Regional Strategies to Produce a Global Powerhouse
Think local, act global, is the new mantra of globalization. Believed to be an antithesis of regionalization for the longest time, globalization is now being touted as a sum total of several regional tracks. The pandemic has especially made it essential to rely on regional or local resources, but still, be global in approach and delivery. Getting personal with the users is now the in-thing.
Coca-Cola is by far the best example of a marketing strategy that is local yet global. The American beverage giant’s key to success in each market it set foot in was to have a flexible bottling policy. The company allowed local leadership to tweak the taste of the drinks in line with cultural preferences. The brand also adapted its marketing, pricing, and distribution efforts to the local milieu in each of its market. At the same time, the company ensured that its products were branded uniformly across its markets and are easily recognizable around the world.
Regional Strategies, Globally
ndeed, a hybrid arrangement of global strategies being executed by local leadership in each market with the local flavour intact is the way forward for businesses. It makes sense especially in the current scenario when countries are increasingly looking inwards for resources and capabilities. But let’s not confuse regional focus with a closed economy; in today’s world, diversity and inclusion of the local is imperative to go global. Leveraging the local knowledge base to appeal to the unique tastes and preferences of the residing population can be a competitive advantage for businesses.
Google, for instance, has started adopting local strategies to strengthen its global presence. In Africa, most of the Google managers are locals, delivering local news via country-specific domains. Google is tapping the local community to source the best of talent available, partner with local suppliers and vendors, and establish a loyal customer base. Implemented correctly, such an approach towards regional centers can be a significant growth driver for businesses.
There are two important truths behind validating a hybrid strategy – that globalization has failed to blur the regional borders of culture and values, and that region-specific strategies are not siloed bifurcations, but critical elements of an integrated global strategy.
Expansion with a Purpose
Typically, companies seeking to expand and set up regional operations as direct subjects of corporate headquarters. The regional centers are often bound to consult the corporate for decision making, resources, leadership, and budgets. Of late, businesses have realized the need for lesser controls, and are building standalone regional bases wherein a part of decision-making rests with the local leadership.
Executing such a decentralized strategy has its challenges. The foremost need is to identify the ratio of standardization processes required versus a customizable leadership structure. Too much standardization of products and services could lead users in certain regional centers to disconnect.
You may recall how Dell was forced to change its strategy in China as it faced competition from multiple quarters offering cheaper products, compared with its globally standardized products. McDonald’s suffered a major backlash in India for its food choices and was forced to change its menu. Ford’s attempt in the year 2000 to bring North America and Europe operations under one global umbrella cost the company over $3 billion in losses in Europe. There are innumerable examples in the public domain to drive the point home.
As opposed to standardization, the regional hub model allows businesses to customize and adapt wherever required. The question that now stands is, how can regional strategies be enmeshed in the existing structures of businesses, more so when the corporate leaders command a majority of the power?
The obvious way out is to reallocate certain decision-making powers from global to regional, or from one division to another. Organizations must implement an integrated operating model that centralizes critical core areas and empowers local teams to customize programs for local needs. In our view, resting the control of functions that require bigger picture analysis, such as finance, with the corporate leadership, while delegating operational control to the local leadership, will work wonders in a hub and spoke model.
But identifying the critical functions to be vested to the corporate leadership alone, is not a mean task. Businesses must employ technology and data extraction to determine the functions that can impact operations organization-wide. Centralization in finance is desirable as a measure of stability for businesses.
But creating global standards with a regional focus is only half the battle won. To shift the balance of power to local leadership, a solid HR strategy is imperative to hire, train, and manage the local labour laws, compensation guidelines, and workplace culture. To balance global HR strategies with regional ones, businesses must build flexible and agile structures, as per the requirement of each region they operate in. While the global spoke of the organizational wheel can drive standardized efficiency and scale, flexible local operations (hub) can drive growth and effective employee engagement.
This article was originally published in Nearshore Americas.