Globality: Whats in Store for the East and West?

"The dazzling performance of several small companies in the developing countries has tended to blur the relentless growth in the revenues of the global giants." - Anonymous

The book "Globality: competing with everyone from everywhere for everything "speaks about seven struggles that any company whether it is an incumbent or a challenger have to overcome to compete, survive, achieve and maintain growth in the present market condition. What is actually expected of the companies is that they have to leverage upon their access to world knowledge whether business, politics, society, innovation, science or economics. They have to customize their learnings in a highly effective manner. The companies from the west had been able to grow worldwide only because of the fact that they had kept in mind the cost gap.

But the companies from the developing world or rather the RDE (Rapidly Developing Economies) have also followed suit. They have learned the tricks of the trade -that the giants of the world business have come to their place, entered the market and excelled only because of the cost advantage provided by their own native place (RDE). These companies in the developing countries have learnt from their experiences while serving the giants and now have come up on their own by developing their considerable entrepreneurial talents (which was passive at past) to challenge the giants of the developed world. If we analyze the determination and hard working ability of the people from the emerging economies as very well depicted in one of the research - the number of working hours per year by a person in Poland was far ahead of the developed countries like the US and Germany.

Research stated that in Poland people work on an average 1984 hours per year compared to 1362 hours per year in Germany. The Latin Americans who were till recently struggling in the business world have made a mark recently in the business world when the largest ever acquisition by any Latin American company in Canada occurred. The present day business environment and its future have to face one important challenge which is lack of skillful human resource which is concomitant or at par with the requirements of the different industries and markets. With the average age in the developed countries on the high, the emerging economies with its young population will obviously be the winner, because of new ideas, more efficiency exposure to new technology, quick learning and never say die attitude.

As very well said in "Globality: competing with everyone from everywhere for everything" that developing people skill is the second important struggle for companies to face. However the rapidly developing economies will always be in an advantageous position with its huge fleet of skilled and educated workers. Reaching deep into the market or rather reaching the last mile has always been a struggle or challenge for the companies to reckon with. Companies though have penetrated deep with their huge investments on building robust distribution systems but actually have not met the needs of the consumer because of the fact that they had inadequate consumer knowledge, customized product, slow turnover and therefore high cost structure.

The challenges in the developed economy however were able to rethink the value chain and break it to pinpoint the right activities at the right cost to the right person and thereby making distance and time irrelevant. These challenges have embraced the strategy of "many-ness" which is they have the right set of talents from many disciplines culture, country skill and therefore are able to customize their offerings and build many strategy that is specific strategy for the specific segment. These companies do not have vast resources to invest in consumer research or R&D, but what they have is innovativeness.

This innovation is blended deep into the organizational culture as because they draw multi talented people from multiple areas and culture. This help them to integrate the cultures , local knowledge and business skill to think big , act fast and grow at an exponential rate with the right mix of mergers, acquisitions, partnerships and alliances. A company in US which is a start up and employs hundred people, shells out $20 million in the very first year of its existence compared to $2 million in China. By 2015, 1.5 million science and engineering graduates will be from India and China. One product is developed every 12 hours by a Chinese baby Goods Company, world’s largest micro motor maker is a Chinese company.

The world thrives today technologically because of Indian IT experts. The Bajaj motorbikes are today imported by Kawasaki and are head to head with Harley Davidson, BMW and Honda. Haier a China based appliance maker have innovated and come up with a cloth washer which can also wash dish. Today there are about estimated 3000 challenger companies globally. These companies will be a force to reckon with because they are simplifiers, adopters, interpreters and have the drive to succeed and survive in the days to come.

These emerging companies or new competitors have some distinct characteristic like they already sell to your customers, but expand their participation to include new customer functions (like a toothpaste manufacturer enters mouthwash segment),they already satisfy customer functions that you satisfy, but expand into your market or they already operate in upstream/ downstream businesses or they enter an unrelated business.

These new breed of companies are very much aggressive and their very presence affect the industry structure in terms of pricing and expected margins of the global giants of yesterdays. These companies can be viewed as a strategic group that are a set of companies in a market essentially following the same set of strategies. They give rise to a new form of competition i.e between a high quality high price firms vs. value for money firms in an industry. The west will survive the globality if they learn their lessons but at the right time. The 9 step model to face globality should and can be used by companies in different aspect of strategic planning, capital allocation, crisis management, risk mitigation and management or in framing the capital structure. The detail examples for each of these applications are beyond the scope of this paper.

Apart from the model for the giants to face globality we suggest another model for the emerging countries to sustain and grow and at the same time keep the aggressive momentum that they are in with. These challenger companies need to follow some short term tactics as well as some long term strategies to remain competitive. They can continue to follow their aggressive attitude but at the same time they need to be cautious as the giants have by now identified them and have hone up their inherent skill to fight them. Therefore, the following model will help the challenger to continue with their invasion of the developed world and therefore gain substantial market share if the world market in which very verticals they are into.

These challengers should become time based competitors to get a new paradigm of corporate success in this new business environment where everyone competes with everyone else and from everywhere. They can become time based competitors if and only if they can make their value delivery model many times more flexible than their competitor –whether be another challenger or a global giant. These companies need to understand the value proposition that the customer is looking for and thereafter make their product offering according to these value that the customer is looking. In this case value based pricing is what these companies look for and do. These challengers should at the same time have some strategies at place to surprise their competitors.

As the question may arise that whether the west or the giants will survive the globality the answer will be both a yes and no. This is because we should not look it as a threat for only one entity rather it may become a threat for these very challengers who are expanding as they too will face the same aggression from smaller entities as and when they will enter new markets. So rather the looking it as a threat both the west and east should look for cooperation and see globality as an opportunity when each of the companies can identify their inherent strengths and weakness and thereafter work upon it to get an specialized edge.