Driving Success in 2010: 3 Simple Rules of the Road
Posted by Sue Perlmutter on Fri, Jan 29, 2010 @ 10:08 PM
As those of us involved in coaching and consulting global executives well know, cultures are messy. Globalization, then, is anything but a tidy affair. A look at Google, Yahoo, Kraft, and now Toyota serve as suitable, if emotionally charged examples, of what can happen when cultures, national or organizational, encounter turbulence. 
It has always been true that simply taking a business, or portion thereof, and putting a global stamp on it through “opening a subsidiary in a far-flung place and hoping brand recognition and experience…will be enough,” is not advisable, as John Gapper points out in one of his recent articles in the FT*. The many missteps and dramas which seem to occur almost nonstop these days, often of soap-opera proportion, lead us to believe that companies need to do far more to ensure their overseas success.
Following are three things to keep in mind when taking a business to the global table, which in today’s market means, according to Mr. Gapper, entering the BRICs (or, if you subscribe to the view that Russia should be out and South Africa in, the ‘BASICs’!):
1. Cheaper is better: China has Haier, India has its Nano, and even non-BRIC Japan has jeans for under $10. Western companies need to let go of their focus on high end products and start looking at the other end of the price spectrum if they hope to remain competitive for the long term. While quality still has its place, and while certain luxury brands continue to flourish, they are facing a questionable future, as emerging markets enter the picture and aim ever higher on the (24k) value chain. Ironically, though, Toyota may now be facing the dreaded consequences brought on when quality takes a back seat to the goal of reaching a larger market segment.
2. Know that in entering any emerging market, not understanding and appreciating the local conditions intimately puts you at a great disadvantage. This includes not only perceiving the nuances of local tastes -- and how many companies have suffered by missing even the smallest beat here, as Marks and Spencer learned in India the hard way ** -- but knowing how the local distribution systems and networks operate as well. Having an excellent product at the ideal price point is all for naught if it can’t make its way past the roadblocks into the marketplace.
3. Most of all, don’t underestimate the power of your competition. The BRICs are all working at a feverish pace, and now have so many companies coming forth as serious global contenders to be reckoned with. This trend shows every indication of continuing well into the future.
Western companies certainly need to wake up and smell the (Brazilian?) coffee, before all this new competition and lack of sufficient cultural business savvy à la 2010 leaves them in the dust. 
* http://www.ft.com/cms/s/0/b4bdfc22-062d-11df-8c97-00144feabdc0.html
**http://www.ft.com/cms/s/0/9d2bd1fe-05e9-11df-8c97-00144feabdc0.html