General Issues

Why do companies such as Wal-Mart, FedEx and America Online want to pursue a global strategy despite failures and losses? They recognize that business is becoming a unified, global field as trade barriers fall, communication becomes faster and cheaper, and consumer tastes in everything from clothing to cellular phones converge. Germany’s Bertelsmann AG, which purchased US publisher Random House put it this way. There are no German and American companies. There are only successful and unsuccessful companies.

Companies that think globally have a competitive edge. Consider Gayle Warwick Linens, whose luxury linens are woven in Europe, embroidered in Vietnam, and sold primarily in Britain and the United States. A French company handles logistics. Gayle Warwick and her employees in London spend their time managing a web of global relationships. Hong Kong’s Johnson Electric Holdings Ltd’s factories and research labs are thousands of miles away from a leading automaker. Yet the company has cornered the market for electric gizmos in US automobiles by using information technology. Via video conferencing Johnson design team meet face to face for two hours each morning with their customers in the United States and Europe. The company’s processes and procedures are so streamlined that Johnson can take a concept and deliver a prototype to the United States in only a few weeks.

In addition, domestic markets are saturated for many companies. The only potential for significant growth lies overseas. Kimberly Clark and Procter & Gamble which spent years slugging it out in the flat US diaper market, are targeting new markets such as China, India, Israel Russia and Brazil. The demand for steel in China, India, and Brazil together is expected to grow 10 per cent annually in the coming years three times the US rate, providing opportunities for companies such as Nucor and North Star steel. For online companies too going global is a key to growth as a growing percentage of...