The opportunities for businesses to become global are expanding thanks to rapidly emerging product markets, the worldwide race for talent, and the widening impact of digitization. Success stories such as Airbnb Inc. and Uber Technologies Inc. are spurring the imaginations of new entrepreneurs while highlighting the vulnerability of many traditional businesses. In this article, author William R. Kerr, who has researched global ventures for two decades, examines subtle but critical differences in how globalization is leveraged even among organizations that seem on the surface to be quite similar (for example, businesses engaged in outsourcing).
Traditional approaches to globalization start with a mindset of taking the company’s best products or services to global markets and often use cross-border opportunities to lower costs (what the author describes as “globalizing the best that your company can offer”); the core focus is on how globalization can enhance existing products and profit formulas. However, other organizations, the author notes, build their businesses on top of globalization (what he calls “harnessing the best that the world has to offer”). Such businesses display a sharp external focus, harness the resources and ideas of others, and aspire to achieve a large global footprint quickly. Although the digital economy can enable these ventures, the real differentiator, the author argues, is the managerial approach taken toward the business.
In addition to looking at Airbnb and Uber, the article examines the global strategies of several companies, including Upwork Global, Alvogen, Rocket Internet, and Home Essentials (HK) Limited. The article highlights best practices that can support managers in globalizing their businesses, ranging from tailoring the businesses for the local environment to leveraging global network effects. Moreover, it looks at the issue of operational complexity and how considering the trade-offs between the benefits and costs can help managers find the optimal global footprint for their organization.
In the author’s view, the rapidly evolving nature of globalization means that neither entrepreneurs nor managers can ever fully analyze a global business before they need to act. However, through a simple analysis of globalization plans along these dimensions, entrepreneurs and corporate leaders should be able to develop clearer expectations and decision-making processes.