Addressing the upheavals of the global markets

N°278a – Synopsis (8p.) – Resilience
Addressing the upheavals of the global markets
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The globalized organization is generally considered to be a reference model. Yet, distance remains a real obstacle, all the more so since this model is today confronted with several disruptions. How can you rethink your performance levers on international markets?

The globalized organization has long been—and still often remains—the reference model of the business world. The most admired companies are those that have succeeded in developing worldwide: they are present on all continents; they optimize their value chain by locating to the greatest possible extent their production units according to economic opportunities; they rely on a global network of suppliers.

This model is challenged today by several disruptions. Firstly, after a sustained growth since the middle of the 20th century, the development of international trade has strongly slowed down. While it was growing twice faster than the creation of wealth at the end of the 20th century, its growth curve has decelerated, and it only grows 10% faster nowadays. Between 2007 and 2017, the export share of the world production has decreased, from 28% to 22%. In parallel, free trade is being challenged: protectionist measures are developing in many countries; regional or bilateral agreements take a growing importance at the expense of global rules. The salary increases in emerging economies, combined with new automation possibilities, are upsetting the economic logics that determined the choices of production locations. E-commerce platforms, and more generally platforms connecting buyers and suppliers or service providers, offer serious alternatives to the set-up of local establishments. Local players, increasingly powerful, become the main competitive threat; they bring to light the complexity—and hence the handicap—in seeking to serve culturally diverse markets from worldwide decision centers.

Should you then give up an international presence or development strategy? Definitely not, observers respond: the opportunities remain very real, as well as the advantages brought by a global optimization of your resourcing strategy. However, you must beware of the myth of the global markets and of the globalized group: distance, whether geographic or cultural, constitutes a real obstacle.

In this synopsis:
- Global markets: a new deal
- Rethinking international performance drivers
- Attracting and retaining local talents

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