Grow Globally

Opportunities for Your Middle-Market Company Around the World

Mona Pearl

• Publisher: Wiley
• Year: 2011
• Print ISBN: 9781118030158
• eBook ISBN: 9781118128961
• Edition: 1
• Topic: Business
• Subtopic: Mergers & Acquisitions
• Index: Business

Discover proven strategies and solutions for successful participation in the global market

With less than fifty percent of middle market US companies succeeding at going global, corporate executives need to know how to build effective global execution platforms that will allow their organizations to thrive in a global economy. Filled with case studies and indispensable checklists, Grow Globally guides executives in crafting an actionable global strategy that will not only stand the test of change—but that will also be on target, on budget, and on time.

• Reveals how to anticipate change in global decision-making and execution
• Explores how to identify trends and respond to differences between internal corporate culture and the target culture
• Includes case studies, checklists, process visuals and resources, plus a website that hosts online tools and materials

As the world becomes more dependent on technology and trade borders gradually disappear, your company needs to acquire the tools and skills necessary to compete in the global market. Grow Globally presents the skills needed to build a global execution platform that will keep your organization relevant and competitive in the international landscape.

Chapter 1

Embarking on Your Global Adventure

Navigating beyond the Borders of Your Organization and Your Home Country

“The wave of the future is coming and there is no fighting it.”

—Anne Morrow Lindbergh

North American Tool is a small manufacturer with 100 employees operating from two plants located in Illinois and Michigan. Seeking growth, its CEO made the decision to expand operations into the global marketplace. The decision was formed in unison with other members of the United States Cutting Tool Institute, a trade association. It started with a tooling show in Italy where U.S. companies were invited to gauge foreign interest in their products. North American Tool left the trade show with 800 sales leads and more than enough motivation to go global, but how?

Ultimately, the company formed a joint venture with three other U.S. companies and opened manufacturing and sales operations in the United Kingdom. Today, this company does business in 56 countries. When asked about the biggest internal challenge, Bernie Bowersock, North American Tool senior vice president, responded with one word: commitment. Once the commitment was made, however, many logistical challenges presented themselves: payment terms, shipping costs, brokerage fees, VAT and GST taxes, product terminology, product pricing, currency issues, and time zone differences for supplying quotes.

These problems were resolved through education and tapping into the appropriate resources for assistance. The biggest external challenge was following up on sales leads. This required visiting various markets, learning new cultures, and trying to find local representation. As North American Tool has developed more international expertise, each new launch has become easier and more successful.

Today’s Economy Is Truly Global

The world has transformed from a collection of regional or national economies into a truly global economy through advances in technology, communication, the opening of new markets, trade agreements, lower tariffs, and improved transportation. By 2020, a whopping 95 percent of the world’s consumer base will reside outside United States boundaries.

This transformation offers unprecedented opportunity for U.S. businesses to expand sales and partnerships into new world markets. Except for one thing: the vast divide that separates this rapidly expanding global economy from the average American business person: experience. It’s a fact: Most U.S. business people have a net deficit of worldwide market experience and initiative when compared to business people in other parts of the world.

That said, U.S. businesses remain the international benchmark for productivity, quality, and innovation; however, the gap is rapidly closing. That’s because new entrants to the global marketplace already possess the fundamental skills necessary to succeed in today’s global economy: skills that are still foreign to many U.S. businesses. In contrast to America’s inward-looking focus, other countries possess an inherent global approach and established tradition of connecting with the international marketplace. This is especially true for smaller countries that historically relied on global growth and expansion for survival.

“We’ve had the luxury in the United States to sometimes say we want to engage or that we do not want to engage. We’re still the big kind of indispensable nation,” commented Deere & Company Chairman and CEO Robert Lane.1 While this coveted status is generally considered a strongpoint for the United States, it has contributed to a great weakness in terms of embracing the new world order. Many smaller countries have learned to start thinking globally well before they launch their business locally. On the other hand, U.S. businesses continue to wait until they achieve success at home before pursuing global markets. Mistakenly, this approach relegates the global marketplace to an afterthought that often leads to failure abroad. No longer can U.S. businesses afford to sit on the international sidelines and watch.

Brazil, Russia, India, China (the BRIC countries), Central Europe, and other smaller countries are making great strides in adapting, perfecting, and in some cases surpassing the treasured U.S. model of innovation in their economic institutions and traditions while competing for limited international talent needed to succeed. These nations are also investing significant resources into higher education—emphasizing mathematics, science, and engineering. They are building state-of-the-art infrastructures to compete effectively both today and into the future.

Likewise, to ensure our future, U.S. companies must begin to explore opportunities in the vibrant and growing global marketplace and to learn how to navigate the business world beyond our borders. Business plans must be created that discard the old strategies of cost-cutting and downsizing and instead embrace new methods and new solutions designed for today’s new world order by integrating global strategies, tactics, and human capital. Savvy business leaders know that globalization is no longer a choice. It is a necessity. It is reality.

Getting in the Game

The opportunities for global expansion are infinite, and the potential for exponential growth is alluring; however, attaining success demands a well-conceived global expansion plan that is grounded in accomplishing specific corporate goals through the careful formulation of business development strategies. Regardless of size or ownership structure, companies that take a proactive, strategic approach to evaluating and understanding both risks and costs will stay one step ahead of the competition and reap the benefits of a successful globalization initiative. It’s a matter of developing the right strategy to win local markets and their consumer base by asking the right questions at the right time to the right people.

A company in the hospitality industry made the decision to expand internationally. With no tangible evidence of research, the company chose Latin America and Mexico as its target markets. With that decision made, the company launched into compiling a list of issues to tackle from each division (finance, sales, marketing, etc.). The questions compiled included queries such as “Should we open a local bank account?” “What accounting system should we use?” “Does this culture respond better to mobile messaging?” While these questions may represent relevant inquires at some point in the expansion process, attempting to answer them before investing in the development of an effective strategy almost always derails the entire process. The issues raised were more about the “how” as opposed to the “why” and “where.” It’s putting the cart before the horse.

Any decision to go global must start with developing a long-term action plan that aligns corporate vision, mission, and activities and leverages corporate strengths while identifying opportunities in desirable and compatible markets. It’s about strategy, not tactics. Realistically, before any tactical questions can be answered, it’s necessary to thoroughly examine individual markets and get the expertise necessary to understand the people and their culture. Unfortunately, due to a lack of international experience, U.S. business executives gravitate toward what they are most comfortable with: tactics—actions in a vacuum without a well-conceived conceptual framework. In the case of the hospitality company, the lack of strategic direction led to a market choice based on bad assumptions. Latin America is not a homogeneous country and Venezuela, for example, has little to no similarity with Mexico. Latin America is a conglomeration of vastly different countries, each with diverse markets that offer unique opportunities that must be understood at a local level before any tactical issues can be properly addressed.

This lack of strategic focus is a major contributor to the high failure rates of U.S. companies in the global marketplace. In fact, when KPMG’s Global Enterprise Institute surveyed U.S. middle-market companies in late 2007, it found that 58 percent of all businesses surveyed planned to increase their global presence over the next five years, and one-third planned to maintain their current global presence.2 Interestingly, in the same survey, fewer than half of all respondents said their expansion efforts over the past two years had been successful; therefore, 50 percent were unsuccessful! With failure rates like these, what must be done differently to improve chances for future success in the global marketplace? And the new global economic normal will not make success any easier to achieve. If anything, the current crisis may make the United States even more vulnerable to globalization.

Your Greatest Challenge May Be Mind-Set

As world leaders in innovation, it is important for U.S. businesses to look at the world from a fresh angle with a new perspective. “A global mind-set is the opposite of economic isolationism. We are part of the globe, and should stop looking inward, but look out,” commented Carlos Gutierrez, former Secretary of Commerce. It’s time for U.S. businesses to take the next step internationally through the development of a winning expansion strategy—a rational approach that eliminates surprises and gets it right the first time. After all, there is no challenge too great for a country that has proven itself over and over again. For example, Intel, the largest high-tech venture capital company in the world, historically made 90 percent of its investments in the United States and very little in China. The company now makes half of its investments in the United States and half in China and India. Intel Chairman of the Board, Dr. Craig R. Barrett, has commented:

Sometimes when we talk about China we focus our thoughts on low cost manufacturing. Do not think that China is not innovative. Do not think that they don’t have creative ideas. Do not think they’re not entrepreneurial. They are and they’re copying the best that we have and that is creating universities that look like ours and then an investment environment that is just like ours to create globally competitive startup companies.

Global expansion is the antidote for shrinking domestic markets. It offers unparalleled opportunity for growth, increased sales, diversified markets, and increased profit. Unfortunately, many U.S. businesses gaze with trepidation at the process and surrender to fear before making an earnest effort. The main problem is mind-set. But this problem also contributes to a lack of experience, talent, and confidence when navigating the global world.

Penetrating and developing an international market requires an entrepreneurial philosophy and drive—the same kind of philosophy and drive behind every successful startup business. Following that logic, America—the birthplace of the modern entrepreneurial spirit—should perform well in the global business. Also, with its multi-cultural diversity, theoretically is should improve its chances for global success. Yet American businesses fail at a rate of three to four times the rate of other countries in their ability to expand globally. Even worse, the majority of U.S. businesses never make an attempt. Of all the obstacles to success abroad, the greatest hurdle is simply mind-set. Our entrepreneurial drive, vision, and expertise just don’t compensate for our lack of global perspective, drive, and success.

Fueled by our rugged individualistic and isolationist heritage, it’s no surprise that collaboration across international borders requires a significant level of reconditioning. The United States must move beyond the “us-against-them” approach and recognize that a prosperous world translates to more business for U.S. companies—a win-win situation for all. This attitude is necessary for the United States to maintain its long-standing and valued leadership in the world. Fortunately, with a large dose of commitment, mind-set can be corrected, and this challenge can be overcome. How quickly depends on how serious American companies are about joining the global marketplace. As proven in previous decades, when American business embraces challenge, it finds success.

While it is tempting for U.S. businesses of all sizes to focus and dwell on the many overwhelming issues of the day, such as weak economic growth at home, an uncertain credit crisis, a shrinking pool of skill and talent, and increased foreign competition, the fact remains, these issues are not within the control of corporate management. Instead, corporate leadership must take one large step back and look into the global marketplace to discover new opportunities and new avenues to generate future growth. While larger corporations have more resources to invest in exploiting these new opportunities, smaller companies are more agile and can more readily adapt to change. In order to determine if your organization needs a mind-set adjustment, let me rai...

Table of contents

• Cover
• Contents
• Title
• Copyright
• Dedication
• Foreword
• Preface
• Acknowledgements
• Introduction: Growing Globally
• Chapter 1: Embarking on Your Global Adventure
• Chapter 2: The Search for the Right Talent
• Chapter 3: Improving Your Market Readiness through Effective Planning, Action, and Commitment
• Chapter 4: Gaining Competitive Advantage
• Chapter 5: Sound International Negotiations
• Chapter 6: Corporate Partnerships
• Chapter 7: Corporate Business Models
• Chapter 8: Focusing on Success
• Chapter 9: Looking into the Future
• Chapter 10: Growth and Discovery
• About the Author
• Index