Second in a series of four posts.

By W Gary Winget, FasTrack Global Expansion Solutions

Why globalize a company’s strategy? A globalized strategy can lead to the integration of a company’s domestic and country-based strategies into a single, coordinated, worldwide strategy and the acceleration of a company’s success in the global marketplace.

How does a company globalize its strategy? To globalize a company, the company needs to analyze the strategic characteristics of its global environment and develop a strategic fit between its long-term strategies and its assumed future global environment.

The second step in the globalization process is to assess your industry’s globalization forces. The tasks are:

• Assess the strategic player forces
• Assess the market forces
• Assess the firm forces
• Assess the trade forces
• Determine the degree of globalization

To assess the forces that are propelling and inhibiting your industry’s movement toward greater globalization and the impact these forces will have on your company and global industry creates the opportunity for your company to respond with strategies that are matched and in balance with the level of the industry’s globalization forces.

You will want to assess the degree of globalization in your industry in relation to a series of positive and negative globalization forces – positive forces propelling your industry toward more globalization and negative forces inhibiting movement toward globalization. The assessment of the globalization forces will assist your company in determining how global your industry is today and how globalized it is expected to be in the future. This assessment will create the opportunity for your company to respond with strategies that are more or less globalized and, therefore, matched and in balance with the level of your industry’s globalization forces.

You will be assessing your industry in terms of the following four globalization categories: Strategic Player Forces; Market Forces; Firm Forces; and Trade Forces.

Strategic Player Forces. The strategic player forces are as follows.

• Many Strategic Buyers. Are there many and an increasing number of global strategic buyers? If yes, you might assess this force as having a high impact on the globalization of your industry. Otherwise, you might assess the impact as medium or low.
• Many Large Strategic Market Segments. Are there many large global strategic market segments? If yes, you might assess this force as having a high impact on the globalization of your industry.
• Many Large Strategic Country Markets. Are there many large global strategic country markets? If yes, you might assess this force as having a high impact on the globalization of your industry.
• Many Strategic Competitors. Are there many and an increasing number of global strategic competitors? If yes, you might assess this force as having a high impact on the globalization of your industry.

Market Forces. The market force category includes the three globalization forces.

• Shared Buyer Needs. Do buyers around the world have similar needs that your product can fulfill? Are all these buyers in the same life cycle use of your product? If buyers have highly similar needs, you might assess the force as having a highly positive impact on globalization in your industry and product. If buyer needs are very diverse, your score on this force may be low.
• Global Distribution Channels. Are there channels of distribution for your product that have a global reach – selling into many global market segments and country markets? If yes, then you might score this globalization force as high. However, if most channels of distribution for your product are local/national, this force would be scored as low.
• Global Marketing Channels & Elements. Are the marketing channels (e.g., the Internet) and marketing elements (e.g., messaging) for your product accepted and highly similar in many global market segments and country markets? If a significant number of buyers can be reached through shared marketing channels and respond to standardized marketing elements, this force might be rated as high on the globalization spectrum. However, if most buyers are reached through, and respond to, local/national channels and marketing elements, this force has a low impact on globalization of your industry and product.

Assess Firm Forces. For this category of globalization forces, you will be assessing characteristics of your product and shipping costs in relation to the global market.

• Global Economies of Scale. Are economies of scale maximized by supplying a global market for your product? If yes, then this force will have a high impact on globalizing your product. If there is no or a low impact on economies of scale, there is no significant globalization effect for this force.
• High Product Development Costs. Is the cost of developing your product high? If this were the case, supplying a larger global market would provide a faster return on this investment and support a high globalization rating.
• Short Product Life Cycle. Is the life cycle for your product short or long? A product with a short life cycle could benefit significantly by supplying a global market compared to local/national markets – more sales in less time. The longer the life cycle for a product, the lower the globalization impact of this force.
• Low Shipping Cost. Is the cost of shipping your product low as a percentage of the selling price? If yes, this would indicate that your product will be more competitive in foreign markets compared to the locally produced product. Thus, low shipping costs can have a positive impact on the globalization of your product.

Assess Trade Forces. The final globalization force category is trade.

• Similar Product Compliance If the governmental compliance requirements (e.g., food product labeling), as well as voluntary requirements imposed by a country’s buyers (e.g., no GMO), are similar in country markets worldwide, the globalization force will be high because a producer can more easily introduce and sell its product in many markets. When the compliance requirements are different in every country, the cost of product design, manufacture, inventory, compliance, and distribution increase significantly.
• Low Trade Barriers. If trade barriers imposed by country markets are few and low, this force will support a high globalization assessment. There are many forms of governmental and privately initiated trade barriers that inhibit the flow of products into a specific country market. Example of trade barriers include such things as a quota on the amount of a product that can be imported, slowing down the processing of imports, subsidizing local producers to make them more competitive with imported products, anti-dumping laws, and local content requirements. The fewer country markets that impose trade barriers, the more likely it will be that this force will support a high level of globalization.
• High Export of Production. The high global export and import of a product is an indicator that the market for a product has been globalized.

Determine Degree of Globalization

After you have assessed each of the fourteen globalization forces and the four summary globalization categories, you will need to determine the overall degree to which these forces are globalizing your industry and product.

The list of the highest globalized forces will become your list of prioritized forces to be used in defining your company’s global strategies and should be reviewed and updated on a periodic basis.

Nest Steps. Defining Global Strategies. Developing a Globalized Strategic Profile.

Reference. FasTrack Export Step-by-Step Process, pages 376-385. www.FasTrackGlobalizer.com.

Contact Tony.Kramer@FasTrackGlobalizer.com for more information.