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International Marketing
Handout
Globality: Why Companies Are Competing with Everyone from
Everywhere for Everything
ID:_______________________________________________ Section:_____________
A global maker of baby products invents a new product every 12 hours. An automaker owns two of the
world most prestigious luxury car brands and also makes the worlds cheapest car. A telecom firm uses a
novel distribution channel that achieves near perfect deliveries without computers.
Well, these three companies have in common is all are based in so-called rapidly developing economies
and they are putting the world of global business on notice. According to globality, a new book by Harold
Sirkin, James Hemerling and Arindam Bhattacharya, colleagues from the Boston consulting group.
Harold L.Sirkin (senior partner & managing director, BCG): Globality is the word comes after
globalization. For last forty years, we have heard about the global economy emerging. But for the first
time we are seeing it happen. We are seeing companies from India, China, Russia, and Brazil emerging to
become real competitors. Thats the sign weve entered the era of globality.
Prof. Mauro F. Guillen (Wharton Management Department): It is no secret that a lot of European and
American and also Japanese companies are in trouble and the pressure they see is coming from emerging
market multinationals. I think this has taken a lot of us by surprise is the speed at which the process is
taking place. So it was to be expected Indian firms or Chinese firms, or Mexican firms, which sooner or
later become competitive threats.
Prof. Mauro F. Guillen (Wharton Management Department): Five years ago, nobody was thinking
about this.
Harold L. Sirkin (senior partner & managing director, BCG): The global playing field is lovely.
In this report, we examine how the world largest firms from the most powerful nations are increasingly
being threatened by emerging challenges with lower costs, innovative products, and global ambitions.
During the earlier phases of globalization, many companies saw going global as a choice. They could
make a decision to participate in the phenomenon by operating in low cost countries, seeking out foreign
markets and availing themselves of global supply chain resources or not.
Harold L. Sirkin (senior partner & managing director, BCG): Going global is no longer a choice. If you
dont capture the low cost, you will be at a significant cost disadvantage. If you dont capture the large
markets, you will miss tremendous scale benefits and if you dont capture learnings, you remain behind
the competitors. Going global, participating in the world of globality is no longer a choice. Its a must for
survival.

A perfect example of a global challenger is TATA motors. Though the firm had been a huge auto producer
in India since the 1960s, few People out of the country gave it much thought. TATA has now a developed a
nano car. A $2500 car that has very few features but its the worlds cheapest car.
Harold L. Sirkin (senior partner & managing director, BCG): At the same time, TATA decided it would
buy Jaguar and Land Rover from Ford. Tatas further expansion in the automotive business has
significant implications for the worlds automakers. On the low-end side, you see summing the world
never has been thought about in either Detroit or Nagoya or Stuttgart. Engineers would never believe you
could produce a $2500 car but TATA does. On the high end Tatas new brands, Jaguar and Land Rover,
give them the ability to take their production which is high quality and produce the versions of those cars
at substantial lower cost which will challenge a lot of the high end automotive manufactures.
A number of factors created these new competitive pressures. One example is governments that control
more than half the worlds population have been opening their economist to global competition.
Prof. Stephen J. Kobrin (Wharton Management Department): The World Bank called it the sea change
in attitudes and over the course of late 80s and through the 90s, most developing countries opened up,
moved to its market economies by privatizing and deregulating and really saw that their way of
development and growth was to participate in the world economy.
In 1969, The Brazilian government created Embraer to produce aircraft for the military and local airlines.
Prof. Mauro F. Guillen (Wharton Management Department): They were privatizing in the 1990s and
again this is another case of a company that has been learning how to use technology and how to develop
it. Given Brazil size and distance between cities, regional jets are an ideal mode of transportation. So
Embraer became an expert of producing these aircrafts.
Airlines love regional jets. They are lower cost because of different work rules. And because they are
smaller, they can serve markets that were uneconomical with large jets. On the other hand, passengers
generally hate region jets. They tend to be small, cramped, and noisy and passengers cant get their bags
into the overhead bins, which are very small in regional jets.
Embraer looked at the problem and said it didnt have to accept these compromises. Because the planes
can be redesign in a different way using the double bubble technology. They can design a regional jet that
is as economic for the airlines as the traditional regional jet. But it is also much better for passengers.
Prof. Mauro F. Guillen (Wharton Management Department): This is a sophisticated company obviously
in a hi-tech field. It is competitive and of course, sure, it has been subsidized over the years so has several
multi airs and so have an Airbus and Boeing.
That very obstacle that make it hard to do business in emerging economies can actually create competitive
advantage for the firms who learn to overcome the obstacles, Professor Guillen has found.

Prof. Mauro F. Guillen (Wharton Management Department): Its good preparation for life. It builds
character but most importantly, it makes you essentially look for an efficient solution to whatever
problems come up. Because they were operating in markets or in countries in which the transportation
system wasnt good, you couldnt get the supplies on time, you wouldnt be able to find the appropriate
suppliers or you need to look for them. You wouldnt able to find the enough managers so this is how
companies learned the hard way; how to run a business. And so when they enter the developed markets
where everything is easier then of course they win big. Because they have learnt how to be very efficient
in all of the sides of efficient context in which life is much much harder. And another very important part
is that the component of their advantages or the strategy is that they have developed the ability to come up
with products or services for niches in the market. And they know how to move very fast from product
assigning to product development and then manufacturing and distribution. And I think this has become a
key advantage.
An example is Good Baby, a Chinese producer of childrens toys and baby products. In 1989, a school
head master used a small bank loan to turn an A-link tool factory into a baby strollers manufacturer that
has for years produced low cost strollers for the world market. The company sells more than 1600 items in
15 categories including strollers, beds, clothing, car seats, toys, and diapers.
Harold L. Sirkin (senior partner & managing director, BCG): Good Baby is an innovation machine. It
created new product every 12 hours. Thats more than 700 products each year. Good Baby, although
based in China has tailored its products to meet the needs of local consumers. So if you were to find a
good baby stroller in Scandinavia, it would have that beautiful, sleek Scandinavian design. When you go
buy a Good Baby stroller in Japan, it does exactly what the Japanese want. It folds up to the smallest
possible space. When you buy a Good Baby stroller in United States that looks more like an SUV. Its
large and has plenty of room for cup holders.
No doubt, that the multinationals that bought expensive strollers from far away in China and rebranded
them for sale in the Europe and the US. Never imagined what a global powerhouse, they were helping to
create.
Harold L. Sirkin (senior partner & managing director, BCG): The challenges are growing very quickly.
Over the last three years, the challenges have grown at an average rate of 30% per year, which is more
than 3 times the speed of some of the fastest growing companies in the developed world. In spite of the
rapid growth, the challengers are very profitable. The average profitability in 2006 was 17%. The average
profit ability of the S&P 500 companies was only 14%.
Prof. Mauro F. Guillen (Wharton Management Department): The job of the CEO, the job of the
cooperative strategy has become even more complex because now you have to gather information from

many more places around the world. And you have to do it really fast because some of these companies
are growing very quickly to become the major competitors in the respective industries.
These emerging challenges and others like them are successfully selling to competitive global markets. But
they also have an edge when it comes to selling in their town. The challengers are in a better position to
understand the local environment, culture and consumers and the ins and outs of reaching them. For
example, Bharti Airtel, an Indian mobile phone operator found an ingenious way to distribute sim chips
and prepaid phone cards to its customers in the city of Mumbai. The company created the delivery system
by tapping into the existing network of some 5000 dabba walas or lunch box carriers. These carriers
deliver thousands of hot meals every day from the homes of workers in the distant suburbs to the offices
down town without mixing up or losing the meal. Then return utensils to the workers homes in the
afternoon. The reliability of these carriers without using any computers exceeds that of six sigma. And
they keep the cost of their service low by using public transportation. Now along with curries and naan the
dabba wallas deliver phone cards and sim chips.
Exciting new solutions to the developed worlds biggest problems are also coming from unexpected
places. Even in health care, Aravind eye care in Tamil Nadu, India has become the worlds largest provider
of Cataract surgery, performing over 250,000 surgeries a year. In 1976, Dr. Van carter Swami known as
Dr. V began pursuing a goal of wiping out needless blindness.
Harold L. Sirkin (senior partner & managing director, BCG): Dr. V and Arvind looked at the world very
differently as I thought about Cataract surgery and better than a traditional hospital process in which
surgeries begin at about 7 oclock in the morning and equipment only operates till 3 or 4 o clock in the
afternoon. They decided that they should take advantage of the availability of the equipment 24 hours a
day. So they have changed the entire process of surgery. And in Cataract surgery, they operate in
assembly line and the patients stay still but the doctors move from bed to bed doing exactly what they
need to do at that point in time. And its not enough Arvind eye care sells its product for about 40% of
what it might cost in United States, gives away 60% of its products that is it gives free surgeries to 60% of
the patients that it sees and still makes a profit. This ingenious approach by Arvind and Dr. V allows them
to cure hundreds and thousands of people of needless blindness. Many of those who got that surgery free.
Globality will affect everyone, everywhere, and everything and that means you, one day it may be your
company that Tata group wants to acquire, your child calling home from Shanghai, your gallop moving to
Mexico city and your brand new nano car gleaming in the drive way and if you learn to compete with
everyone from everywhere for everything, you might find globality offers you great opportunities than
you could have ever imagined.