Far more than in the past, today’s enterprises are global, with offices and production facilities all over the world. Corporations such as Starbucks and Adidas transcend national borders. A key reason for this change is the strong demand coming from consumers and businesses overseas. Companies that want to grow often need to tap international markets where incomes are rising and demand is increasing.
Nike got its start selling athletic shoes and apparel from a small town in Oregon. Nike now sells products in 170 countries, with more than half its revenues coming from outside the United States.
Globalization also occurs via cross-border partnership. Netflix created partnership agreements with cable and cell phone operators across the globe and expanded its reach to every country except China, Crimea, North Korea, and Syria.51 Not only does Netflix offer local subscribers access to its massive database of movies, documentaries, and TV shows, but it also provided funding to local producers to create new content for global consumption. For example, Elite is a Spanish series produced by Zeta Audiovisual that stars Spanish actors.
Other global content funded by Netflix includes Schitt’s Creek, a Canadian production by Daniel Levy, Aggretsuko, a Japanese animated series, and Bodyguard, a U.K.-based drama. The global partner strategy is working. In 2018, for the first time, “international streaming revenues exceeded domestic streaming revenues.” Netflix is the largest global streaming service with over 151 million subscribers, only 60 million of whom live in the United States.
Another factor that is making globalization both more possible and more prevalent is the Internet. It is estimated that by the end of 2019, there will be over 26 billion devices around the world connected to the Internet. From 2000 to 2019, the largest increases in users of the Internet were from developing countries in Africa, the Middle East, Asia, Latin America, and the Caribbean. As people in developing nations turn to the power of the web, they develop content in their own languages and create their own means of access, like Baidu, the search engine market leader in China that has over 70 percent of the search engine market share.
The Internet is a powerful force for connecting people without regard to time and space. The Internet enables people to connect and work from anywhere in the world on a 24/7 basis. Laura Asiala, a manager for Dow Corning, based in Midland, Michigan, supervises employees in Tokyo, Seoul, Hong Kong, Shanghai, and Brussels. To keep in touch with them, she starts working at 5:00 a.m. some days and ends as late as midnight. She takes a break from 3:30 to 9:30 each day, and technology lets her communicate from home.
China, with its 829 million Internet users, is an attractive market for tech companies that want to expand internationally. Internet companies have struggled to operate and succeed in the Chinese market due to intense local competition, logistical challenges, and human rights concerns.
Involvement in company operations by the Chinese government has reached a new level. The state-run Xinhua News Agency announced that cybersecurity police would be embedded in large Internet companies to help guard against fraud and the “spreading of rumors.” This policing effort is believed to be an effort on the part of the Chinese government to exert better control over the Internet in a country of over 1.4 billion people.
Despite these challenges, LinkedIn entered the Chinese market in 2014 to try to attract some of the 140 million knowledge workers to its professional networking site. In exchange for being granted access to Chinese Internet users, LinkedIn agreed to censor content when asked to do so by government officials. In 2019, the company had 50 million registered users in China. Time will tell whether LinkedIn can navigate successfully the myriad challenges in the world’s largest Internet market.
Smaller firms are also engaged in globalization. Many small companies export their goods. Many domestic firms assemble their products in other countries, using facilities such as Mexico’s maquiladora plants. And companies are under pressure to improve their products in the face of intense competition from foreign manufacturers. Firms today must ask themselves, “How can we be the best in the world?”
For students, it’s not too early to think about the personal ramifications. In the words of chief executive officer Jim Goodnight of SAS, the largest privately held software company in the world, “The best thing business schools can do to prepare their students is to encourage them to look beyond their own backyards. Globalization has opened the world for many opportunities, and schools should encourage their students to take advantage of them.”