Successful Globalization

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Economy of scale, innovation/learning, and diversification are just a few reasons companies take on a global strategic initiative. The science of business is constantly changing. This means consumer taste, market size, competition and institutional rules are continuously evolving. This puts a strain on businesses to stay ahead of the change curve with their offerings and/or requires expansion into new untapped markets. A global strategy provides such an opportunity.

Starting fresh in an untapped market presents new challenges. A company’s leadership team needs a solid understanding of these challenges in order to put actions in place ensuring success. Success in one market does not translate into success within other markets. Wal-Mart learned this through their failed expansion into Germany. After losing hundreds of millions of dollars since 1998, Wal-Mart pulled the plug closing down its operations (Landler & Barbaro, 2006). Although costly it did provide a learning opportunity affording Wal-Mart better outcomes with future global endeavors. Not all companies can recover from such loss; Wal-Mart has the luxury of capital and therefore can afford these learning opportunities.

To take advantage of global markets leaders must first understand the nature of the market and the dynamics surrounding entry. This begins with having a well-designed global strategy. Understanding the decision to enter requires knowledge. This can be gained through either learning before doing or learning by doing. Both provide a different level of advantage and present certain challenges. For example learning a market before entering can help with putting together a better entrance strategy (i.e. avoid the Wal-Mart Germany failure). ...

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Khurana, S. (2010, July 8). "success breeds success". Retrieved from http://quotations.about.com/b/2010/07/08/success-breeds-success.htm

Landler, M., & Barbaro, M. (2006, August 2). Wal-mart finds that its formula doesn’t fit every culture . The New York Times. Retrieved from http://www.nytimes.com/2006/08/02/business/worldbusiness/02walmart.html?pagewanted=all&_r=0

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