01 Global Strategy

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Global Strategy in the Internet Era

Professor George Yip

Centre for the Network Economy

CNE WP01/2001


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This paper gives a detailed framework for evaluating how the Internet and the Web

affect the globalization potential of individual industries and the global strategies

that companies should adopt. It argues that the Internet does not have a uniform

effect across industries but has very different effects on speeding up globalization

in particular industries. The reader will learn how to diagnose Net effects on their

own industry. The paper also shows the reader how to use the Internet to better

exploit five types of global strategy: global market participation global products

and services global activity location global marketing and global competitive

moves.

Globali%ation an& the rise of !nternet are the two most powerf'l forces affecting

b'siness now an& for at least the ne(t &eca&e) *'ch has been written abo't each

s'b+ect, b't separately) -his article pro.i&es the first e.er in&epth analysis of their

+oint effects) ow &oes the !nternet era affect global strategy ow sho'l&

m'ltinational companies ree.al'ate their global strategies to take best a&.antage of

the !nternet an& the Web -his article pro.i&es a systematic &iagnostic approach that

managers can apply) !t &emonstrates that the !nternet &oes not ha.e e'al effects on all

in&'stries) !t interacts with e(isting in&'stry globalisation &ri.ers an& strategies, ha.ing

more of a m'ltiplicati.e than an a&&iti.e effect 34ig're 15) ence, managers nee& to

'n&erstan& the twin phenomena of globalisation an& the !nternet together rather than

separately) -ogether these two forces &etermine the potential to 'se global strategy

34ig're 25) We will look first at how the !nternet affects in&'stry globali%ation &ri.ers,

then at the effects on global strategy an& for m'ltinational companies)

64ig're 1) Effect of !nternet on !n&'stry Globalisation Potential7

64ig're 2) 4ramework for Global trategy in !nternet Era7


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Internet Effects on Globalization Drivers

!n&'stries &iffer in their globali%ation potential 3Yip 1898 an& 188251an& in their &egree

of !nternet 'se) :'t, as &emonstrate& below, increasing !nternet 'se accelerates the pace

of globali%ation, b't in &iffering ways for &ifferent in&'stries 3-able 15)

6-able 1) 'mmary of !nternet Effects on !n&'stry Globalisation "ri.ers7

!arket "lobalization #rivers

-he !nternet affects in&'stry specific market globali%ation &ri.ers in se.eral

ways) !n a&&ition, 'se of the !nternet still .aries greatly by co'ntry;from now nearly

nite& tates to 'n&er se of !nternet in Bey Economies7

The Internet increases global commonality in customer needs and tastes.

When c'stomers in an in&'stry ha.e nee&s an& tastes that are mostly common across

co'ntries, companies can make more 'se of global strategies, especially in offering

globally stan&ar&ise& pro&'cts an& ser.ices) -he !nternet an& the Web f'rther e(pose

c'stomers to global offerings an& other lifestyles) !n&i.i&'als can now tra.el on the Web

rather than physically b't can ha.e similar global e(pos're an& global learning effects)

o they are more likely to migrate to the highest or most pop'lar global stan&ar&) -his

effect hel& e.en before the arri.al of the !nternet)

-he !nternet has two effects) 4irst, it reinforces the appeal of those bran&s that

are alrea&y globally recognise&) Potential c'stomers can get more information abo't

these pro&'ct offerings an& ha.e their &esires f'rther reinforce&) t the same time, the

Web creates more opport'nities an& ch'rn in the ne(t tier of conten&er bran&s)

?elati.ely 'nknown bran&s will be able to rapi&ly b'il& 'p wor& of mo'th .ia the


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!nternet an& global presence .ia the Web) 'perior &esign in Web sites can make 'p for

c'rrently low recognition) :oth chwab an& "ell Comp'ter completely shifte& their

marketing an& or&ering systems to the Web) -he &ramatic effects on their b'sinesses are

well recor&e&) Dess ob.io's is that this shift helpe& propel both companies from the

possibleF category of s'ppliers to the m'st consi&erF category) E.en if someone &oes

not en& 'p choosing chwab or "ell, most potential c'stomers now ha.e to consi&er

these two companies)

The Internet enables global customers. *'ltinational companies increasingly

act as global c'stomers by globally coor&inating or centralising their p'rchases) :'t

there are many obstacles, both e(ternal 3fin&ing an& coor&inating with .en&ors aro'n&

the worl&5 an& internal 3agreeing an& coor&inating re'irements across international

s'bsi&iaries5) -he !nternet an& the Web make it e.en easier to become global c'stomers)

C'stomers can search the Web for s'ppliers from anywhere in the worl&) $r they can go

e.en f'rther an& place re'ests for proposals on their own websites an& wait for .en&ors

to bi&) General Electric create& -he -ra&ing Partner Network as an online a'ction site

for c'stomers an& s'ppliers of nonpro&'ction goo&s, s'ch as office an& comp'ter

s'pplies an& other nonpro&'ction pro&'cts an& ser.ices that help to r'n &ayto&ay

b'siness operations)

The Internet facilitates global channels.nalogo's to global c'stomers, there

may be channels of &istrib'tion that b'y on a global or at least a regional basis) -heir

presence makes it more necessary for a b'siness to rationalise its worl&wi&e pricing,

other terms of tra&e, an& e.en its pro&'ct offerings) -he Web has accelerate& the growth

of regional an& global channels of &istrib'tion, allowing tra&itional bricksan&mortar

channel firms to more easily complete their networks) n&, of co'rse, clicksan&

limite&mortarF firms like ma%on)com +'mp straight into e(istence as global channels,


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altho'gh the real ma%on &istrib'tion system was ma%on !ngram 3the >nite& tatesA

largest book wholesaler, base& in eattle, since &isplace& by ma%onAs own wareho'se

operations5 >nite& Parcel er.ice in the >nite& tates an& .ario's other package

&eli.erers elsewhere)

-hir&ly, the rise of net interme&iaries 3p're clickan&mo'seF firms with no

physical assets5 s'ch as 'tobytel)com an& Carb'sters)com creates a new &imension

to longtime .en&or&istrib'tor relationships) !n the a'tomobile sector, carmakers

ha.e tra&itionally foc'sse& on mostly s'bnational, an& occasionally national, area

agreements) -he new !nternet channels bypass these relationships to seek o't the best

&eals either on a national basis 3as 'tobytel &oes in the >nite& tates5 or on a pan

E'ropean basis as &oes the Carb'sters)com partnership with Which? 3:ritainAs

cons'mer association5) -he imme&iate effect is that carmakers are rethinking their

E'ropean pricing, ha.ing a &egree of price con.ergence force& 'pon them)

The Internet makes global marketing more possible. *'ltinational companies

now try to 'se as m'ch as possible global rather than national marketing) -he !nternet

has two effects on global marketing;enabling an& &eman&ing)

!n terms of enabling global marketing, !nternet/Web base& marketing has

inherent global reach) econ&, 'sers share a common style of interaction;they ha.e

been con&itione& to interact with electronic comm'nications in a certain way;

browsing, searching, an& impatient) -hir&, most 'sers, by selfselection, ha.e a

working knowle&ge of English, itself the far &ominant lang'age of the !nternet, e.en

tho'gh more than half of the 290 million !nternet 'sers speak lang'ages other than

English 3B'shner 20005)2

!n terms of demandingglobal marketing, the !nternet an& the Web man&ate

that .en&ors 'se globally stan&ar& bran& names) simple e(ample s'ffices to


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ill'strate this new comman&ment) !n an earlier era, ma%on)com wo'l& probably ha.e

been ma%on)com in :ra%il only, b't *ississippi)com in the >nite& tates,

-hames)com in the >nite& Bing&om, ?hine)com in Germany, an& Yangst%e)com in

China) !n the !nternet era, the fo'n&er of ma%on)com chose the worldslargest ri.er

as his companyAs global bran& name) imilarly, other elements of the marketing mi(,

partic'larly price, nee& to be more 'niform than in the preNet era)

The Internet highlights lead countries.Global competitors nee& to participate

in co'ntries that are in&'stry lea&ers of inno.ation, fashion or prestige) -he !nternet has

two effects) 4irst, it makes it easier for c'stomers to i&entify lea& co'ntries an& to

monitor their offerings) -he Web lets e.eryone .isit Paris or -okyo or Dos ngeles)

Cons'mers can rapi&ly i&entify the tren&s an& fashions in lea& co'ntries an& will

become increasingly &issatisfie& with inferior &omestic offerings) -he fall of the

:erlin Wall c't &eman& for East German cars, s'ch as the -rabant, from a tenyear

backlog to %ero) -he Web brings &own :erlin Walls all o.er the worl&)

$ost "lobalization #rivers

e.eral cost &ri.ers ha.e sp'rre& globali%ation o.er the last two &eca&es) -he !nternet is

reinforcing each of these &ri.ers by transforming the economics of almost e.ery

b'siness)

The Internet drives down global economies of scale and scope. Global scale

economies or scope economies apply when singleco'ntry markets are not large eno'gh

to allow competitors to achie.e optim'm scale in a .al'ea&&ing acti.ity, whether

pro&'ction, research, marketing an& so on) -he Webin&'ce& transformation of

b'sinesses generally re&'ces minim'm efficient scales) 4irst, many physical acti.ities

are being replace& by webbase& .irt'al acti.ities) -herefore, many scale an& in.estment


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barriers to global sprea& are bypasse&) 4or e(ample, many alrea&y globali%e& companies

are r'nning &own their international &istrib'tion systems, while newly internationalising

companies nee& spen& m'ch less on international &istrib'tion) econ&, .al'e chains an&

b'siness systems are being broken 'p or &econstr'cte&F 3E.ans an& WIrster 18885)@

!ne.itably, this means a consoli&ation of players an& market share at the &econstr'cte&

stages an& therefore a larger scale) $n the one han& this means that there is less press're

on the new entities to globalise) :'t on the other han&, these new entities ha.e a clearly

foc'sse& b'siness mo&el an& competiti.e a&.antage that is easily transferable an&

le.erageable internationally)

-his re&'ction in economies of scale an& transaction costs will partic'larly help

smaller firms from emerging markets) 4or e(ample, small firms in sia will be able to

combine to achie.e global reach, re&'cing the c'stomer pro(imity a&.antage of firms in

&e.elope& economies)

The Internet enhances global sourcing efficiencies. -he market for s'pplies

may allow centralise& p'rchasing to achie.e sa.ings in the cost of pro&'ction inp'ts)

primary Web phenomenon has been the creation of Webbase& p'rchasing systems that

are global) :efore the Net, globally centralise& p'rchasing re'ire& comple(, paper an&

phonebase& coor&ination of the nee&s of geographically &isperse& s'bsi&iaries an&

s'ppliers) With the Net, s'bsi&iary re'irements can be manage& in a more efficient an&

&emocratic process thro'gh !ntranets) n& relationships with .en&ors can be manage&

on a global basis on E(tranets) 4or e(ample, the :ig -hree >)) a'tomakers create& the

'tomoti.e E(change Network 3NJ5 to s'pport a'tomate& interactions with their

parts s'ppliers) NJ &efines a set of technology an& ser.ice'ality stan&ar&s for

e(changing critical transaction an& planning &oc'ments o.er the Web 34rook 18895)#

E'ropean an& Kapanese a'tomobile companies are &e.eloping similar systems) !n


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electronics, *ats'shita is b'il&ing !nternet links among its 100 factories in Kapan, an&

@,000 of its L,000 s'ppliers)

The Internet speeds up global logistics. fa.o'rable ratio of sales .al'e to

transportation cost enhances the ability to concentrate pro&'ction into globalscale 'nits)

-he Web facilitates the operation of global pro&'ction an& s'pply networks) :oeing

Company create& the :oeing partners network to connect with its #0,000 tra&ing

partners aro'n& the worl&) 4or e(ample, #< separate reg'latory agencies in the >nite&

tates, Cana&a, Kapan, ?'ssia, an& se.eral E'ropean nations, 'se the :oeing !ntranet to

collaborate on its space station pro+ect) -hese networks can also be s'pporte& by thir&

party ser.ices, s'ch as !nformation ?eso'rces ssociatesA E(tranet 'pport Centre)

The Internet exploits differences in country costs."ifferences in co'ntry costs

an& skills can pro.i&e a strong sp'r to globali%ation) -he !nternet &oes not change

relati.e co'ntry costs an& skills b't it enables many acti.ities to be shifte& to lower cost

co'ntries) 4irst, the !nternet can 'se& as a means of efficient comm'nication an& co

or&ination to make possible the offshoringF of acti.ities that wo'l& otherwise be too

comple( to manage) 4or e(ample, some cons'lting firms ha.e shifte& their &oc'ment

pro&'ction work to !n&ia, comm'nicating .ia the Net an& taking a&.antage of time %one

&ifferences as well as lower costs) While >)) an& E'ropebase& cons'ltants sleep,

when they &o sleep, their &oc'ments an& presentations are being pro&'ce& for them)

econ&, the &econstr'ction of acti.ities creates specialise& Webbase& f'nctions s'ch as

c'stomer ser.ice 3partic'larly for informationrich ser.ices5 that can easily be shifte& to

lower cost locales) -he information &atabase can remain in the home or other key

co'ntry while being accesse& by !nternet from lower cost an& perhaps less sec're

co'ntries)


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The Internet reduces product development costs. igh pro&'ct &e.elopment

costs relati.e to the si%e of national markets act as a &ri.er to globali%ation;companies

nee& a global sales base to amortise the &e.elopment costs) -he !nternet has se.eral

effects) 4irst, it can re&'ce &e.elopment costs in a n'mber of ways) ome aspects of the

pro&'ct, partic'larly s'pplementary ones s'ch as ser.ice, can be shifte& o't of the

physical pro&'ct onto the Web) -his allows the &e.elopment of a simpler, global, core

pro&'ct with lower &e.elopment 3an& pro&'ction5 costs) !n some cases, the c'stomer can

&o the final c'stomisation online) :oth Nike an& !"watch from !&town 3a ong Bong

firm5 allow c'stomers to &esign an& or&er their own c'stomise& pro&'cts) nother cost

re&'ction arises when companies 'se !ntranets to manage globally &isperse& pro&'ct

&e.elopment teams, thereby also enhancing effecti.eness)

"overnment "lobalization #rivers %&arriers'

Go.ernment globali%ation &ri.ers mostly constrain the ability of m'ltinational

companies to globalise an& operate globally integrate& strategies) -he !nternet weakens

many of these go.ernment barriers to globali%ation)

The Internet side(steps trade policies.ost go.ernments affect globali%ation

potential in a n'mber of ma+or waysM import tariffs an& 'otas, nontariff barriers,

e(port s'bsi&ies, local content re'irements, c'rrency an& capital flow restrictions,

ownership restrictions an& re'irements on technology transfer) Ecommerce hits

these barriers in se.eral ways, partic'larly in the bypassing of import &'ties an& ta(es)

4or ser.ices &eli.ere& o.er the !nternet, most go.ernments fin& it impossible to

monitor or ta( these, 'nless the go.ernment is acti.ely engage& in monitoring an&

censoring !nternet traffic, as is the case with a few a'thoritarian regimes) 4or ser.ices

or&ere& o.er the !nternet b't &eli.ere& physically across bor&ers, go.ernments sho'l&,


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in theory, be able to catch these at the frontier) :'t in practice, most go.ernments miss

significant proportions of the increasing n'mbers of relati.ely low .al'e items)

The Internet spurs global technical standards. "ifferences in technical

stan&ar&s among co'ntries affect the e(tent to which pro&'cts can be globally or

regionally stan&ar&ise&) -he mo.e to p't stan&ar&s on go.ernment websites an& to

allow p'blic access is gra&'ally increasing the transparency of the stan&ar& setting

process, an& sho'l& enco'rage the sprea& of globally compatible stan&ar&s) 4or e(ample,

Kapan is lobbying other G9 nations for 'nifie& global r'les on ecommerce financial

tra&ing.

The Internet confronts diverse marketing regulations. "iffering marketing

reg'lations affect the e(tent to which 'niform global marketing approaches can be 'se&)

Go.ernments lag in their efforts to reg'late marketing on the !nternet) "ifferences in

r'les on !nternet marketing can themsel.es pose a barrier to globali%ation) 4or e(ample,

the E'ropean >nion is applying increasingly strict r'les to pre.ent marketing email

from originating o'tsi&e the E>) o many emarketers are fin&ing that, +'st like ol&

economy pro&'cers, they nee& to set 'p operations insi&e the E>) Germany forbi&s all

'nsolicite& marketing contact of cons'mers, incl'&ing .ia email) 4rance forbi&s e:ay

an& similar !nternet a'ction ser.ices from allowing 4rench 'sers to access websites

o'tsi&e 4rance itself)

The Internet depends on legal systems. :oth o.erly weak an& o.erly strong

legal systems of in&i.i&'al co'ntries pose &eterrents to international b'siness) -he

critical iss'e with the Web re.ol.es aro'n& the protection of free speech) K'ris&ictions

.ary in the protection e(ten&e& to content on websites, partic'larly as regar&s

pornography an& &efamation) With pornography the problem lies with the h'ge

.ariations in interpretation) What may be 'ite innocent in a liberal nation may be


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&eeme& criminal elsewhere) With &efamation, some +'ris&ictions allow portal an& web

operators the &efence that they &o not know what is mo'nte& by content pro.i&ers) $ther

+'ris&ictions &o not allow this &efence) !n response many portal an& web operators are

shifting operations to host co'ntries with more liberal !nternet r'les)

Web operators an& eb'sinesses face the general problem that their inherent

global reach e(poses them to the laws, especially cons'mer protection ones, of all

co'ntries) -he E'ropean >nion poses a special case of this general problem, with

c'rrently conflicting legislati.e proposals 3"ibb D'pton lsop 20005) "irecti.e wo'l& apply the internal market cla'se common in the E>)

-his wo'l& allow an eoperator to a&here only to the laws of its own co'ntry, an& rely on

the E> principle of m't'al recognition) $n the other han&, a propose& :r'ssels

?eg'lationF wo'l& gi.e the co'rts of a cons'merAs co'ntry of habit'al resi&ence

+'ris&iction o.er s'ppliers for goo&s an& ser.ices, th's e(posing eoperators to the

.arying laws of all fifteen E> states) Companies can try to protect themsel.es with

&isclaimers s'ch as this site is not open to contract'al offers by 4rench cons'mers)F :'t

there is a large &egree of legal 'ncertainty as to whether s'ch a &isclaimer wo'l& be

.ali&) &option of the operator co'ntry of +'ris&ictionF r'le wo'l& fa.o'r smaller,

national companies 3who lack the reso'rces to 'n&erstan& an& comply with the laws of

fifteen states5) &option of the cons'mer co'ntry of +'ris&ictionF r'le wo'l& generally

&isco'rage ecommerce b't also fa.o'r larger, m'ltinational companies, who can

inherently cope m'ch more easily with m'ltiplicity)

*ore generally, a n'mber of co'ntries still place restrictions on their citi%ensA

access to the !nternet, both in general an& for types of sites an& content) -he !n&ian

4e&eral go.ernment e.en consi&ere& re'iring all !nternet cafes to recor& the names an&


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a&&resses of c'stomers an& of the sites they .isite&) 4ort'nately, this proposal was

&roppe& b't some !n&ian state go.ernments may still implement s'ch restrictions)

$ompetitive "lobalization #rivers

Globali%ation re'ires companies to be partic'larly sensiti.e to competiti.e actions an&

reactions) -he !nternet heightens this global ri.alry in se.eral ways) 4irst, !nternet timeF

accelerates the nee&e& spee& of mo.es an& co'ntermo.es) econ&, the Web creates a

p'blic for'm for signalling, making it easier for competitors to comm'nicate with each

other legally) -hir&, comparison of competitors becomes m'ch easier for potential

c'stomers, partic'larly in terms of price transparency;the Web allowing for both cross

competitor an& crossbor&er comparisons) 4o'rth, the Web makes it easier for companies

with a gi.en competiti.e a&.antage to transfer an& le.erage that a&.antage globally in

the ways alrea&y &isc'sse& 3by re&'cing the amo'nt of physical in.estments nee&e&5)

4ifth, for e(isting in&'stry lea&ers or inc'mbents, the !nternet era has create& the

phenomenon of born globalF ri.als;.ia the !nternet these companies ha.e global reach

from the &ay they p't 'p a Web site)

)ummary of Internet *ffects on "lobalization #rivers

!n s'mmary, wi&esprea& a&option of the !nternet an& the Web has accelerate& both

general an& in&'stryspecific globali%ation &ri.ers) -he phenomenon has also taken to its

logical e(treme the information an& comm'nications re.ol'tion beg'n by the fa(

machine)


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Internet Effects on Global Strategy

Det 's now look in more &etail at how the !nternet era changes &ifferent aspects of global

strategy 3-able 25)

6-able 2) 'mmary of !nternet Effects on Global trategy7

Internet *ffects on "lobal !arket +articipation

:y s'bstit'ting for or s'pplementing physical acti.ities, the !nternet makes it easier for

companies to participate in foreign markets) -he a&.ent of global strategy meant that

companies starte& to p'll back from smaller or nonstrategic markets in or&er to re&'ce

costs) -he !nternet makes it more economically feasible to once again ser.e these non

core markets) !ronically, the !nternet is allowing companies to ret'rn to the m'ltinational

era when companies so'ght a presence in as many co'ntries as possible) -o&ay,

companies can participate in core co'ntries with physical presence s'pplemente& by

Web acti.ities, while they can participate in noncore co'ntries with a Web presence

s'pplemente& by some physical acti.ities

-he instant global reach of the Net, also means that companies nee& to rethink

their polices on new pro&'ct rollo'ts) !n the preglobal era, international rollo'ts took

years, e.en &eca&es, to reach most markets) !n the global era, the inherent

connecte&ness of markets meant that companies ha& to mo.e m'ch faster, entering all

ma+or an& strategic markets as 'ickly as possible) 4or e(ample, in the 1890s, General

Electric recognise& that they &i& not ha.e the l'('ry of a gra&'al rollo't of their new

programmable controllers pro&'ct line) !nstea& they rapi&ly entere& the key markets

of the >nite& tates, Germany, Kapan, an& the >nite& Bing&om) :y 188


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!n the !nternet era, e.en 2# ho'rs looks slow) !nternet ser.ices ha.e, by their

nat're, .ery strong network effects an& relate& first mo.er a&.antages) 4ail're to

rapi&ly e(ten& into key markets can allow local ri.als to take preempti.e positions)

Perhaps the most &ramatic e(ample of this effect is merica $nlineAs slowness in

international e(pansion) !ts &elay allowe& !Ps 3initial ser.ice pro.i&ers5 in other

co'ntries to b'il& 'p locally &ominant positions) $D now trails 4reeser.e in the >B,

>$D in :ra%il, -$nline in Germany, an& -iscali in !taly) $n the other han&, start'ps,

in partic'lar, nee& to 'n&erstan& the tra&eoffs in.ol.e& in m'ltico'ntry la'nches) $ne

of the reasons for the &ramatic fail're in 2000 of boo)com, the >)B)base& fashion

retailer, was its attempt to la'nch sim'ltaneo'sly in 19 co'ntries, something that some

of the largest eb'siness companies ne.er attempte&) :oo)com sho'l& ha.e realise&

that, as a speciality retailer an& not an !P, preemption an& first mo.er a&.antage

were not nearly as important as &e.eloping a .iable b'siness in at least one co'ntry)

:'t the implication is not +'st a change in spee&) With a website, a company

reaches o.erseas c'stomers from the start, even if it is not ready to serve them.

>nsolicite& foreign or&ers will start coming in) o companies will ha.e to backfill

'ickly to pro.i&e s'pport operations an& ser.ices) $f co'rse, a company can choose

to not ser.e some or all foreign c'stomers an& post s'ch notices prominently on their

websites) :'t that creates negati.e messages on first contact) :y the time the

company is rea&y to ser.e those markets, they may ha.e lost significant goo&will)

E.en those companies who inten& to ser.e markets still ha.e a lot to learn abo't the

&esign of their websites) !t can be as simple as getting their geography right) -he

website for one ma+or Kapanese electronics firm somehow fails to locate the >nite&

Bing&om within E'rope nor offers the >nite& Bing&om as a stan&alone choice


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3antagonising both pro an& anti E'ropean integrationists, as well as fr'strating

potential c'stomers5)

Internet *ffects on "lobal +roducts and )ervices

Global pro&'cts an& ser.ices are sel&om totally stan&ar&ise& worl&wi&e, b't they are

&esigne& with global markets in min&, an& they ha.e as large a common core as

possible) ome in&'stries an& categories, s'ch as personal comp'ters an& air tra.el,

allow the potential for a .ery large common core, while others, s'ch as f'rnit're an&

legal ser.ices, allow for less commonality)

Websites len& themsel.es mar.ello'sly to be both global an& local at the same

time) global portal can offer the 'ser a large n'mber of regionally or nationally

tailore& sites) o as ol& economy companies increase the Webbase& component of

their pro&'cts, they can a.ail themsel.es of this &'ality of the Web) New economy

companies that sell primarily o.er the !nternet ha.e to race to increase the n'mber of

their national websites) s of early 2000, fewer than onethir& of ma+or online

companies ha& localise& websites for their international c'stomers 3B'shner 20005) H

E.en ma%on)com still offers only two non>)) websites, for the >nite& Bing&om

an& Germany) $n the other han&, Elle, the lea&ing womenAs fashion maga%ine, has

twel.e national websites co.ering fi.e continents) Companies also nee& to think abo't

global commonality an& recognisability across their .ario's national sites)

ma%on)com &oes a minimal +ob, with common bl'e hori%ontal bars 34ig're #5) *-

&oes not e.en try) -heir >)) an& >)B) sites c'rrently ha.e no elements in common

34ig're


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co'ntry webhopping easier or more &iffic'lt;easier if 'sers can transfer to other

co'ntriesA sites witho't re.erting back to the global home page)

64ig're #) ma%onAs >)) an& >)B) ome Pages7

64ig're )) an& >)B) ome Pages7

64ig're H) YahooAs >)) an& 4rance ome Pages7

-he ability to in&i.i&'ally c'stomise the website for reg'lar 'sers raises

interesting iss'es of global pro&'ct an& ser.ice &esign) -he .en&or can totally .ary

the national mi(es offere& to the in&i.i&'al c'stomer, an& the latter is free& from the

tyranny of location) 4or e(ample, an merican c'stomer nee& no longer be offere&

+'st merican styles an& si%es by a clothing company, b't whate.er national

preferences he or she has e(presse& by clicking an& p'rchasing beha.io'r, or by

preferences state&) t the same time, companies ha.e to consi&er s'pply chain iss'es

of offering e.eryone, e.erything, anywhere) Citibank, as yet the only retail bank with

significant global presence p'rs'es a strategy of letting its c'stomers &o b'siness with

the bank any way, any time, any whereF)

Dastly, where the ser.ice is &eli.ere& o.er the Net, companies may

increasingly seek to &esign globally stan&ar& offerings that ha.e ma(im'm global

appeal) Perhaps the 'ltimate e(ample is the la'nch in 18 pril 2000 of the worl&As

first .irt'al broa&caster, nano.a 34ig're L5) -his pro&'ct of the :ritish national news

agency, the Press ssociation, was &esigne& as a sim'late& female cybercasterF with

broa& global appeal 3with a mi&tlantic accent an& .ag'e ethnic origin5, o't

globalling the real life newscaster, Christiane manpo'r of CNN fame) :'t nano.a

an& manpo'r make an interesting contrast) -he former is global by .irt'e of being

from nowhere, while the latter is global in combining three .ery specific b't


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contrasting originsM !ranian, :ritish, an& merican) Companies, too, can choose to

position their pro&'cts as global from nowhereF or global from somewhere)F

64ig're L) nano.a;CybercasterF7

Internet *ffects on "lobal ,ctivity -ocation

-he !nternet helps to sol.e the longtime &ilemma facing m'ltinational companies;

how m'ch of their .al'e chain to recreate o.erseas !n earlier eras of poor

transportation an& comm'nications, the sol'tion generally re'ire& the foreign

location of a lot of e(pensi.e assets an& acti.ities) !n the global era, beginning in the

1890s, many companies fo'n& that they co'l& re&'ce &'plication by operating

physical networks with specialise& no&es) s an electronicnetwork, the Web, thro'gh

both !ntranets an& E(tranets, completes this process of &e&'plication) mart

companies are shifting the b'r&en of proof in two ways) 4irst, they ask what acti.ities

ha.e to be con&'cte& physically rather than on the Web) econ&, they ask what

acti.ities ha.e to be physically &'plicate& in more than one co'ntry 3the one co'ntry

not necessarily being the home co'ntry either5)

*any &ownstream an& s'pport acti.ities len& themsel.es well to Webbase&

replacement for local physical presence) Globali%ing ?O" operations has been a key

ob+ecti.e of global companies) :'t centralisation at one location has been the

tra&itional strategy to achie.e the nee&e& scale in ?O") -he Web now enables .irt'al

?O" teams that concentrate an& pool e(pertise an& reso'rces from separate locations,

so that companies can both tap into local e(pertise an& achie.e global scale) -he Web

can also be 'se& to coor&inate globally &isperse& pro&'ction acti.ities) !ts !ntranet,

ocrates, helps General *otors coor&inate its 100,000 workers sprea& across 12se of Globaltrategy

&irect effects

fee&back effects


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&igure (. )se of Internet in *ey Economies

!nternet 'sers as = of pop'lation, 2000

o'rceM N'a !nternet 'r.eysR 1he 4conomist estimates

0 10 20 30 40 50

)nited States

S'eden

Canada

Singa!ore

$ustralia

+ritain

South *orea

,ong *ong

Germany

Tai'an

-a!an

Italy

&rance

S!ain

.ussia

+razil

Me/ico

$rgentina

China

India


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&igure 0. $mazons ).S. and ).*. ,ome #ages


32/37

&igure 2. MT3s ).S. and ).*. ,ome #ages


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&igure 4. 5ahoos ).S. and &rance ,ome #ages


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&igure 6. $nanova 7 8Cybercaster8

o'rceM www)anano.a)com
http://www.ananova.com/http://www.ananova.com/


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9:TES


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1ee George S. Yip "Global Strategy ...In a World of Nations?" Sloan ManagementReview, Vol. 31, No. 1, Fall 199, pp. !9#1$ and George S. Yip, Total GlobalStrategy: Managing for Worldwide Competitive Advantage, %ngle&ood 'li(s, N.).*+rentie -all, 199!.

!ased on international polls and ens/s infor0ation, Global ea2, a te2nology

resear2 r0 in San Franiso, esti0ates t2at 1! 0illion of t2e nearly !4 0illionpeople &2o /se t2e Internet spea5 lang/ages ot2er t2an %nglis2. 67a8id /s2ner,New York Times Servie, reported in :;n %letroni

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01 Global Strategy