Globalization

Globalization can refer, from a demand standpoint, to the process of converging preferences across different markets, and simply the availability of more customers to sell to. From a supply perspective, globalization offers opportunities to source the cheapest materials worldwide and to locate production in the most favorable locations. Both of these facets of globalization present challenges and opportunities to organizations, especially those that are becoming more global in scope.

Although the terms are often used interchangeably, a global company and a multinational company are not the same. Multi-national indicates that an organization has some presence in more than one country; as opposed to adapting standards or processes to a multitude of local preferences, they’re just simply there. For example, a local manufacturer of furniture may sell to regions throughout Asia, but the company is operating as a multinational company and not as a global company. A true global company, on the other hand, has more rigorous requirements as it goes worldwide with the customer, adopting the same standards, languages, networks, and processes for each location, each step of the way. The major global organizations are well known, such as Coca-Cola, but often times they are so global in scope that the location of their headquarters is not apparent.

The globalization of markets and operations represents both challenges and opportunities for sales organizations. While globalization offers bigger markets, along with that comes competition, price pressures, delivery and logistic challenges, local requirements, and cultural adaptation to name a few. According to one company we met with, “Globalization means inter-personal skills must become intercultural skills.”

In addition, globalization creates issues for many newly merged organizations as they struggle to leverage their new global capabilities even when products, resources, cultures, and infrastructure are yet to be integrated. These organizations need to represent one face to a global customer, a critical but difficult feat to accomplish. Customer and prospect organizations that have true global reach can be a real challenge for the sales organization.

For many of the organizations we studied, globalization means that their customers have more choices; it means that it may cost more to serve a broader base of customers; it means new competitors on the scene; it means finding and coordinating salespeople across markets; but it also means new revenue opportunities. One company representative commented, “You have to assume a global approach and that means knowing how your big customer’s business works in North America, in Europe, and in Asia, for example.”

Not all organizations we studied are global companies; indeed, some only operate in one or two markets. But all of the organizations are challenged in one way or another by the forces of globalization. Take, for instance, the global transparency of pricing and product resulting from the Internet presence that organizations must have, or the increase of foreign competitors as multinational and global organizations enter home markets. Globalization, rather than being a passing fancy, has only continued to become a more influential and significant factor sales organizations must take into account when developing their strategies.