In the past, we contrasted local activity to activity "abroad"
In the past, Enterprises were mainly national: they produced and distributed in the country or region where they were set up.
For the few international enterprises, we distinguished in their organization, the national department from the "foreign" department. The latter which grouped together the activities from the countries in which we produced and distributed, was more often than not considered a minor activity.
Today, Enterprises are working for the global market
But, since the last 30 years, the world has changed a lot:
- Enterprises began to Distribute in foreign countries, while keeping, in general, a local Production
- Then they decided to Produce in countries close to their customers.
- Then they decided to Produce in those countries where Production costs were low.
An increasing number of Products have become international, that is to say distributed in every country. Distinctions are gradually becoming blurred: it is increasingly difficult, when we travel, to bring back an original object.Why are most of the Products offered in different countries the same?
There are three main reasons:
- People are traveling more and more and identify the best products: good products have worldwide success, bad products disappear. Product convergence is underway, especially for storable Products (Goods and Information) but not for Services.
- Costs and timescales for transporting Information have been greatly reduced
- Costs for transporting Goods have also
considerably decreased despite the sudden rise in the cost
of fuel, thanks to containers, which are vehicle or
cargo-sized and to transport optimization Models.
Convergence is underway.
- It is the case for Goods: Ikea, Apple, Mercedes, Nestlé, Sanofi, Michelin… offer almost identical Goods in different countries.
- It is also true, in part, for Information
- Operational Information is partially global: the cinema and music are international, news is not due to language and local interest differences
- Models are
becoming global: this is significant in software
package industry (see the CEISAR white paper)
- Service is still partly protected: but we can see
the Banks and Insurance companies bringing the Product
Models in different countries where they operate closer,
even if regulatory differences still require us to
personalize the Models.
Going from a local market to a global market changes the rules of the game
The consequences of globalization are clear:
- The size of the market leads to more sizable Enterprises: there is a reduction in the number of Enterprises who are able to remain in mature markets.
- Economies of scale are considerable.
- Enterprise management becomes international and
Luckily, the "big brother" effect is compensated by the rhythm of Enterprise startups which bring original value propositions.
The story of George the Baker is made available under the terms of the
Creative Commons Attribution - NoDerivatives 4.0 International license.