5 Things Every CEO Must Do Now to Achieve Globalization 2.0

We have been riding the crest of a globalization wave over the last 10 years, Boston Consulting Group says. But now, the wave is over, and companies will have to work harder to reap the profitability globalization can offer.

Consider this: According to Boston Consulting Group, over the last decade, Volkswagen has increased its annual revenues by an average of 10.5%, whereas Peugeot, its French rival, has seen revenues grow by an average of only 2.5%. Likewise, Procter & Gamble, the U.S. consumer giant, has enjoyed average annual growth rates of 7.6%, twice the 3.1% average achieved by Clorox, one of its regionally focused U.S. competitors. And, in the oil-field services industry, two rivals have taken divergent paths, with the more global Schlumberger recording an average annual growth rate of 16%, compared with 8.6% for Halliburton.

These companies represent a small group of worldwide firms that make going global look easy. Going forward, all companies will have to hone their strategy and laser focus on the areas they feel they will benefit from the most.

The emerging markets will continue to be the key source of growth, BCG says, as a result of their favorable demographics, rising middle classes (which will increasingly define consumer demand and choices), and a new generation of “challenger” companies (which will seek partners in their quest to become global market leaders). As we move into this next stage of globalization, the gaps between the global haves and the nonglobal have-nots are likely to widen even further, creating a real chasm.

However, there are many concerns that some emerging markets are on the verge of a crash, and CEOs should be careful in their expansion strategies.

“Is the international financial system on the verge of an epoch-defining seismic rupture accompanied by a return to global protectionism? Asks Edward Chancellor in Breaking Views online. This warning, he says, was posed by economist Claudio Borio a couple of years ago. Since then, some emerging markets have crashed and some countries have resorted to capital controls to protect their currencies.

Here are 5 things Boston Consulting Group says companies need to do to position themselves globally in the future:

1. Decide whether you want one brand globally or you want to use local language and local brands.

2. Be agile, so that you can make quick-fire changes to your setup if local or regional conditions change.

3. Arrange your organization around a decentralized network of headquarters, business units, and partners.

4. Be multi-cultural. Understand that you need different requirements in different locations for people with different qualities and different ways of seeing the world and dealing with challenges.

5. You, personally, need to spend time in every country you do business in.

To hear more of what BCG has to say, click here.

Read more: 4 New Rules for Global Business Success





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