Home Court Advantage and the Downfalls of Going Global
July 14 2011 by ChiefExecutive.net
Going global is tricky business. Though it signals strength in a company (the ability to expand in the marketplace), it also poses numerous challenges. But, just because a company can afford to scale up and take itself into another market, doesn’t mean that it will grow stronger. In fact, a recent study in the McKinsey quarterly found that localized companies fared better than those who had gone global. Staying close to home made for a healthier business – and according to the study its health accounts for more than 50 percent of a company’s future successes.
The intricacies of markets vary by country and culture and global businesses may not be equipped to adapt well in multiple places. The study found that only 30 to 40 percent of companies had the infrastructure to really handle the tradeoffs of being global versus being local. In reality, going global may only add complexity and cost a company a lot of money.
The key points of the study are as follows:
- Global organizations are less successful at maintaining a “shared vision” and engaging employees across its multiple markets
- Leaders are less able to keep standards high and to innovate across multiple markets
- It is more difficult to establish and maintain relationships with governments, local businesses and communities than it is for local companies