrid found itself in direct competitionwith the Ryton site in England for themanufacture of new 306 models. In this

competition, the partners of Peugeot-Espanola - local subcontractors, tradeunions, employees - mobilized themselves to achieve excellency, improvingin a few years the productivity of theSpanish sites, formerly mediocre, to thebest European standards^.

The enterprises consider this way thatgeographical competition can be beneficial and favorable to the productivity, taking into account the increased means ofmobility: possibility of closing not verycompetitive sites, choice of implementation where the synergistic profits seemmost advantageous, possibility of transferring from lately elaborated technologies towards zones considered as moredynamic or offering a better quality-costra t io .

"The large firm organizes itself like anarchipelago, by combining on the onehand the anchoring of its establishmentsin the basins where they are implemented, their local socialization, making profit out of the available externalities, butalso of the production and reproductionof rare resources such as labor and know-how; on the other hand while makingthese establishments function together,sometimes on very long distances,according to a variable proportioning of

decentralization and coordination. To this

archipelago belong also the providers,subcontractors, customers functionally -if not geographically - closest"".

Acting according to an efficient dimens i o n

In spite of their efforts to function in networks, the large firms are inevitably morebureaucratic and more rigid than themedium or small organisations whosesize allows adaptability and great flexibility.The medium and small dimension oftenalso have a competitive advantage due tothe quality of information and competency that it can gather quickly or put easilyinto synergy. Globalisation thus does notimpose a worldwide size, but the need foradapting the dimension to discountedefficiency.

The new criterias of localization

Moreover, the worldwide strategy leadsto choices of localization that fit increas

ingly into worldwide logic.The entrepreneurs establish units ofresearch and of production there wherethe conditions appear to be most advantageous", even if the choice of the distribution and marketing units of implementation is more imposed by the proximity ofthe markets, and thus by the economicvalue of the demographic potential.

The companies do not necessarily chooseexternal subcontractors and beneficiar iesbecause of their geographical proximity,but according to a quality-price ratio inwhich the price of transport has an

Geostrategics n® 2 - March 2001 - 1 8 -

increasingly limited importance". It is more to energy, raw materials and fin-thus possible to call upon countries where ished products, but can include as inthe cost price is the lowest, particularly national flows many intermediary prod-due to lower wages or tax and special ucts, such as for example cars details totaxation costs. The firms that collaborate ^ country of destination,within a subsidiary can have geographi- xhe companies formulate, within thecal implementations very distant from framework of their productive projectseach other and yet exchange the neces- strategy implementations and these proj-sary information in due time. Interna- ects are not accompanied a priori by ational trade flows are not limited any wish of precise location. This results from

3 - Economic changes:" worldwide " strategies of the companies

- Thinking worldwide• Rise of a world design of the economy;• Worldwide globalisation of the large companies markets as well as

for the S.M.E. (providers market, rnarket of the customers);

- Focusing on the core competencies• E x t e r n a l i z a t i o n

- Rise of the company-networks• Worldwide competition for the production sites.

- Acting according to an efficient dimension• From economies of production to economies of flexibility;

- New local izat ion cr i ter ia

• Transnational implementation networks of considered advantageous:- emulation between the establishments

- mobilization of the subcontractors;

• possibility of closing the less competitive sites;• choice of the implementation according to the synergistic benefits;• possibility of transfer of technologies.

© Gérard-François Dûment

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the defined needs and available suppliesbest suitable to the demands, varyingaccording to the type of the economicsector or the nature of the activity to beestab l i shed. An e lec t ron ics fi rm wi l l be

sensitive to the level of labor qualifications; a company of fresh food-processing products will combine the physicalinfrastructures (airports, motorways) andthe central character of the site dependingon the local market^*.

The criteria of the burden schedules defin

ing the needs thus have a different hierarchy, even a different nature, according towhether the company seeks to implementservices, distribution, production, hightechnology or executive activities. A banking firm feels the need to be close to thestock exchanges and markets. A large distribution enterprise requires a location verystrongly linked to the transportation communication channels. A firm that implantsa production establishment seeks first tomeet its needs for labor and communication facilities. Experience shows that thehigh technology enterprises are particularlygregarious. They ask for a location in a sitewhere they will be able to profit from synergies and from a general environmentenhancing the technological developmentof their industry sector. As for executiveactivities, it seeks a place where the political dimension is present: place associatedwith a certain prestige, or creation of a headoffice whose architecture will symbolizethe image that they wish to convey.

The needs for the enterprises can thus bevery varied, according to their functions,their partners, and their relations of thelocation with the markets. But in anycase, the large companies carry out theirarbitration on a worldwide scale.

For more and more products and services,competition is planetary and the means tobe implemented to face this competitionmust be the subject of a reflection at thesame scale. This is obviously true for thecompanies established on the five continents. But it is also the case of a numberof medium and small enterprises whoseexisting or prospective customers areeverywhere in the world^'.Just as the customers are everywhere,production or research do not have stronggeographical constraints on location anymore. There is a world competition forthe production, distribution and servicessites™, which continuously prodsincreased productivity researches, with asa consequence the disappearance of certain types of Jobs and the creation of newones. The territories, directly concernedwith the evolution of employment, cannotr e m a i n i n d i f f e r e n t t o t h i s w o r l d w i d e

globalisation which requires more spatialcompetitiveness.

C O N C L U S I O N

Fruit of national, regional and international political decisions, globalisationwas facilitated by the rise of processesfacilitating trade between different territories of the planet. Firms have had noother choices then to realize their strate

gies worldwide taking into account thepolitical and geographical context evolut i o n . "

These considerable evolutions should notmask two fundamental elements concern

ing the role of the States on the territoriesof which they are in charge and the maintenance - happy - of national localrequirements and identities."

Geostrategics n" 2 • March 2001 - 2 0 -

Admittedly, with the rise of the informa- ensure a minimum amount of securitytion firm, and the increasing needs for and economic justice.fl e x i b i l i t y o f t h e e c o n o m i c a c t i v i t i e s , t h e .role of the national States evolves and Moreover̂obalisation and intematton-must evolve, while the regional group- alisauon of the markets fortunately do notings in constitution, gathering several geographical and cultural differ-countries, must take into account the new «'hich f""» companies to thinksituation. These States or regional oigan- 'ooel 'hey cannot avoid thinkingisations remain necessary because the worldwide. Ultimately, globalisationcompanies need authorities looking after leads to strategic behaviors having to sat-rules compliance, however without isfy the "glocalisation" (glocalization),installing rigid economic standards this neologism making it possible to syn-unsuited to a world in constant evolution, thesize the need for being able at theIn fact numerous enterprises avoid, with same time to think globally and to actregret, the States appearing incapable to locally. ■

N O T E S

1 German Federal Republic, Belgium, France, lOD\ipuy,Gabntl, Les territoires de I'automobile,Italy, Luxembourg and the Netherlands. Paris, Anthropos-Economica, 1995, p. 120.

2 Le Figaro économie, February 26 2001.

3 In France, the monopoly (of France Telecom)on local telephone communications has beeneliminated since January 1 2001.

4 Rochefort Michel, Dynamique de l'espacefrançais et aménagement du territoire.Harmattan, Paris, 1995.

5 11 is thus intra-national, but can be international given the cross-border spaces.

6 Boudeville, J.R., Les Espaces économiques,Paris. P.U.F, 1969. Quoted by Dumont Gérard-François. "Les évolutions démographiques etles défis de l'aménagement du territoire", in ;Démographie et aménagement du territoire,Paris, Cudep, 1999.

7 Claval, Paul, Histoire de la géographie, Paris,P.U.F, 1995.

8 Urbanization form which is translated by thehabitat development, and eventually of certainactivities at the towns periphery.

9 Margairaz, Michel, Histoire de la RATP, Paris,Albin Michel, 1989.

11 Dumont, Gérard-François, Les Spécificitésdémographiques des régions et l'aménagement du territoire, Paris, Officiai JournalsEdition, 1996.

12 Dumont Gérard-François, Les migrationsinternationales, Sedes Edition, Paris, 1995.

13 It is by basing itself on this principle thatFrance has delimited the Departments in 1790by considering at the maximum one horse dayaway from the main place.

14 Even if the discontinuous character of spaceis, in a certain way, an ancient reality depending on the existence of the transport network,let us think of the effects on the territories ofthe Roman roads, or of the development ofpostal cars in the XVth century.

15 The following cities do not belong Lille (IhOOin TGV in 1996), Montbard (lh05). Douai(lh05). Tours (lh02) nor Arras (0h50), whereas Reims (Ih29) has adhered.

16 Dumont, Gérard-François, "Une révolutionurbaine silencieu.se : la ville plurielle", in:Penser la ville de demain, Paris, Harmattan,1 9 9 4 .

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17 The rather general character of this process isfor example put into evidence in The alpin arcby Perlik, Manfred, "Polarisation de l'arcalpin en régions urbanisés de navetteurs et enrégions de dépopulation", Revue de géographie alpine, 1996, n" 1 et "Processus de péri-urbanisation dans les villes des Alpes", Revuede géographie alpine, 1999, n" 1.

18 Dumont, Gérard-François, "Evolutions démographiques et métropolisation", in: Métropo-lisalion et aménagement, Paris, Commissariatgénéral au Plan, juin 1994.

19 Dumont Gérard-François, Les populations dumonde, Paris, Armand Colin, 2001.

20Claval, Paul, "Métropolisation et aménagement", in Métropolisation et internationalisation, Commissariat général au Plan, Paris,January 1994.

21 Means rapidity, extension of the networks,cost reductions, increasing frequencies.

22Paulet, Alain, "Grande firmes mondiales ;stratégies et réalités économiques". Revuefrançaise de géoéconomie, n°3. Fall 1997.

23 Le Monde Économie, January 11 2000, p. X.24 Hatem, Fabrice, "Les politiques d'attractivité

en Europe de l'Ouest", Pouvoirs locaux, n°19, Décembre 1993, p. 35.

25 Savy Michel, "Communications et localisation des activités", in La localisation desactivités économiques. Commissariat généralau Plan, Paris, January 1994.

26 This way, the President General Director ofEssilor affirms that without de-localization inAsia, Essilor would have disappeared.Fontanel, Xavier, "La mondialisation vécue

au Jour le jour". Académie d'Etudes et d'éducation sociales. Novembre 1998.

27 The policy of tensed fluctuations sometimesgives a certain importance to the notion of thesuppliers' proximity.

28 "La localisation des activités économiques".Commissariat général au Plan, Paris, January13 1994, p. 4.

29 For example, small enterprises from theregion of Oyonnax in the French Jura sellmussels to China for the plastic industry.

3 0 G l o b a l i s a t i o n a l s o a f f e c t s t e r r i t o r i e s a n d t h e i r

strategies. Cf. Dumont, Gérard-François,Économie urbaine. Villes et territoires encompétition, Paris, Litec Edition, 1993.

31 The cases of Renault, France Telecom andeven EDF are the among the most knownexamples.

32 For Europe, Cf. Dumont Gérard-François andalii. Les racines de l'identité européenne,Paris, Economica, 1999 ; for the Alpes, Cf.Dumont Gérard-François and alii. L'arcalpin, Paris, Economica, et Zurich, ThésisVerlag, 1998; for the French regions, Cf.Dumont Gérard-François, " Le dessein identit a i r e d e s r é g i o n s f r a n ç a i s e s " , i n :Bonnemaison, Joël, Cambrésy, Luc, Quinty-Bourgeois, Laurence (dir.). Les territoires del'identité, tome I, Paris, Harmattan, 1999 ; forthe Department of the Alpes-Maritimes, Cf.Dumont, Gérard-François, "Globalisation etidentité dans le sud de l'arc alpin : les Alpes-Maritimes et Nice", in: Borsdorf, Axel, Paal,Michaela (HG.), Die "alpine stadt" zwischenlokaler verankerung und globaler vemetzung.Vienne, Ver lag der Osterre ich ischenAkademie der Wissenschaften, 2000.

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