Posted Comments on EY Article –“Global entrepreneurs changing the world” -An interesting article about how global entrepreneurs can take on big multinationals.
Interesting insights here- thanks for sharing. Outstanding group of global
entrepreneurs. I am involved in this area and one number in article that jumped out at me is only 53 percent of 300 entrepreneurs interviewed believe important to adapt products to meet local market needs.
As we know, major ‘transnational’ competitors face global competition and pursue two key strategies- either cost leadership or product differentiation – cost leaders do minimal local market customization to compete globally (think soap and consumer products), but leading global product differentiators do need to create scale to achieve lowest cost possible, but still have added costs to meet local market needs- achieving balance here is tough as all know.
Many case studies to illustrate this – I like to use IKEA which most know- profitable , successful, undifferentiated, low cost Scandinavia supplier of low cost, easy to assemble furniture in many European markets – entered a major market – the U.S. – and results poorer than expected. Why? U.S. consumers wanted changes ranging from longer beds (we are taller here) and increased quality among other changes – these changes were made, improved results but decreased margins in U.S. market.
For IKEA and many others, global undifferentiated product strategy had to change to succeed in US (and other) market(s).
Lessons for entrepreneurs?
–Global market is excellent opportunity and entrepreneurs
should pursue through organic strategy and alliances (JV, acquisition, other) .
–To achieve long term sustainable, defensible business, I do think the need to
customize to meet local market needs will increase not decrease – this impacts
margins so favors larger global firms who have ‘scale’.
–What this means for entrepreneurs is need to look closer at local market trends – entering overseas market and securing initial market share with an innovative product or service is a great accomplishment- important though to understand the longer term “lessons learned’ by many firms about need to customize as competition intensifies and margins impacted
— Do what you need to learn about “going global’ – clearly this is where there are outstanding global opportunities emerging in all sectors and entrepreneurial companies can play a major role