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Business Models for Born Global Companies Introduction In recent times, we are seeing businesses which operate globally from the moment they start their operations. These companies are born with a global vision and serve global markets and can be called as "Born Global Companies". Unlike traditional companies which start their operations locally and expand slowly into exports, becoming multinational later and then becoming global, born global companies establish a global operation from the very start. Their mission statement, Corporate vision, business strategy, organization structure and business operation are all geared towards globalization. The emergence of born global companies is fairly new and is not limited to any country. The first of the born global companies are from developing nations or from nations with small local market. Today this phenomenon appears to be fairly widespread. Irrespective of the country of their origin, these born global companies share certain common traits. In this article, I’ll explore some of the important characteristics necessary for the success of a born global company. CHARACTERISTICS Small Local Markets WTO agreements and free trade agreements has resulted in globalization of markets. Globalization of markets allows economies of scale, but the limited local market size force companies to explore foreign markets and expand globally. Global expansion is further aided by falling tariffs Good corporate networks Top management of the global startups have global work experience & have had established an extensive and reliable network with other companies abroad. This network allows the startups to offer services or become a supplier of OEM parts to other global giants. Flexible & learning organization Global start ups are flexible on their operations i.e., they are willing to do a variety of tasks and services in order to survive in business. Organization encourages learning from all its engagements. Multiple skill sets Employees have multiple skill sets which helps organization to be flexible and fast moving. Unlike large organizations, Global startups are do not have a large specialized departments in middle or upper management areas. Any specialization will be limited to technical/Engineering areas only. Global experience Top management of born global companies have global experience. CORPORATE CULTURE Born global companies are developing a unique corporate culture which can be best described as a "Global culture" This culture is marked by:
GLOBAL STRATEGY Born global companies tend to choose a strategy based on their origins. By this I mean, that companies from emerging companies tend to have a cost leadership strategy as they try to exploit the cost advantages of operating from a developing country. While companies for developed countries tend to develop a differentiation strategy based on technical superiority. ( I need to collect more data from the actual companies to substantiate the above claims) Financial Planning Born Global companies tend to raise capital from around the world based on the costs and availability. These companies have established corporate networks in foreign capital markets and using these networks, they tend to raise capital at a lower cost than doing the same in their home country. ( This is particularly true for companies from emerging countries like India, China etc.) Human resources & Staffing Born global companies do not limit themselves to have employees from their home countries. Instead they build their staff with the best employees from all over the world. High tech startups in Silicon Valley have a reputation for attracting the best talent from all over the world. Companies from emerging countries have a little disadvantage in their ability to attract the best talent to their home country, however they tend to over come that handicap by having offices in other countries. High tech startups from India have offices in US, Europe & Japan to attract the best talent. Since these born global companies are knowledge oriented companies, they tend to give huge importance to attract the best talent. Information Technology & Systems Born global companies tend to operate as a virtual teams spread out around the world. To work effectively, these companies invest in the best computer network technology to enable their staff to coordinate their activities. Use of IT is integrated into their business models and employees are computer savvy. This results in a high level of Business and IT alignment in the organization. Many startups use IT as a core competence and build a substantial competitive advantage from their information technology. Start up in India (Mind tree, SIFY) are the prime examples of such companies. To be completed ..... |