Economic Globalization is the increasing economic independence of national economies across the world through a rapid income in cross border movement of goods, services, technology and capital.
Idea about Economic Globalization
As companies of all types rush to become more global, it’s easy to overlook how badly many have stumbled in their globalization strategies – missteps that in some cases have resulted in rivals of activist share owners dismantling the firm’s international network and kicking out the management team that built it.
Before launching a global move senior managers need to conduct a simple but rigorous self-assessment to gauge the likelihood of success.
By taking the time to do this they can ensure that their international efforts make strategic sense and avoid potentially disastrous consequences.
Self Assessment to going Global:
Under increasing Pressure to become more global, the authors point out, many companies have embarked on ill-fated globalization strategies. To avoid such mistakes at your firm, try conducting a three-part review of any proposed international initiative.
- Where and when would the benefits of globalization show up in our financial statements?
- What is the expected economic value of each benefit?
- How detailed and solid is our understanding of each one?
- What is the hard evidence that other companies in similar circumstances have been able to realize these benefits in practice?
2. Do we have the necessary management skills?
- What skills are required to realize these benefits?
- Do we have a clear track record of exhibiting them in the past?
- Do we know how to further develop them?
3. Will the costs outweigh the benefits?
- What will it cost, in terms of management time and business process investment, to realize the benefits of our globalization strategy?
- What would skeptics inside our various business units say about the cost of globalization and its potential impact on their local performance?
- What would be the most productive alternative use of all the resources that we plan to devote to our globalization strategy?
