ABSTRACT
The preceding case suggests that MNEs are facing a new landscape in the international market: increasing economic integration among countries. International managers must understand the influence of such integration on their worldwide operations and, more importantly, strategically respond to this integration as 3M did. International economic relations are governed by a variety of institutions and a complex web of principles, most of which have been established by treaties and agreements signed since World War II. These institutions (e.g., the International Monetary Fund and the World Bank), treaties or agreements (e.g., the General Agreement on Tariff and Trade, or GATT, and Agreement on Trade Related Investment Measures, or TRIMs) have helped boost global economic integration and erase barriers to free trade, investment, and services among nations. Meanwhile, many regions or sub-regions, from Europe and North America to Latin America and the Caribbean, have established harmonized blocs within their respective territories. Intra-regional trade and investments significantly increase as a result of reduction or elimination of various trade barriers. While MNEs have to realign international expansion strategies with increasingly integrated environments, they themselves are also a critical force steering international economic integration. MNEs are more committed today to intra-organizational trade and global vertical integration. This intra-MNE activity heightens cross-border and inter-regional flows of products, services, capital, technology, and human resources. Consequently, the world is entering a new era of economic integration which is simultaneously altering global political and social systems, although new obstacles have also arisen such as the stalled Doha Round of world trade negotiations and the Eurozone crisis of the early 2010s. This integration is characterized by high levels of both globalization and regionalization.
