A container ship passes beneath a suspension bridge, delivering products for globalization
iStock/shaunl

Country Analysis Framework

Overseas expansion requires careful planning. The Country Analysis Framework can help you look beyond an industry-level analysis and reframe your view based on performance, strategy, and context. Try this short course to learn how it works.

CAGE Distance Framework

Want to expand overseas? The CAGE distance framework can help ensure you're constructing a solid global strategy in four areas: cultural, administrative, economic, and geographic. Learn how to leverage useful differences between countries, identify potential obstacles, and achieve global business success.

Strategy: Understanding the External Environment

To plan strategy on any level, you need to understand your company's external environment. In fact, your level of understanding can impact hiring, budgeting, marketing, or nearly any other part of the business world. Want to learn how to do all that? This course from GLOBIS Unlimited is the perfect first step!

Most business leaders would say they want to globalize their operations. But the truth is, a leader will globalize his or her enterprise only to the extent for which there is compelling, strategic logic to do so.

Strategy: Understanding the External Environment

To plan strategy on any level, you need to understand your company's external environment. In fact, your level of understanding can impact hiring, budgeting, marketing, or nearly any other part of the business world. Want to learn how to do all that? This course from GLOBIS Unlimited is the perfect first step!

Why so circumspect?

Globalization is hugely expensive and fraught with risk at every turn. Just ask former Uber CEO Travis Kalanick, who spent more than $1billion to enter the China market, only to retreat in less than two years. Or ask the leaders of Walmart who, after having spent years and billions of dollars to participate in the Japan market, gave in and sold off their majority stake in Seibu.

But let’s say that, after much consideration, you do decide that, yes, there is compelling, strategic logic to begin overseas operations, whether it’s sales, sourcing, financing, or something else. As a business leader, you must understand which iteration of globalization to pursue. 

Again, why so circumspect?

Because “globalization” is an evolving phenomenon. In fact, in the seven decades since World War II, we can see the distinct outlines of at least four iterations.

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A man reaches toward a globe.

Globalization 1.0 (1945 – 2008)

Let’s call Globalization 1.0 “classic” post-war globalization, which came about as all major Western countries actively pursued free-trade policies while protecting certain sectors—agriculture in particular. Despite labor dislocations in certain industries, consumers benefitted hugely. For that reason, the electorates of these countries, for the most part, supported pro-globalization policies.

The leaders of developing nations, too, were quick to welcome globalization. After all, it allowed local businesses to produce and export goods, thereby lifting billions out of poverty.

In this environment, enterprises (particularly large ones) sought a competitive advantage by globalizing to the extent their industries allowed. This typically meant that they actively crossed borders in search of new markets and less expensive labor, IP, financing, etc.

Unfortunately, they did so with little-to-no concern about the CO2 footprint of their supply chains.

A container vessel belches pollution from its smokestack as it moves through the open ocean
The carbon footprint of supply chains is becoming a heated issue as globalization evolves. | iStock/vale_t

Globalization 2.0 (2009 – 2016)

Starting with the Great Recession of 2008, significant portions of the electorates in major economies began to feel left behind by the globalizing economy—thus, Globalization 2.0 was born.

Having been given little support to adjust to trade-induced labor and industry dislocations, people grew vocal in their opposition to free-trade and globalization. Right-wing politicians (left-wing, too, in some cases) tapped into these currents of populism and nationalism to garner political power.

Donald Trump likely comes to mind. But how about Viktor Orbán in Hungary, Jair Bolsonaro in Brazil, and even in Tayyip Erdoğan in Turkey?

Consumers, enterprises, and political leaders, particularly in advanced economies, also started to voice and act on concerns about CO2 footprints and the sustainability of globe-spanning supply chains.

Globalization 3.0 (2017 – 2021)

Globalization 3.0 came about amidst undercurrents of populism. The world economy was roiled by increasingly powerful crosscurrents arising from resurgent nationalism and the economic and political competition between major powers. Even though the economies of China and the West remain linked in many fundamental ways, the world began to see the vague contours of a trading environment shaped by “block” politics—that is, one block dominated by Western democracies and a second block dominated by China and Russia. India sat somewhere in the middle, as it did during the Cold War.

In this increasingly uncertain environment, enterprises had to dial up their attention to country, political risk, and supply chain CO2 footprints.

Country Analysis Framework

Overseas expansion requires careful planning. The Country Analysis Framework can help you look beyond an industry-level analysis and reframe your view based on performance, strategy, and context. Try this short course to learn how it works.

Then came the COVID-19 pandemic, which disrupted supply chains worldwide. Suddenly, all the best practices of globalization went out the window. Just-in-time inventory shipped from overseas suppliers was no more.

Blurred image of production line workers rushing to move boxes from a conveyer belt to a delivery truck
Next-day delivery might become a thing of the past with the uncertainty of Globalization 4.0. | iStock/simonkr

Globalization 4.0 (2022 – ?)

As if the pandemic were not enough, President Vladimir Putin of Russia has now tragically decided to invade Ukraine. The West has responded with extraordinary sanctions that caused the Ruble to slide almost 50% in value (although it has recovered much of that value through government rules and interventions that do not seem sustainable in the long run).

It appears certain the Russian economy will go into a recession or even depression, which will further disrupt worldwide trade and sourcing patterns.

Does the war in the Ukraine, along with the lasting effects of the pandemic, spell the end of globalization? Not at all. In fact, in very short order, we will probably be able make out the emerging contours of Globalization 5.0. 

The Future of Globalization

The world’s best business leaders know they have to adapt their globalization strategies to the politics and economic dynamics of their times.

CAGE Distance Framework

Want to expand overseas? The CAGE distance framework can help ensure you're constructing a solid global strategy in four areas: cultural, administrative, economic, and geographic. Learn how to leverage useful differences between countries, identify potential obstacles, and achieve global business success.

If you are the CEO of a large enterprise with a global footprint and business infrastructure that was put in place during previous iterations of globalization, you’ll need to chart a new way forward as globalization continues to evolve.

In this extraordinarily volatile environment, business leaders remain reactive, focused on putting out fires. Nonetheless, there is widespread recognition that global enterprises must fundamentally “re-architect” the way they do business and construct supply chains that are more resilient, shorter (i.e., less CO2 intensive), and less politically vulnerable.

In summary, here are three key takeaways for your globalization efforts:

  1. Do not globalize your enterprise unless there is compelling logic to do so. This was crucial with Globalization 1.0, and it continues to be critical today.
  2. If you decide to globalize, don’t overdo it. How will you know you if you have overdone it? One, two, three or more years of negative ROI.
  3. Build your enterprise, especially its supply chain, to be resilient and flexible because, again, globalization is an evolving phenomenon. The best practices of global business in 2022 might become obsolete before 2023 plays out.

The smoke in Ukraine will clear at some point (soon, we hope), but the currents of Globalization 4.0 will continue to reshape the global economy. Which businesses will do best in this era? The ones whose leaders right now are rethinking and re-architecting their enterprises to adapt to the dynamics of Globalization 4.0—and who are getting ready for Globalization 5.0.

Those leaders will have to plan with imagination and plenty of flexibility. Because who knows what changes Globalization 5.0 will bring? Whatever happens, the best practices of today will bear little resemblance to those from years ago.

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