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[Music]
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a global maker of baby products invents
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a new product every 12 hours an
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automaker owns two of the world's most
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prestigious luxury car brands and also
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makes the world's cheapest car a telecom
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firm uses a novel distribution channel
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that achieves near perfect deliveries
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without computers what these three
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companies have in common is all are
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based in so-called rapidly developing
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economies and they are putting the world
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of global business on notice according
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to globality a new book by Harold cirin
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James hling and arindam bataria
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colleagues from the Boston Consulting
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Group globality is what comes after
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globalization for the last 20 years
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we've heard about the global economy
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emerging but for the first time we're
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seeing it happen we're seeing companies
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from India China Russia and Brazil
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emerging to become real competitors
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that's the sign we've entered the era of
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globality it is no secret that uh you
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know a lot of European and American and
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also Japanese companies are in trouble
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and the pressure the heat is coming from
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Emerging Market multinationals I think
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what is has taken a lot of us by
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surprise is the speed at which the
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process is taking place so it was to be
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expected that Indian firms or Chinese
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firms or Mexican firms would sooner or
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later become you know competitive
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threats but 5 years ago nobody was
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thinking about this the global playing
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field is
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leveling in this report we examine how
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the world's largest firms from the most
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powerful nations are increasingly being
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threatened by emerging challenges with
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lower costs Innovative products and
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Global
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Ambitions during the earlier phases of
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globalization many companies saw Going
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Global as a choice they could make a
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decision to participate in the
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phenomenon by operating in lowcost
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countries seeking out foreign markets
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and availing themselves of global supply
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chain resources or not going global is
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no longer a choice if you don't capture
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the loow costs you will be at a
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significant cost disadvantage if you
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don't capture the large markets you will
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miss tremendous scale benefits and if
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you don't capture learnings you will
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remain behind your
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competitors Going Global participating
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in the world of globality is no longer a
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choice it's a must for survival a
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perfect example of Global Challenger is
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T Motors though the firm had been a huge
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Auto producer in India since the
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1960s few people outside the country
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gave it much thought Tata has now
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developed the Nano car a $2,500 car that
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has very few features but is the world's
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cheapest car at the same time Tata
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decided it would buy Jaguar Land Rover
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from Ford tata's further expansion in
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the automotive business has significant
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implications for the world's autom
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makers on the lowend side you see
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something that would never have been
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thought about in either Detroit or ngoya
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or stutgart
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Engineers would never believe you could
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produce a $2,500 car but Tata does on
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the high end tata's new brands jaguar
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and Land Rover give them the ability to
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take their production which is high
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quality and produce the versions of
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those cars at substantially lower cost
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which will challenge a lot of the
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high-end Automotive
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manufacturers
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a number of factors created these new
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competitive pressures one example is
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governments that control more than half
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the world's population have been opening
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their economies to Global
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competition the World Bank called it a
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sea change in attitudes and over the
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course of the late 80s and through
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the90s most developing countries opened
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up moved towards market economies by
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privatizing and deregulating and really
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saw that their way to development and
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growth was to participate in the world
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econom
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in 1969 the Brazilian government created
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emba to produce aircraft for the
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military and local
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Airlines they were privatized in the
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1990s and uh again this is another case
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of a company that has been learning how
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to use technology and how to develop it
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given Brazil's size and distance between
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cities Regional jets are an ideal mode
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of transportation so embre became an
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expert at producing these aircraft
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Airlines love Regional Jets they're
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lower cost because because of different
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work roles and because they're smaller
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they can serve markets that were
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uneconomical with large
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Jets on the other hand passengers
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generally hate Regional Jets they tend
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to be small
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cramped noisy and passengers can't get
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their bags into the overhead bins which
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are very small in Regional Jets Amber
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looked at the problem and said he didn't
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have to accept these
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compromises because the planes can be
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redesigned in a different way using
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their double bubble technology they can
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design a Regional Jet that is as
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economic for the airlines as the
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traditional Regional Jet but is also
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much better for passengers this is a
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sophisticated company obviously in a
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high-tech field it is competitive uh and
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of course uh sure it has been subsidized
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over the years but so has Bombardier and
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so have Airbus and Boeing the very
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obstacles that make it hard to do
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business in emerging economies can
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actually create competitive Advantage
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for the firms who learn to overcome the
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obstacles Professor Guan has found it's
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good preparation for life it builds
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character but most importantly it makes
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you essentially look for a you know
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efficient solution to whatever problems
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comes up because they were operating in
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markets or in countries in which the
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transportation system was good you
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couldn't get uh the supplies on time uh
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you know uh you you wouldn't be able to
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find the uh the appropriate suppliers so
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you would need to look for them uh you
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wouldn't be able to find enough managers
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you know so so these are companies that
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have learned the hard way how to run a
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business and so when they enter
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developed markets where everything is
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easy and of course they win big because
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they've learned how to be very efficient
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in all of these other institutional
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contexts in which uh you know life is
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much much harder another very important
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part is that uh or component of their
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advantages or their strategy is that U
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they have developed the ability to come
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up with products or services for niches
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in the market and they know how move
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very fast from product design into uh
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product development and then
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manufacturing and distribution and uh I
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think this has become a a key key
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Advantage an example is good baby a
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Chinese producer of children's toys and
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baby products in 1989 a school
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Headmaster used a small bank loan to
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turn an ailing tool Factory into a baby
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stroller manufacturer that has for years
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produced lowcost strollers for the World
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Market the company sells more than 1,600
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items in 15 categories including
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strollers beds Clothing car seats toys
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and
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diapers good baby is an innovation
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machine it creates a new product every
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12 hours that's more than 700 products
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each year good baby although based in
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China has tailored its products to meet
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the needs of local consumers so if you
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were to find a good baby stroller in
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Scandinavia it would have that beautiful
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Sleek Scandinavian design
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when you go buy a good baby stroller in
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Japan it does exactly what the Japanese
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want it folds up to the smallest
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possible space and when you buy a good
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baby stroller in the United States it
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looks more like an SUV it's large and
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has plenty of Ro for cup holders no
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doubt that the multinationals that
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bought expensive strollers from far away
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China and rebranded them for sale in
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Europe and the US never imagined what a
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global Powerhouse they were helping to
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create the challenges are growing very
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quickly over the last three years The
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Challengers have grown at an average
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rate of 30% per year which is more than
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three times the speed of some of the
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fastest growing companies in the
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developed World in spite of their rapid
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growth The Challengers are very
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profitable their average profitability
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in 2006 was 177% well the average
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profitability for the S&P 500 companies
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was only 14% the job of the CEO the job
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of the corporate strategist I think has
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become even more complex because now you
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have to gather information from many
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more places around the world and that
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you've got to do it fast uh because some
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of these companies are growing very
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quickly to become major competitors in
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their respective Industries these
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emerging challenges and others like them
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are successfully selling to competitive
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Global markets but they also have an
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edge when it comes to selling on their
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home turf The Challengers are in a
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better position to understand the local
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environment culture and consumers and
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the ins and outs of reaching them for
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example example bti AEL an Indian mobile
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phone operator found an ingenious way to
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distribute Sim chips and prepaid phone
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cards to its customers in the city of
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Mumbai the company created a delivery
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system by tapping into the existing
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network of some 5,000 dabble wallers or
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lunchbox carriers these couriers deliver
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thousands of hot meals every day from
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the homes of workers in the distant
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suburbs to their offices downtown
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without mixing up or losing a meal and
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then return the utensils to the workers
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homes in the afternoon the reliability
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of these couriers without using any
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computers exceeds that of Six Sigma and
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they keep the cost of their service Low
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by using public transportation now along
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with curis and Nan the dabble wallers
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deliver phone cards and Sim
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chips exciting new solutions to the
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developed world's biggest problems are
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also coming from unexpected places even
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in healthcare aravind iare in Tamil Nadu
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India has become the world's largest
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provider of cataract surgery performing
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over 250,000 surgeries a year in 1976 do
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venat Swami known as Dr V began pursuing
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a goal of wiping out needless blindness
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well Dr V and arvand looked at the world
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very differently as I thought about
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cataract surgery and rather than a
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traditional Hospital process in which
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surgeries begin in about 7:00 in the
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morning and the equipment only operates
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till about 3 or 4:00 in the afternoon
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they decided that they should take
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advantage of the availability of
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equipment 24 hours a day and so they've
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changed the entire process of surgery
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and in cataract surgery they operate an
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assembly line and the patients stay
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still but the doctors move from bed to
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bed doing exactly what they need to do
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at that point in time and interestingly
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enough Arvin iare sells its product for
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about 40% of what it might cost in the
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United States gives away 60% of its
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products that is it gives free surgeries
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to 60 % of the patients that it sees and
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still makes a profit this ingenious
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approach by Arvin and Dr V allows them
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to cure hundreds of thousands of people
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of needless blindness many of those who
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got that surgery for
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free globality will affect everyone
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everywhere and everything and that means
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you one day it may be your company that
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tartar group wants to acquire your child
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calling home from Shanghai your job
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moving to Mexico City
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and your brand new Nano car gleaming in
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the driveway and if you learn to compete
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with everyone from everywhere for
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everything you might find globality
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offers you greater opportunities than
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you could have ever
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imagined
