Deregulation of the Financial Sector in Japan Essay - 8

Deregulation of the Financial Sector in Japan - Essay Example Thomas Friedman in his book, â€Å"The World is flat†, described this process as â€Å"Glocalization†. What this means is the marriage of globalization with localization or adapting global practices to local needs. In the case of ML, it means that its managers if they are to get a share of the 1.2 Trillion in household savings, they have to re-orient their strategies towards the local market. The strategic challenges that confront global managers are how to work around the complex set of laws that govern capital movement in the countries in which they operate. Though many countries have joined the WTO (World Trade Organization), they have not yet fully embraced the conditions that govern this trade organization. For instance, in many of the countries, full capital account convertibility is not allowed and only partial convertibility is allowed. Global managers in the global economy need to go beyond the straitjacket attitude towards business that proclaims â€Å"one size fits all† approach. Instead, they have to ensure that their companies make tailor-made products for each country and each region. This has been illustrated in the case involving ML when the company tried to set up branches in the retail space and had to withdraw them later in the face of mounting losses. This was a clear instance of a global company retreating in the face of sustained local regulations over which it had no control. One reason multilateral institutions like the World Bank and the IMF prescribe policies that guarantee uniformity of regulations is to ensure that the local economy benefits from competition. However, this has led to demands for level playing fields from local companies. Hence, global managers have their task cut out when they present their case for uniform regulations. The best strategy would be to convince the regulators to liberalize the financial sector while keeping the checks and balances in place. Another point that the case highlights are for global managers to be tuned to the changes in the country’s regulatory and financial environment.