Globalization – It’s More Than a Simple Definition

Globalization is a term that we seem to cover in nearly every business course.  Booz & Company put out an interesting article last month about globalization and its importance to business strategies as we move into the future.  The concept of globalization is simple to understand, but its successful implementation is far from being a simplistic task.

Let’s consider Walmart as an example.  Walmart is arguably one of the most successful companies in the United States.  They are the 3rd largest public corporation in the world and employ more than 2 million people worldwide.  Walmart recently entered the South Korean and German markets.  Shortly thereafter they closed operations in these markets as a result slow growth rates and lack of market share, among other things.  There obviously seems to have been some poor decision making and analysis that occurred before entering these markets.

So how does a corporation successfully compete globally?  The article suggests a focus on “localization” first.  This involves an investment of time and money into better understanding how globalization exists in a corporation’s home country first.  Few companies have been able to quantify the untapped potential for growth in their own country.  If this information could be better understood, these companies would recognize an increasing importance for establishing global connections.

The article further implies that globalization needs to be done with a smarter and more integrated approach.  Global depth and global breadth will become more important in creating successful, global business strategies.  In simple terms global depth represents how much of an economy is devoted to exports and imports.  On the other hand global breadth is the extent to which international trade flows are spread globally versus confined to a particular set of partner nations.  Without understanding the depth and breadth that exists within a country, it is nearly impossible for a corporation to enter a new market successfully.

All of this talk about globalization makes me think of my own corporation.  I was surprised to find out that my definition of globalization was mostly inaccurate.  My corporation conducts most of its business within the United States, but we have recently started to sell products in England.  I thought this now put our company into the “globalized” category.  In reality, we are still a domestic company that now conducts some international transactions.  I’m still not sure if this makes our corporation any better positioned for the future, other than now having some new clients to serve.  I struggle to understand whether the costs associated with entering these new markets will actually lead to long-term success.  Obviously a lot of time, effort and money is necessary to implement a successful market entry strategy.  As the article suggests, the world is only 10 to 25 percent globalized, so businesses such as my own will have to keep pace with changes to avoid similar failures that happened to Walmart.

If you would like to read the Booz & Company article please follow the link below:





2 thoughts on “Globalization – It’s More Than a Simple Definition

  1. Effectively addressing globalization is one of the most difficult parts of my current role. We are in the process of aggressively targeting overseas markets for our products but learning that especially in emerging markets there are not only different top-of-mind problems and customer requirements, but also the regulatory environment and route to market are so different it is effectively impossible to manage ‘globalization’ from a comfortable office in Chicago. I second the need to organically grow through globalization efforts, and that there is no easy way to do this.

  2. I don’t think a company is truly globalize until they have a local office in every regional market they sell in. For example, if you’re a US based company that sells a consumer product to the US market but have huge manufacturing facilities in China, you’re not a globalized company. When you start selling those same products in China, you’re halfway there. But to be truly globalize, you need to be rooted in that region. You need to invest in an office, a salesforce, and a management team in China. You need to hire locals that can relate to the regional culture, change the product, and redefine your company for that region. That’s globalization!

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