Question

Should they adopt the Venetian model? OR should we look at the world as one large economy where each worker and each organization should compete for a piece of the pie regardless of national borders, so that consumers everywhere can enjoy products of the highest quality for the lowest price possible?

Answer 1

This is a long standing debate between localisation and globalisation.

While Globalisation is in and every organisation is competing for every single pie in the world irrespective of borders, the flavour of localisation is a must and will prevail.

The logic comes from various stand point of view.

• The Purchasing Power Parity - This commands what kind of goods a region can afford. Same high end car models cannot be served to all the regions. Where as every region demands for a car. So this pertains to what kind of segment an organisation caters too. While the high end model will still be available to the poor region, this will come at an extra cost (tax) for the buyer.
• The Localisation Rule - Every nation is ought to protect the local business. This is needed to promote inhouse developement. Hence Imports come with a duty levied on them. If everything comes from import then the country will soon run out of funds because of deficits.
• Geographical Constraints - We might be having a global business, but the goods have to be ultimately be transferred physically which involves cost (air or shipping). This has also time constraints from Supply Chain point of view and finance impact because extra cost.
• Environment Constraints - Every region is contraint from supply point of view. If one region starts catering to the whole world, it will soon run out of supplies. So a balance is needed.

Hence inspite of everything globalisation and localisation will co-exist and a perfect single kind of model is not possible.

Offcourse with todays modernisation and digital economy, all organisations can globally compete with each other for every pie. This has a advantage of reducing the monopoly of organisations due to localisation and cosumers becoming the king.