What is the meaning of globalization of business
The business world today has transformed the world’s economy, educational, political and social landscape in a way that none of us saw coming. The biggest drivers include global economic opportunities, trade liberalization and the communications revolution. Globalization is happening, and globalization of business is the newest challenge for companies in this new economy. Becoming global has many strategic advantages such as the ability to access new customer markets, new suppliers, new partners. But being global also brings some strategic challenges. According to global executives, preparing leaders to go global is the biggest challenge they face.
Globalization is a concept which has become the subject of study and a factor in business the last few years. However, Dr. Ranker thinks about the history of globalization starting much earlier, with the early trading empires. The basis of the expansion of many empires was to acquire resources and value from countries visited. For example, The Silk Road between China and Europe, the Phoenicians, the Egyptians; and in our Western tradition, Romans and Greeks—these empires and others in Asia and other parts of the world were reaching out, sometimes initially, to acquire value as they explored the world. They brought that value back to a central location, usually the capital of the empire. That was the beginning of globalization of business.
Drivers of globalization of business
The new economy has markedly transformed the structural parameters of the economic landscape. The role of information technology in the new economy has been pivotal. People who work in global enterprises are surrounded with much more data, information, and connectivity than ever before. Also, this connectivity allows companies to compete for business regardless of geographic location. Because of this hyper-connectivity and the increase of buying power of developing nations, global consumers are demanding greater choices. China, India, Brazil are examples of thriving economies that are not only buying, but also producing and exporting more products and services. Thus, competition pressure is also a driver of globalization of business. Even if companies want to stay local, they often have no choice but enter the competition on a global scale.
Impact of globalization on international business
In his many years of experience as a global leader and as a global coach, Dr. Ranker has seen this trend develop. The impact of globalization can be easily observed by the increasing number of “business transactions” that are done on an everyday basis. Companies want to sell more, stay competitive, increase their revenue thus they are looking to diversify their presence and their products across the world. Dr. Ranker believes that the most significant impact of globalization of business is the creation of an opportunity to increase revenue, diversify their risks and, of course, elevate their brand perception. His suggestion when asked about globalization, is to get on the train before it is too late. Yet, the most successful way of doing is ignored by many global companies. There is not a way to sugarcoat this if companies want to successful globalize, they must develop global leaders with a Global Mindset.
How leadership affects globalization?
One of the most significant differences in successful global enterprises has to do with the use of people. For multinational companies, this can be a challenge. Global executives need the same knowledge and capabilities as domestic executives, as well as unique attributes and skills to work in often radically different cultures, political systems, and environments. Developing global leadership capacity is surfacing more and more as a constraint. As the pace of globalization continues to grow, Dr. Ranker has seen a gap, preparing leaders for global posts.
In a recent report, McKinsey and Company identified people as an asset and a challenge for global companies, especially, when it comes to preparing them to take on global posts. First executives feel that their companies are not doing a good job at transferring lessons from one market to another. Second, companies are finding hard to develop talent for global posts at a pace that matches their expected growth. Interestingly, local competitor’s brands are now stronger, and they are giving global companies real competition.
Developing global leaders
As companies reach out across the globe, their global leadership capacity is surfacing more and more as the binding constraint.
Dr. Ranker’s experience in coaching to develop global leaders sometimes faces a dichotomy. On one hand leaders want to stay true to the culture and norms of their home country, company. Others have an impulse to sever or hide their roots and work hard to adopt the customs and practices of their host culture. Dr. Ranker encourages embracing their own identity but also branching out beyond them to connect with stakeholders who also might be rooted in their district place and culture. Leaders that identify strongly with both their home and host cultures perform better than those who identify only with only one of them. The globalization of business starts with preparing global leaders.
The globalization of business depends on not only preparing global leaders but also changing the mindset of what being global is and how to develop it. The most common myth is the assumption that global leadership is developed only thru experience. Coaching many global leaders and interviews with many global leaders, Dr. Ranker truly believes that experience is not sufficient for the development of an effective global leader.
If experience alone is insufficient to develop an effective global leader, what do executives need to learn to be effective?
They need to learn and embrace a Global Mindset, a mindset that will make the global leadership competencies much more effective. They need to develop and embrace a Global Mindset Leadership. Dr. Ranker believes that the development of a global mindset is almost a requirement for success in the globalization of business going forward. Only by being truly open to new ideas and new ways of relating to each other, leaders will be able to capture the opportunities available in the new, fast-changing global stage. This does not mean that they have to give up their own beliefs and values. Instead, by exercising their increased understanding, openness and tolerance, they can build trust with people who are different from them and thrive in the new global economy.