The rise of deglobalization and the resulting uncertainty in the global business landscape has prompted technology-based industries to reevaluate their overarching strategies.
Recent geopolitical developments, such as the ongoing conflict in Ukraine, the widespread effects of the pandemic, and the renewed focus on greenhouse gas emission targets, have reignited debates surrounding the merits of globalization.
However, the pace of international trade of goods and services has been waning significantly since 2011, a trend that is being driven in part by the growing tide of nationalism.
Moreover, the narrowing gap between salaries in developed and emerging economies has reduced the incentive for companies to engage in overseas product shipments, which are increasingly under scrutiny due to their environmental impact. In this context, the question arises: how can industrial companies ensure sustainable growth in today’s global markets?
Solid growth
In their recently published book, “Solid Growth,” Johannes Habel of the University of Houston, Olaf Plötner, and Bianca Schmitz, both members of ESMT Berlin’s faculty, delve into global strategies for industrial companies.
The book provides insights into how industrial companies can achieve solid growth in the global market, compete with low-cost suppliers, market digital innovation, and address other pertinent issues. The authors examine the key challenges faced by companies in implementing their strategies and analyze major global trends in technology-driven industries, offering practical illustrations and insights for managers to stay successful.
The book emphasizes three categories of supply in industrial markets, including advanced premium products, no-frills products, and complex service solutions. Furthermore, it identifies opportunities for interactions between these strategies and how the company of the future can be organized.
The authors provide a plethora of examples of companies from both developed and emerging countries to illustrate their strategies. For instance, they highlight the lateral diversification approach of Tata, a family-run company in India, to demonstrate how it can mitigate risk.
“Digitization and the volatile dynamics of doing business globally have led technology-based industries to review their overall strategies,” they explain. “In the face of deglobalization, an option is to establish additional headquarters in key economic regions, allowing companies to gain more independence from geopolitical upheavals, faster decision-making processes in respective regions, and greater market proximity and customer orientation.”
