Globalization and Strategic Invention

First of all, both firms and areas do not know exactly how the world is going to be reconstructed. Countries which are seeking to acquire or preserve decisional autonomy, all the while integrating the world market (such as regions which are patiently trying to build themselves up), are not guaranteed great success in light of present pressure put on them by the free exchange context. In addition, firms do not know what proportions national and regional areas will take on within the context of globalization and relative to the exchange of goods and capital.  Hence, the question becomes: how can firms reorganize their conception, production, and commercialization apparatus so that they will be workable ones when set within different global recomposition scenarios? How can areas avoid that global or regional reorganization(s) of automobile industry activity not hinder the type of international integration they are seeking?

A second challenge must be considered: where is market growth located? Those expecting much from emerging countries have once again been disappointed. Growth in many of these countries was based on uncontrolled debt and on access to markets with an increasing amount of conditions to fulfill. Neither areas nor firms can predict what types of national or regional growth modes will prevail. Hence, the question becomes: how can firms integrate uncertain markets and/or (as of late) very competitive ones, all the while avoiding to pay a high price? How can areas attract automobile firms when they possess only a relative degree of autonomy in the choice of their growth mode?  It is possible that the global market stagnate, thus justifying the present-day wave of alliances, mergers, and acquisitions, which theoretically allow for economies of scale by the suppression of doubloons. And even then, the profit strategies of firms that group together must be compatible.

Hence, the third challenge and probably the most important one: how are various types of automobile demand structured? One knows that they are largely dependent on revenue distribution modes implemented in different areas. Today, these modes vary from those which are still hierarchized and centralized to those which are balkanized and decentralized, not to mention inegalitarian and bipolarized modes or those allowing for the periodic emergence of new population categories. What is each area's leeway when deciding which revenue distribution mode to adopt? Can the same firm or automobile group satisfy all corresponding demand in the event that not a single type of demand dominate? Could it simultaneously offer a classically hierarchized and commonly shared range of products: for example, conceptually innovative vehicles for new population categories, stylized automobiles for those social categories defending their specificities, luxury automobiles for the growing group of those more well-off, vehicles to get around the city in, and vehicles for emerging countries which are trying to move from two-wheels to four-wheels, all the while conceiving of and inventing engines which pollute little?

Up until now, firms adopting "different" types of profit strategy have satisfied these demands: "volume", "volume and diversity", "quality and specialization", "innovation and flexibility", "diversity and flexibility". This has been the case because these strategies have been pertinent ones in relation to automobile demand in those areas where they were developed, and because they require different types of "firm management compromise" in order to achieve coherence between product policy, productive organization, and employee relations. With global automobile demand diversifying both socially and geographically, without one type of demand dominating another, how can one make compatible what wasn't in the past?  That is to say, the six sources of profit - volume, diversity, quality, innovation, flexibility, and a permanent reduction of costs at constant volume. At the end of this century and for firms in the automobile industry, this means having a capacity for invention equivalent to what General Motors demonstrated in the 1920s/1930s, by rendering volume and diversity compatible. We all know the time and effort that this invention required and the extent of changes it subsequently brought about.