Global Business.
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One of the decisions a company must make is about product strategy. Is your product more adept for a global approach or local? A product that fits a global strategy would be a pair of Levi jeans.
No matter where these jeans are marketed, they can be sold "as is." No need to adapt a pair of Levi's for local tastes. The name & reputation are well known.
Electronics, automobiles and food are products that must adhere to local tastes and restrictions. The steering wheel may have to go on the left side of the car instead of the right. A blow-dryer must support a local electric current. That soup may need twice the amount of salt.
Localization doesn’t stop at conforming to the market’s tastes. Probably one of the more difficult tasks is weaving through government regulation & taxes, developing a supply chain and finding partners.
When entering a foreign market a global business must make sure they have a competitive advantage. Your advantage could be superior product, brand name, great price or ease of production.
A competitive advantage is necessary because when you enter another country’s market, you’re already behind the eight ball. You have a lack of market knowledge, reputation and customers.
Another challenge faced by global business companies is how you structure leadership. The two main models are a simple headquarters with subsidiaries model or distributed headquarters.
In the simple headquarters structure, power is concentrated at the top. Headquarters takes the lead on international affairs and communication between subsidiaries is minimal. This situation might be fine if most of the company’s business is handled through a local partner or distributors.
The world won’t get simpler as it gets older. Larger multinationals run with a distributed headquarters model. Each country essentially has its own headquarters. Let’s face it…...you need to be on the ground and working with local officials to understand the local market.
A local headquarters give the company an ability to act fast and negotiate autonomously.
From the U.S. point of view, you would think it might be tough for U.S. companies to deal with local governments and perception abroad. Lately, it can be just as tough for some foreign businesses to operate in the U.S.
Case in point: Dubai Ports World. DP World is a wholly owned subsidiary of the United Arab Emirates. All DP World wanted to do was provide port management for six major U.S. seaports (although later it was discovered it was more than six). President George W. Bush wanted this deal to go through. He threatened to veto any legislation passed by Congress to block the deal.
In March 2006 the House Panel voted anyway to block the deal. Something about a war I guess.
International investment in the U.S. is at the highest level its ever been. For all you know your bank is being kept afloat with overseas money.
Without further adieu, let’s discuss three parts of the world you ought to know about. Because that's where the money is.
Choose A Part Of The World
Doing Business With The Arabic World
Get Down To Business In India
China. Meet The Next Economic Super-Power.
