UKCBC’s Business and Management Top-up Degree students were lucky enough to be joined by Yenni Leighton, Vice President of Investor Services at J.P. Morgan, on Wednesday, 18th April for a discussion on globalisation. Yenni brought her 18 years of experience to the classroom and sparked much debate among the students. The lecture, ‘Globalisation: Empty Parachute or Corporate Necessity’, looked at the various barriers to entry companies face when attempting to go global, and the factors affecting successful global businesses. Yenni finished off the talk with a discussion of the companies that were performing particularly well in the international market.
Globalisation: Empty Parachute or Corporate Necessity?
Yenni began the lecture with a question: “What are the reasons companies go global?” The answer, she said, was simple: “improve revenue, and reduce costs.” The bottom line of many companies’ global strategies look remarkably similar; simply, if a company begins to outgrow its market, then it’s time to scale up and see where and how a brand can expand.
What Are the Challenges of Creating a Global Company?
While the underlying principle behind expanding into the global market may be deceptively simple, the reality of becoming a success in that arena is not. There are many factors to consider when creating a global strategy, said Yenni, including the need for a “five-year strategy.” Five years was an optimal time frame for such a strategy, as it “leaves room for flexibility.” Being tied into long-term investment projects seems like a more significant risk due to political tensions, said Yenni, so flexibility has become essential for those businesses that want to both make money and minimise potential losses.
But what of the other challenges affecting global expansion? “Hubristic CEOs,” Yenni said, “can be particularly difficult to deal with.” A lack of caution and an abundance of confidence should never be the driving force behind a global strategy; instead, careful consideration of the company’s potential on the global market, if not during product development, should certainly be considered. If the answer to global expansion is still ‘yes’, “how do we deploy our tools to make the biggest impact?” asked Yenni.
The challenges don’t stop there. World domination is not just hard to obtain; it’s also difficult to keep, especially if the right contingencies are not in place. Consumer trends often change, as do the regulations that might affect your product or service. Without sufficient oversight, a company can quickly be hit by regulations that hurt both profits and production (see the sugar tax). Additionally, companies need to “innovate to differentiate,” said Yenni, or they risk becoming just another addition to an already saturated market.
What of the customers? Is there a universal pattern for consumers around the world? Certainly not. “When you’re going global, don’t forget you’re talking to a local market,” said Yenni. Here we must use the new resources at our disposal; technology can help us gain valuable insight on our target audience before we invest a penny in our global expansion – “understanding cultural sensitivities is vital to success.”
Likewise, competitor analysis should never be ignored. Just because a company works in one location does not necessarily mean it will work in another, particularly if a competing product or service has already been established. Careful analysis will determine if a particular location is viable for expansion – don’t let hubris get in the way of sensible decisions.
Taking a cue from one of the world’s most successful global companies, Coca-Cola, Yenni highlighted how keeping global brand strategies broad (and thus easily transferable) aided in thinking locally. “Happiness,” said Yenni “is a universal feeling,” and it happens to be the word at the centre of Coca-Cola’s global brand message. That message can easily be moulded to the local feeling: it’s refreshing in the summer, and it’s Father Christmas in the winter; it can mean youth in Japan, and in the UK it can be “Enjoy Life”.
What Are the Factors Affecting Success?
Thanks to Yenni, the top-up students had a good grasp of the challenges in creating a global company, but what of the factors preventing companies from achieving their full potential on the international market? “Local brand reputation,” said Yenni, “can really affect how the brand is perceived across the globe.” Thanks to technology, scandals involving a products supply chain, for example, have a way of getting out, and this can lead to consumer boycotts on a global scale. Details can quickly be shared across social media, and a movement against the potentially unethical behaviour of a company can soon gain traction.
In a similar vein, Yenni went on to speak about poorly managed mergers and their potential for damaging a global brand. This could be down to unethical behaviour on the part of the parent brand (see the Body Shop’s former parent company L’Oréal), or due to cultural clashes between employees (see the Sprint and Nextel Communications merger). “If something is not quite right, it could come back to damage the company. If you have doubts, resolve them before they become a barrier to progression,” said Yenni.
Yenni’s talk finished with a discussion about some of the most successful global brands and how they are doing so well. Students offered examples, with Yenni providing analysis of their success. Uber, for example, was described by one student as “one of the biggest transportation companies in the world, yet it has no vehicles.” For Yenni, this was an example of a company using technology to reduce cost by becoming a subcontractor: “A virtual organisation that eliminates the need to pay rent, energy costs, council tax.”
Thanks once again to Yenni Leighton for joining our top-up students for an insightful talk on how global companies succeed. Are you interested in learning from industry professionals? UKCBC welcomes guest lecturers throughout the academic year for our undergraduate courses. Contact a course advisor today to find which of our undergraduate qualifications can help you achieve your professional goals.