A Borderless World

Why do companies such as Dell, FedEx, and eBay want to pursue a global  strat- egy, despite difficulties, failures, and losses? They recognize that business is becoming a unified,  global field as trade barriers fall, communication becomes faster and cheaper, and consumer tastes in everything from clothing to cellular phones converge. Thomas Middelhoff of Germany’s Bertelsmann AG, which purchased U.S. publisher Random House, put it this way: “There are no German and American companies. There are only successful and unsuccessful companies.”7

In addition, for many companies today, the only potential for significant growth lies overseas. The demand for raw materials  such as steel, aluminum,  cement, and copper has slowed in the United  States but is booming in countries  such as China, India, and Brazil.8

For online companies, too, going global is a key to growth. The number of residential Internet subscribers in China is growing significantly  faster than that of the United States. Western  Europe  and Japan together  account for a huge share of the world’s e-commerce revenue. 9

Companies that think globally have a competitive  edge. Consider  the U.S. movie in- dustry, where global markets used to be an afterthought. Not any more. The success of Crouching Tiger, Hidden Dragon in both Asian and U.S. markets spurred movie studios to take a broader view. Squeezed at the box office in the United States, studios  such as New Line Cinemas, Columbia Pictures, Disney,  and Universal  are busily striking deals to co-produce foreign language films designed primarily  for foreign markets that are experi- encing a booming  demand. The box-office  share for local films in Russia, for example, nearly tripled in 2004.10 Movement of people around the world, as immigrants to a new country,  can now create business opportunities.

The reality of today’s borderless companies means that consumers no longer can tell from which country they’re buying. U.S.-based Ford Motor Company owns Sweden’s Volvo.

Source: Daft Richard L., Marcic Dorothy (2009), Understanding Management, South-Western College Pub; 8th edition.