Globalization and the Corporation

Royalty free photo by Fancycrave.com
Royalty free photo by Fancycrave.com

Globalization is a force whose effects continue to be felt across the world. Having studied this phenomena in an academic setting with UCLA International Institute, I would describe globalization as the flows of people, goods and organization from one country to another. The product of this is a wider encompassing exchange not just of tangible things, but also of language, cultures, values across markets and regions. While transportation and logistics is the very mechanism that enables the movement of people and goods, technology by way of internet connectivity and consumer devices, has also created a communication highway, enabling people to feel connected, if not be connected physically.

With this, distances shrink, time zones fade, and people are more connected than ever.

In the business setting, the MNC is a contributor to the increased globalization of the world. MNCs– with global operations that span countries, regions, people, language and cultures– contribute to much of the exchange that happens across places.

The Global Organization

What does it mean to be a true global organization? Does having multiple offices around the world enough? Is it about sending company officers in different regions?

Multinational companies (MNCs) can operate in different ways. From what I’ve seen in my experience with top global companies in consumer packaged goods, technology, consulting and telecommunications, companies can operate as a portfolio, with each region having autonomy and could be managing a handful of markets. For example, a technology giant client has Singapore as a regional center of excellence, and the Singapore team managed the output of the other Asian countries. This is what the company called a “regional/market” approach: a regional COE managing countries (referred to as “markets” in company lingo).

MNCs can also operate in a globally integrated way, such that the performance of an office in, say, Asia affects the rating of an office in North America. With my large consumer package goods client, when a new product is rolled out in Europe, the success of the product is attributed to both the European local team and the North American team that oversaw the overall brand.

My observation of the client in the first example (portfolio) proved that giving local heads autonomy may work well because of their local expertise, but sometimes initiatives are not aligned with other countries, or are separate strategically from HQ. Having a universal mindset across the management team in offices around the world, developed by giving responsibility to both the local team and the HQ management team, such as in the second example, prove to be beneficial for the organization. Teams are unified and act as part of one team, one company.

It seems easy to make these observations and start discussing a recommended approach based on experience, but in reality, to develop a collaborative and globally integrated team, is quite difficult and much more complex. Budgets, power, legacy technology and established processes could all be collaboration barriers.

The way the teams are incentivized also play a big role in the corporate mindset of those involved. During my time with the technology client, they admitted that their sales teams are not incentivized properly because they are so focused on closing the sale rather than aligning with the more strategic goal of the sales and marketing department, such as to reposition a product brand.

Many times, a major organizational change needs to come from a minor shift in corporate mindset, rather than an immediate restructuring of the whole organization.

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