A series of reports for executives in the technology industries.

Autopilot globalisers

Autopilot globalisers are companies that are globalising by default—either they have not rethought their strategy in this field in light of recent economic events, or they do not believe they could modify their policies even if they wanted to. About a quarter of our survey respondents indicated that they fell into this category.

Putting too little thought into corporate globalisation may be more common than companies are willing to admit: Over seven in ten of respondents said that companies as a whole, in choosing where to increase or decrease their foreign presence, tend to follow the herd rather than do detailed homework.

The financial performance of this type of globaliser differs little from that of its peers, but executives at these companies sense that they are missing out. Some 74% of respondents in this group said that a downturn is a better time than usual to benefit from globalisation, but only 52% believed that current conditions had made it more important to their firms.

The lesson: To gain from globalisation, companies need to manage their efforts actively rather than simply go with the flow. KR Lakshminarayana, Chief Strategy Officer of the information technology business at Wipro, says that many firms rush in because they think "If I'm not there first, there will be nothing left." Or worse, they think they can figure it out as they go along. "If you follow this reasoning," he warns, "you'll make some very costly mistakes."

Reactive globalisers

Reactive globalisers are those firms that are accelerating their globalisation activity even though they admit that, when benchmarked against other firms, their abilities in this area are average at best.

In practice, they are much more likely to look for a quick fix than take the long view: In our survey, 87% said that the downturn made globalisation a higher priority, and 55% said that the search for new markets to deal with immediate troubles in existing was their leading driver of globalisation—figures that are significantly higher than among other respondents. In seeking quick results, they are also looking to act fast, and are much more likely to buy local firms directly than to partner or build from scratch.

These efforts, however, bring relatively small economic gains. This group reported above average performance during the last five years only slightly more often than the survey average (52% compared with 48%, respectively).

To really benefit from globalisation, companies need to pursue a long-term strategy. As Kris Gopalakrishnan, CEO of InfoSys puts it, "There is a kind of myth about globalisation. If a company is looking at this as an answer for [a] slowdown, it is not going to get an immediate one. The benefits are definitely going to take some time."

Effective globalisers

Several things set apart those companies that are effective globalisers. The first is thought and planning: According to our survey, 66% give a great deal of thought to the local demographics and market size when considering whether to increase activity in a market, in contrast with 38% of other companies. Second, they are much more willing to learn about and commit to a market. The survey suggests, for example, that effective globalisers are more likely to be prepared to build up a business from scratch and to see emerging markets as sources not only of cheap inputs but of talented employees, new ideas, and superior R&D.

As a result, effective globalisers come to understand the differences and similarities in markets worldwide, and harness the strengths. Says Léo Apotheker, the former CEO of SAP, the goal is "to be an integral part of the local economy. You have to be global and local at the same time."

Taking this approach yields tangible results: 68% of effective globalisers in our survey said that they have had above-average financial results in the last five years, against 44% of all other companies. Moreover, their edge has widened in the downturn: 65% of this group indicated that they outperformed their peers in the last year, against just 36% of other firms.

Others

Your answers indicate that your company is not taking as much advantage of globalisation as many others. You may wish to consider the benefits which effective globalisation can provide.