Trend 15: Increasing Globalization

Jan 23, 2011 3 Comments by

Increasing world markets mean increasing world competition and world standardization. This global world brings new opportunities but plenty of new risks and threats as businesses choose how to adapt – or not.

In a globally connected world, it may seem obvious that we can now do business globally, but what does that actually mean for business?

We have the ability to more easily promote our own businesses globally, simply by being online and by being found online by prospective customers. We also have the ability to tap into these world markets as customers and source products and services from anywhere in the world.

No Safe Backyard

Along with our ability to buy from almost anywhere in the world, so can our customers. We face competition from new players all over the world. Gone is the safe territory of our own backyard where we could reign supreme in our own patch.

Now we have new competitors potentially attacking us by chasing our best customers – and we may not even know it is happening, let alone who these new competitors are – and how we can defend ourselves.

New Standards

As more products are sold globally in different niches, new market leaders will appear with their standard easy-to-buy and easy-to-sell products.

What is the future for a local store competing with sites like Jomashop.com?

New world standards will emerge by which other products in its market category are judged. It will no longer be possible, tolerable or acceptable to have an inferior and more expensive product trying to dominate a local market purely on the basis of it being a locally made product.

Product standards will typically be driven higher, with more product features generally being provided for a lower cost. In some cases, product standards may appear to drop as lowest common denominator products are produced that are worse than what we currently have, but acceptable and far cheaper to produce, sell and deliver.

New Global Pricing

Prices will typically be driven lower by global competition. Businesses that previously used differential pricing models to sell the same products at different pricing levels in different geographic markets have had to re-think their pricing strategies for a more standard approach, often at a lower price.

Globalised Labor

Globalization makes more products and services appear to be generic. Skilled labor from knowledge workers can appear to be generic, even though it seldom is due to educational, training, cultural and time-zone differences. However, in a globally connected world in which we can hire the apparently same skilled labor at a lower cost in a different country, why would we not at least give it a try?

In some instances, we’ll come back to local skilled labor, in others we’ll happily choose to continue with the off-shore alternative.

This is already happening, often in other businesses and larger multi-national businesses, but this is a trend not a fad, and globalised off-shore hire of knowledge workers will continue to increase.  If it hasn’t been done already, then sooner or later, it may – or will – make sense for some tasks in your business.

It’s easy enough to find off-shore specialists through sites like oDesk.com, Rentacoder.com, Freelancer.com, Elance.com and others.

Sites with simple but potentially very attractive value propositions have emerged such as Amazon Mechanical Turk and Fiverr.com that allow outsourcing of small tasks for small amounts of money.

As an example, Fiverr.com is based on tasks being done for USD $5.

So, finding people is easy.  Finding good people is another question – and managing them effectively remotely can be challenging. But it’s happening, and thousands of jobs are moving around the world.

Some are new jobs being created off-shore, but others are existing jobs moving from employing labor in high cost countries to low cost countries, many never to return.

Staying Local is a Strategy

You may opt to focus on your local markets rather than trying to operate and sell globally. It may be a sound strategy to stay local, and it does not prevent you from using online systems to better service your local clients.

One of the keys to successful local strategies is focusing on maximizing the human-to-human relationships between you and your customers. It’s no secret strategy, but it could become your secret strength in a globally competitive world.

Questions To Ponder

  1. How do your products and services compare with others available globally?
  2. How much of your business comes from the local off-line world?  How safe is your sales territory?
  3. Who is already trying to sell their products against you in your own back-yard?
  4. Which of your customers could be wooed by a lower priced off-shore alternative to you? How many are already looking? How do you know?

Go to next trend: More 100% Fit Products in Global Niches

Go to previous trend: Increasing Mass Customization

Strategies & Roadmap, The Big Picture, Trends
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  1. Barry Rodgers says:

    Thanks for the great post. I am actually a big fan of Fiverr.

  2. UK site like FiverR says:

    Really useful blog. Thanks