27 May 2008  Sharpening Your Skills

Thinking About Global

Sharpening Your Skills dives into the HBS Working Knowledge archives to bring together articles on ways to improve your business skills.

Questions to be Answered

  • Are global brands effective?
  • How should I think about strategy in a flat world?
  • Which countries are the most business friendly?
  • How can my foreign assests and resources be protected?

Are global brands effective?

Why Global Brands Work
Japanese automakers create single products and brands for worldwide consumption, while Ford customizes products for local markets. You know who won. Why do global brands work? What makes them work? Professor John Quelch provides some answers.

Key concepts include:

  • For decades, Ford has created specialized products for different countries while Toyota, Nissan, and Honda sold standard products under a single brand umbrella.
  • Ford's strategy resulted in added manufacturing and supply chain costs, a balkanized bureaucracy, and deteriorating market share, financial performance, and stock price.
  • There are five characteristics that all top global brands have in common.

How should I think about strategy in a (not so) flat world?

Businesses Beware: The World Is Not Flat
With apologies to Thomas Friedman, managers who believe the hype of a flat world do so at their own risk, says HBS professor Pankaj Ghemawat. National borders still matter a lot for business strategists. While identifying similarities from one place to the next is essential, effective cross-border strategies will take careful stock of differences as well.

Key concepts include:

  • Some indicators of globalization aren't increasing as many experts have claimed.
  • Toyota and Wal-Mart are examples of companies that understand how to deal with distance in a strategic way.
  • Take a broad view of differences, figure out the ones that matter the most in your industry, and look at them not just as difficulties to be overcome but also as potential sources of value creation.

Which countries are the most business friendly?

Handicapping the Best Countries for Business
India? South Africa? Russia? Which are the best countries for a firm to invest in? Although circumstances in some countries have changed since this 2007 interview, Professor Richard Vietor's basic advice for analyzing the business environment of countries remains strong.

Key concepts include:

  • Governments create the overall environment for successful competition in the global economy. Bad government can only lead to less competitive businesses.
  • To be competitive, countries need to offer businesses sound fiscal and monetary policies, secure property rights, high savings and investment, an absence of corruption, and exports that are competitive in enough areas to eventually balance imports.
  • Business people must understand where markets and countries are headed by analyzing the present and then extending current performance trends forward three to five years.
  • Although each has issues, Singapore, China, and India are currently the best bets for FDI and, pending political stability.

How can my foreign assests and resources be protected?

Risky Business? Protecting Foreign Investments
After a string of forced nationalizations of private enterprises in the 1960s and 1970s, the pendulum swung back and companies were again encouraged by host countries to build and run major infrastructure projects such as power and water. But a set of new property protections has done little to manage the risk in many of these politically unstable environments. Professor Louis T. Wells, coauthor of a recent book on making foreign investment safe, discusses the current landscape.

Key concepts include:

  • Although property rights protections for investors in developing nations have improved since 1980, the new instruments are failing to satisfy the interests of either host countries or their business partners.
  • Protections can be improved by developing a real consensus on the part of investors' home countries, host countries, and investors themselves.
  • Business managers must take a significant role in pushing for a multilateral agreement on foreign direct investment, or at least become active in promoting lesser changes that will lead to more balance and security in the current system. Otherwise businesses will lose profitable opportunities and find themselves in the middle of disputes that hurt their future prospects. And poor countries will fail to benefit from what investors can bring them.
  • Absent strong protections, managers must ask themselves a series of questions before investing in developing countries, such as: Is my investment project politically sensitive? If so, will the country continue to need my participation in the project?