Global Economy: Challenges and Opportunities for Global Businesses
We've discussed the opportunities in expanding businesses internationally as well as some tools and resources to help inform your expansion strategies. Today, let's take a step back and look at current global economic trends, the most exciting opportunities out there and also some of the most important challenges global companies face today.
An External Perspective on Global Business, by Professor Mauro Guillen
We invited Professor Mauro Guillen to join us at Google and help us understand the main trends in today’s global economy and how they are affecting international businesses. He is the Director of the Joseph H. Lauder Institute at the University of Pennsylvania in the US, a research-and-teaching program on management and international relations. He holds the Zandman Endowed Professorship in International Management at the Wharton School.
Key learnings from the Professor:
#1. Find a balanced strategy between localization and scale: Assuming that all markets are the same is not a good strategy. But neither is assuming that all markets are completely different. Successful global businesses should strike a balance between the markets, identifying what’s specific and unique in some markets and what is shared or common between markets so you can scale accordingly.
#2. Segment your customers: It’s fundamental to understand which customer segments in each market are worth your while. By doing this, you will be able to find opportunities to scale what is working and redirect your focus to customers who will be more profitable over time.
#3. Don’t become a currency trader: Instead, focus on your business goals and consider currency fluctuation as one risk among many. Accept that exchange rates will always fluctuate.
#4. Don’t overlook emerging and developing markets:
- Asia consists of more than Japan, China and India. Southeast Asian consumers combined have potential to generate more business than China in 5 to 10 years.
- Africa has the demographic potential to become the next big thing, so start learning about African markets (Nigeria, South Africa, Kenya) now or it will become too late.
- Latin America has been gaining momentum with business favorable demographic indicators, and is making exciting progress in infrastructure.
#5. Take advantage of major social trends:
- Big cities are becoming major economic forces.
- Women live longer and have increasingly better job opportunities.
- Technology is becoming increasingly disruptive to typically traditionally offline industries, such as healthcare and education.
Watch the full recording of Professor Mauro Guillen’s talk here.