Global expansion is critical for companies. It requires people to deal with diversity and unfamiliar language, culture and political systems. In this course, LinkedIn Learning Instructors Anil Gupta and Haiyan Wang share some tips for how you and your colleagues can take advantage of the benefits of globalization while dealing with its risks and challenges.
Globalization allows a company to experience faster growth and fosters innovation. Economies of scale can reduce a company’s cost structure and boost its competitive advantage across the globe. However, with globalization comes a greater risk of unforced errors due to the unfamiliarity of the market differences between nations, slowed decision-making due to the complexity of a global strategy and the extra time and expense it takes to set up global operations.
Distance is the cause of most difficulties for global companies. Geographic, language, cultural and economic distance as well as distance between political institutions and government regulations will lead to many roadblocks. Who wins and who loses in globalization depends on who can bridge all types of distances better than the competition.
Gupta and Wang suggest four models for global organizations to use to navigate these distances, including centralization, differentiated global centers, globally-coordinated regional or local centers, or creating regional and local centers with almost complete autonomy. The choice among these models depends on the importance of economies of global scale, the need for global standardization and the possible benefits for coordination across locations.
When thinking globally, you have to think locally at each of your centers and build local capabilities. Connect with the local market by appointing someone to lead there who is deeply embedded in both the local reality and the corporate headquarters. The team of local leadership should be made up of equal parts expatriates and local nationals—this mix has complementary strengths and ensures a high degree of local depth, global understanding and the trust of corporate leaders.
Inevitably, people in your company will have to manage a team across borders. Think about the culture— educate yourself about any other cultures you’ll interact with through research and talking to people experienced in those cultures. Global teams will face challenges such as unfamiliarity among team members, different time zones, geographic distance, language and culture; those challenges increase the risk of miscommunication, misunderstanding and mistrust. Mitigate this by starting with one or more face-to-face meetings with your team to build social bonds, engagement and trust.
Global leaders aren’t born global leaders—the company has to groom them. This person will have responsibilities cutting across multiple countries and will need to be savvy in managing operations, subordinates, peers, supervisors and external stakeholders all over the world. A company can develop global leaders by putting well-designed training programs in place, involving the would-be leaders as members of cross-border teams before asking them to assume a leadership role, and by giving them longer-term immersion experiences in foreign countries. It’s crucial that global leaders at least become familiar with the key cultures in which they will operate.
The most important thing for global organizations to do is build a one-company culture to accomplish two disparate goals at the same time—manage the company as a cohesive organization and to understand and respond to the diversity across the company’s market. Corporate leaders can help build a one-company culture by distinguishing between core and context. Core includes the elements of a company that are central to competitive advantage across multiple markets—strategy, brand names, logos, etc. Context include all other elements of a company that remain subject to local adaptation.
Corporate leaders can also help build a one-company culture by building an easy-to-use common information platform to be used across the company globally, and globalize the career development path for the employees.
To become and stay a global leader, every company must excel at two complementary tasks—tailoring your strategy and operations to the unique realities of every market and operating as a cohesive and integrated global enterprise. Hopefully with these tips, you will know how to effectively balance those two tasks as a global leader.
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