Globalization

October 7, 2022

Globalization

Globalization is a rapidly growing and irreversible phenomenon involving a shift towards a more integrated, borderless and interdependent world economy. It is driven by declining trade barriers, changes in and advancements in communication, information, and transportation technology among other forces. Globalization has transformed how businesses operate, compelling companies to reassess and/or change their organizations and open minds as well as boundaries. During the second half of the 20th century, the developed markets of the U.S., E.U. and Japan (collectively termed “triad”) accounted for the bulk of total World GDP and GDP growth. However, during the first decade of the 21st century, despite the tepid economic growth recorded throughout many regions of the world, the rapidly developing economies [RDEs], notably the BRIC (Brazil, Russia, India, and China) economies outperformed their triad rivals. It is projected that together the BRIC economies could be larger than the G6 by 2033 and account for more than 50% of incremental world GDP growth during the second through the third decades of the 21st century. With stellar economic growth forecasted through the first half of the 21st century, the BRIC and other smaller RDEs should rank very high on the global expansion destinations for organizations which seek incremental sales and profit growth opportunities to ensure their long term survival. Globalization has transformed how businesses operate, compelling companies to reassess and/or change their organizations and open minds as well as boundaries. The overarching question facing large numbers of organizations today is no longer whether to globalize but how to effectively compete in an interdependent, complex, and hypercompetitive business environment. To accurately address this overarching question, an organizational must first answer several fundamental questions concerning how to globalize operations to effectively meet an organization’s strategic growth and globalization objectives. These questions include but are not limited to:

1. Which opportunistic market(s) should we pursue in the most efficient targeted way, what is the optimal mode of entry given existing firm based resources and market risk profile?
2. Do we know how to build/improve capabilities to compete effectively to gain/retain market leadership positions globally, in particular overcoming the cost advantages, market knowledge and unique institutional void competencies developed by emerging market multinationals to operate successfully in domestic and international markets?
3. Can we change and transform to become a globally advantaged organization that records “profitable” growth in rapidly developing economies while retaining/growing market share in the triads?
4. Is our global strategy flexible to effectively pursue and win growth opportunities in an increasingly hypercompetitive global business environment?
5. Have we engaged an enduring and capable network of stakeholders to actively and successfully coordinate activities globally to achieve a higher level of profitable growth?
6. Can we uncover the hidden growth opportunities in overlooked regions and/or future markets, are our business models economically viable, and do we possess the capabilities to exploit these opportunities?
7. Do we have the management talent to champion our strategy, support and promote our global aspiration?
8. Is our projected financial performance realistic and achievable?

  At TMCG, our singular focus is to assist organizations build and enhance critical capabilities to transform operations and leverage their core competencies to gain and/or retain market share in global markets. Our efforts are influenced by the dynamic and rapidly changing nature of the twenty first century’s increasingly complex and hypercompetitive global business environment. Globalization is in the DNA of every successful forward thinking organization regardless of its age, size, industry /sector or home country. We work collaboratively with clients to formulate unique global strategies and serve as a key resource for implementing these strategies. Irrespective of an organization’s internationalization experiences either as a first time exporter or has made substantial commitments through foreign direct investment in host countries, the internationalization process must be preceded by comprehensive country and business risk analyses. These analytic and decision support systems aid organizations in; 1) uncovering the optimal entry mode(s), 2) evaluating data for determining business opportunities and risks to recommend business development initiatives, 3) evaluating data for determining business opportunities and risks to recommend investment initiatives, and 4) evaluating data for determining business opportunities and risks to recommend operations initiatives. Our thorough knowledge of local markets enables us to facilitate our clients’ successful market entry, business development, investments and operations initiatives in host countries. These market expansion efforts, in particular those that venture into inherently risky RDEs which are plagued by institutional voids. However, these RDEs are the most opportunistic markets in the first half of the 21st century because of the growing middle class population, relatively younger demographics, relatively large but low wage educated labor force. The RDEs have increased in importance not only as a destination for low wage/cost labor, coordinating global logistics, and raw materials sourcing, but also as significant sources of revenue and profit for global multinationals. The recent accelerated expansion of RDE multinationals into the triads has been driven by the need to escape institutional voids in home markets, acquire capabilities to improve international competitiveness, acquire/build managerial expertise, recruit capable global employees, search for growth opportunities presented by network effects which moderates the economies of scale advantages of incumbents in the triads, just to mention four. TMCG is also key resource which facilitates the strategic growth and globalization efforts of young, emerging and incumbent companies in developed and emerging markets. In the 21st century, forward thinking organizations may have to merge, acquire, form alliances, divest and restructure business activities to grow, create, and leverage competitive advantage(s). Whether growth is generated organically through internal resource based capabilities and/or externally through mergers and acquisitions is largely dependent on an organization’s strategic plans or influenced by the dynamic operating economic and industry environments. We advise and work with clients’ management to formulate and implement the most effective and cost efficient market entry option(s), including but not limited to strategic alliances, mergers and acquisitions, and greenfield investments.