Taking a Breather by the Waterfront: Thoughts on Global Business
Had the opportunity to spend last weekend in Vancouver and Seattle — business trip turned mini vacation. Got to do some productive work as well as visit some friends in that area.
I really liked the two cities. They both had the ‘right’ mixture of suburban innocence and developed city personality. Guiltily, I think I only feel such affinity to the two cities as they remind me of everything I grew up with. Auckland was very much the same — smaller city feel, lots of familiarity but also a hint of maturity. Vancouver has arguably more of that American influence that we know and love — my Starbucks Gold Card swipes just as charmingly as it does when I use it back in Los Angeles. Walking down the street there are as many Banana Republics as there are Roots.
Perhaps this is the globalization that we hope to see around the world one day. Globalization is still far from a coffee table term in much of the world — much of the developing world is still far away from the “luxuries” and “conveniences” of American enterprise. There are inevitably a lot of difficulties with the concept of Globalization and many academics have discussed those in very fine details — much of the Harvard Business School cases I have read have mentioned those. When I was talking classes in strategy, the one puzzle that really stuck out to me was the difficulty of maintaining local individualization while achieving global economies of scale.
The inherent difficultys behind it is one of resource struggles — scaling is achieved most successfully where products and services are standardized and easily transferable from one market to another. Individualization requires a lot of customization — the personal touches that we love from the boutique cafes and hotels demand a lot of monetary and human capital. Over the years, we’ve seen a lot of firms such as McDonalds who have catered to individual markets in different ways; in Taiwan, you used to be able to get rice burgers and curry dishes at McDonalds. I met a German businessman in a McDonalds in Beijing once who shared the differences in regionally.
Much of the difficulty of entering different markets does come from understanding and being opportunistic about the arbitrages in the local market. Even for these big industry giants — Nike, P&G, IKEA and such — making money and expanding in new markets demands the finesse and acumen that comes from local market understanding: firms really need to understand the complexities of the local regions — while America and Mexico are geographically next to each other, the societal values, purchasing behaviours and resources available are very different.
Even if that future capitalistic expansion doesn’t fully materialize, something similar might exist. We’ll walk down the street in whatever city in whatever country with a grande Starbucks Hazelnut Macchiato in hand and breathe in the many brands, products and services that roll so familiarly off of our tongues — Burger King, Dunkin and “Every time a Good Time.”