{"id":10173,"date":"2021-12-17T07:18:16","date_gmt":"2021-12-17T12:18:16","guid":{"rendered":"https:\/\/flevy.com\/blog\/?p=10173"},"modified":"2021-12-16T13:19:26","modified_gmt":"2021-12-16T18:19:26","slug":"3-pillars-of-globalization","status":"publish","type":"post","link":"https:\/\/flevy.com\/blog\/3-pillars-of-globalization\/","title":{"rendered":"3 Pillars of Globalization"},"content":{"rendered":"

\"\"Early 2000s saw a change of mind regarding the Globalization<\/a> of commerce by members of the political and economic arenas.\u00a0 This change of mind was instigated by myths perpetuated against commerce Globalization because of the dichotomy that appeared between existing Operating Models of companies and needs of the emerging markets.<\/p>\n

These perceived trade-offs that were myths included ideas like choosing between centrally-controlled Operating Model<\/a> and local responsiveness model.<\/p>\n

Proponents of the central model had the view that intellectual power and Innovation<\/a> capability had to be centralized, all products and services brought in line everywhere, foregoing catering to diverse needs and demands of customers in every emerging market.<\/p>\n

The converse view was that in order to have locally applicable distribution systems, proactive Supply Chains<\/a>, and reduced costs of emerging-market management, it was necessary to devolve the company and operation as a loose federation.<\/p>\n

This trade-off incompatibility was addressed by the Hub Strategy where, in place of a single center, companies set up principal office \u201chubs\u201d in as many of the 20 gateway countries of the world as required\u2014a global corporate structure with no headquarters.<\/p>\n

These 20 gateway countries represent 70% of the world population and generate 80% of the world income.\u00a0 The gateway countries include Australia, Canada, France, Germany, Italy, Japan, the Netherlands, Spain, the United Kingdom, and the United States from the developed economies.\u00a0 Rest of the 10 are emerging markets of Brazil, China, India, Indonesia, Mexico, Russia, South Africa, South Korea, Thailand, and Turkey.<\/p>\n

This new Business Model<\/a> covers both the recognized advantages of developed markets and the possibilities of emerging economies.\u00a0 A model that handles decentralization, centralization, existing practices, and possible disruptions not as trade-offs, but as complements.<\/p>\n

It is, however, important to understand that for the model to have its full impact, 3 core pillars have to be integrated and pursued simultaneously.\u00a0 The 3 Pillars of Globalization<\/a> are:<\/p>\n

    \n
  1. Customization<\/strong><\/li>\n
  2. Unity<\/strong><\/li>\n
  3. Arbitrage<\/strong><\/li>\n<\/ol>\n

    \"\"<\/a><\/p>\n

    Only business leadership<\/a> that has taught itself and its teams to be very careful about where to customize, how to develop capabilities, and what to arbitrage are the ones reaping benefits from this model.<\/p>\n

    Let us delve a little deeper into the details of the 3-pillar Business Model.<\/p>\n

    Customization<\/strong><\/h2>\n

    Variation in needs, wants, and cultures of consumers makes it impossible to customize centrally.\u00a0 Providing products and services in a locally competitive manner is therefore central to become a global enterprise.<\/p>\n

    Customization entails fulfilling the requirements and wants of varied consumers, in areas such as product or service features, affordability, and cultural alignment.\u00a0 Hub Strategy provides the leverage to fulfill this demand by enabling companies to customize only in the 20 gateway countries.<\/p>\n

    Unity<\/strong><\/h2>\n

    Unity entails worldwide alignment of the company with, a unified central purpose, a body of exclusive first-rate knowledge, and capabilities that differentiate the company from all others.<\/p>\n

    Core purpose must be understood in the same manner by all functions of the company, in every geographical location.<\/p>\n

    Arbitrage<\/strong><\/h2>\n

    Arbitrage is a methodical initiative that consists of increasing effectiveness and Cost Reduction<\/a> by discovering materials, manufacturing methods, logistics practices, funds sourcing, or infrastructure that are less expensive.<\/p>\n

    Interested in learning more about the 3 Pillars of Globalization and its Case examples?\u00a0 You\u00a0can download\u00a0an editable PowerPoint on 3 Pillars of Globalization<\/strong> here\u00a0<\/a>on the\u00a0Flevy documents marketplace<\/a>.<\/p>\n

    Do You Find Value in This Framework?<\/h2>\n

    You can download in-depth presentations on this and hundreds of similar business frameworks from the\u00a0FlevyPro Library<\/a>.\u00a0\u00a0FlevyPro<\/a>\u00a0is trusted and utilized by 1000s of management consultants and corporate executives.\u00a0 Here\u2019s what some have to say:<\/p>\n

    \u201cMy FlevyPro subscription provides me with the most popular frameworks and decks in demand in today\u2019s market.\u00a0 They not only augment my existing consulting and coaching offerings and delivery, but also keep me abreast of the latest trends, inspire new products and service offerings for my practice, and educate me in a fraction of the time and money of other solutions.\u00a0 I strongly recommend FlevyPro to any consultant serious about success.\u201d<\/p>\n

    \u2013 Bill Branson, Founder at Strategic Business Architects<\/p><\/blockquote>\n

    \u201cAs a niche strategic consulting firm, Flevy and FlevyPro frameworks and documents are an on-going reference to help us structure our findings and recommendations to our clients as well as improve their clarity, strength, and visual power.\u00a0 For us, it is an invaluable resource to increase our impact and value.\u201d<\/p>\n

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    \u201cFlevyPro has been a brilliant resource for me, as an independent growth consultant, to access a vast knowledge bank of presentations to support my work with clients.\u00a0 In terms of RoI, the value I received from the very first presentation I downloaded paid for my subscription many times over!\u00a0 The quality of the decks available allows me to punch way above my weight \u2013 it\u2019s like having the resources of a Big 4 consultancy at your fingertips at a microscopic fraction of the overhead.\u201d<\/p>\n

    \u2013 Roderick Cameron, Founding Partner at SGFE Ltd<\/p><\/blockquote>\n","protected":false},"excerpt":{"rendered":"

    Early 2000s saw a change of mind regarding the Globalization of commerce by members of the political and economic arenas.\u00a0 This change of mind was instigated by myths perpetuated against commerce Globalization because of the dichotomy that appeared between existing Operating Models of companies and needs of the emerging markets. These perceived trade-offs that were… 3 Pillars of Globalization<\/span><\/a><\/p>\n","protected":false},"author":110,"featured_media":10180,"comment_status":"closed","ping_status":"open","sticky":false,"template":"","format":"standard","meta":{"neve_meta_sidebar":"","neve_meta_container":"","neve_meta_enable_content_width":"","neve_meta_content_width":0,"neve_meta_title_alignment":"","neve_meta_author_avatar":"","neve_post_elements_order":"","neve_meta_disable_header":"","neve_meta_disable_footer":"","neve_meta_disable_title":"","footnotes":""},"categories":[82,81],"tags":[2770,2777,4,14,2779,2775,2774,7,2773,41,2771,2772,2,106,2645,2778,136,2776],"class_list":["post-10173","post","type-post","status-publish","format-standard","has-post-thumbnail","hentry","category-operations","category-strategy","tag-3-pillars-of-globalization","tag-arbitrage","tag-business-model","tag-cost-reduction","tag-cultural-alignment","tag-customization","tag-developed-markets","tag-emerging-markets","tag-gateway-countries","tag-globalization","tag-globalization-myths","tag-hub-strategy","tag-innovation","tag-leadership","tag-operating-model","tag-product-or-service-features","tag-supply-chain","tag-unity"],"_links":{"self":[{"href":"https:\/\/flevy.com\/blog\/wp-json\/wp\/v2\/posts\/10173","targetHints":{"allow":["GET"]}}],"collection":[{"href":"https:\/\/flevy.com\/blog\/wp-json\/wp\/v2\/posts"}],"about":[{"href":"https:\/\/flevy.com\/blog\/wp-json\/wp\/v2\/types\/post"}],"author":[{"embeddable":true,"href":"https:\/\/flevy.com\/blog\/wp-json\/wp\/v2\/users\/110"}],"replies":[{"embeddable":true,"href":"https:\/\/flevy.com\/blog\/wp-json\/wp\/v2\/comments?post=10173"}],"version-history":[{"count":8,"href":"https:\/\/flevy.com\/blog\/wp-json\/wp\/v2\/posts\/10173\/revisions"}],"predecessor-version":[{"id":10184,"href":"https:\/\/flevy.com\/blog\/wp-json\/wp\/v2\/posts\/10173\/revisions\/10184"}],"wp:featuredmedia":[{"embeddable":true,"href":"https:\/\/flevy.com\/blog\/wp-json\/wp\/v2\/media\/10180"}],"wp:attachment":[{"href":"https:\/\/flevy.com\/blog\/wp-json\/wp\/v2\/media?parent=10173"}],"wp:term":[{"taxonomy":"category","embeddable":true,"href":"https:\/\/flevy.com\/blog\/wp-json\/wp\/v2\/categories?post=10173"},{"taxonomy":"post_tag","embeddable":true,"href":"https:\/\/flevy.com\/blog\/wp-json\/wp\/v2\/tags?post=10173"}],"curies":[{"name":"wp","href":"https:\/\/api.w.org\/{rel}","templated":true}]}}