May 14, 2018
Originally posted 2018-11-19 11:20:32
By Aurelia Mitchell Durant|www.amdlawgroup.com
Globalization has become a reality for the planet. The very loose and fluid definition of globalization is summed in an often-quoted quote by former Secretary-General of the United Nations, Kofi Annan, “It has been said that arguing against globalization is like arguing against the laws of gravity.” Globalization is the notion that the emerging and sustainable marketplace is global as opposed to regional or national. Ostensibly, in order to compete in the global market, place a business owner ought to have a more far-reaching international mindset. We are no longer marketing just to the people that see your billboard or shingle, the internet makes all things global.
Globalization ushers in the notion of a “born global” entity which is a business organization that, from inception, seeks to derive significant competitive advantage from the use of resources and the sale of outputs in multiple countries. Many companies “go global”, but that does not make them born global. What distinguishes a born global entity is that they originate internationally. Born global, from their beginnings, have a global focus and commit their resources to international ventures and growth. Most companies operate from their home country, and after years of doing business domestically, slowly evolve to do business internationally. By contrast, born globals begin with a borderless worldview, and immediately develop strategies to expand themselves abroad. Born globals have many distinctive features that allow them to start, and thrive in the international arena.
One way born globals begin internationally is that they rely on exporting as their primary method of foreign market entry. They begin exporting their goods within a couple of years after their founding, and may even have a desire to export the bulk of their total production. Because of this, born globals must rely on external facilitators and distribution channels. By using these external means, born globals can enter or withdraw from foreign markets quickly and easily. Conversely, one of the challenges faced by born globals is inherent in their reliance on these external means.
Born globals also have a distinct way of doing business. Top management in born globals tend to view the entirety of the planet as their marketplace from the very beginning and use a decidedly aggressive entrepreneurial mindset to pursue international markets. Furthermore, when developing their markets, born globals employ differentiation strategies so as to make a niche for themselves internationally. Because of specialized resources, born globals can offer specialized and customized products, satisfying a market that is too small to interest larger organizations.
Not only are born global goods specialized, but they strive for superior product quality. More often than not, born globals are leading their industries technologically. This advantage allows them to not only pursue markets around the world but to offer superior products designed for the specialized markets they have made niches out of.
Born global firms are of special interest not because of the size of these organizations, but by the age at which the firm ventures into foreign markets. Born global firms are entirely unique from other major international organizations because they are born doing business abroad. Even the most sophisticated of the traditional multi-national organizations may allow years to pass before venturing into new market territories. These distinctive firms will eventually become the standard model for how companies operating in the international economy.