How to succeed in the global marketplace.

• Author: Steingraber, Fred L.

Getting ahead "requires patience, commitment, and an open-minded approach to how industries work and consumers think in other cultures."

During the past decade, the distinctions between foreign and domestic companies have become increasingly irrelevant in every market. Advances in transportation and electronic technology have helped reduce the impact of distances and time zones and differences among political and monetary systems, tastes, and standards. Organizations such as the General Agreement on Tariffs and Trade (GATT) and emerging trade groups such as the European Union, North American Free Trade Agreement (NAFTA), and the Association of Southeast Asian Nations (ASEAN) are encouraging moves to accelerate the integration of commerce and trade still further. These changes have helped turn a world of distinctly separate nations, each with its own barriers, into a single global marketplace.

Global trade has tripled in the past 25 years. Customers--both industrial and consumer--are becoming global shoppers. Today, it is easier for a firm of any size to operate on a global scale.

There are a variety of reasons for a company to consider globalizing, including labor and material cost advantages and shrinking market barriers in every region of the world. However, a company that operates only in its home market today just can't decide to be global tomorrow. No matter where the global adventure begins, it is inevitable that the firm will go through a gradual transformation on the way to becoming a truly global organization. We have analyzed the way companies choose and implement globalization strategies and developed a framework that describes the range of options and stages they can pursue and move through.

Essentially, globalization is the process of building, reinforcing, and leading an organization toward establishing and maintaining competitive positions across a set of geographically dispersed markets. Before a company decides to enter the global arena, it must consider a range of key factors: topline opportunities, economic leverage, competition, decreasing transaction costs, and increasing interdependencies.

Top-line opportunities. A number of economies, especially in Asia, have grown large enough to support critical mass operations. As these economies continue to develop, customers will demand higher product quality and performance at world-class standards. Executives who think they can dump obsolete technology and marginal-quality products and services into these markets will be bitterly disappointed.

Economic leverage. In some industries, it is essential to access world...