A series of reports for executives in the technology industries.

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Technology executive connections is a series of survey reports designed to provide executives in the technology industries an opportunity to explore, understand and share ideas about today's pressing business and strategic issues.  
 
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Raman Chitkara
Global technology leader
Tel: +1 (408) 817 3746
How does your company's performance compare with that of its peers in the following areas?
  Better About Average Worse Don't Know
Ability to assess and exploit opportunities worldwide
Ability to assess and manage risks worldwide
Ability to integrate global assets/strengths of company in collective undertakings

Has your company rethought its globalisation strategy since the downturn began, and what what was the result? Select one.

How does your company's performance compare with that of peers in the following areas?
  Better About Average Worse Don't Know
Financial performance in the current year
Financial performance over the last five years

What is your preferred method of entering a new market?

How well has your company's globalisation strategy performed in the downturn?

How much time does your company spend studying a new country before entering as a market either for the purchase of inputs or the sale of products/services?

On a scale of 1 to 5 (where 1=a great deal and 5=none), how much effort does your company put into the following in new markets which it enters?
  1 2 3 4 5
Developing new products/modifying existing products for the specific needs of local markets (especially in emerging markets)
Seeking to develop and promote local talent within the country operations
Seeking to develop and promote talent from this country within the company
Searching for R&D opportunities

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."

More to explore

Shared Services & Outsourcing Services

What other types of globalisers are there?

Effective
Autopilot
Others

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.

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The quantitative findings presented in this report are based on an online survey conducted by the Economist Intelligence Unit (EIU) in mid-2009.

A total of 159 senior technology industry executives from a broad range of functions participated in the survey, of whom 49% were C-suite or above. Roughly 33% were based in Europe, 32% in North and Latin America, and 31% in the Asia-Pacific region, with the remaining 4% coming from the Middle East and Africa. Participants also represented a wide cross-section of company sizes, with 53% having annual revenue of over $500 million, and 29% with revenue of over $5 billion per year.