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Whether you agree with globality or disagree, don't ignore it

(chinadaily.com.cn)
Updated: 2008-09-04 18:24

In the age of globality, these challengers will compete with every other company for everything.

"And by everything, we mean just that -- all the world's resources. Everybody will be trying to grab the same things that everybody else wants, especially the most precious and limited ones: raw materials, capital, knowledge, capabilities, and most important, people: leaders, managers, workers, partners, collaborators, suppliers. And, of course, customers."

For example, Tata Group of India, which was historically well known within the country but little known to outsiders. It burst upon the global scene when its steel subsidiary, Tata Steel, acquired the Anglo-Dutch Corus Steel for $13.1 billion in 2007. It was the largest international acquisition by an Indian company at that time.

Since then, Ratan Tata, the conglomerate's Cornell-educated chairman, has led the Tata Group to launch the Nano -- a car that costs $2,500 -- and also to acquire the Jaguar and Land Rover brands from a beleaguered Ford Motor Company.

"Today, Tata Group has market capitalization in excess of $50 billion, and more than 50 percent of its $50 billion in annual sales comes from outside India."

Another example from India is that of Aravind Eye Care, the world's largest provider of cataract surgery.

Founded in 1976 by Dr Venkataswamy -- popularly known as Dr V -- the company performs 250,000 surgeries and treats 1.5 million outpatients a year.

According to the authors, Aravind Eye Care treats 60 percent of its patients for free and still makes a profit.

The reason it can do this is that Dr V has "transformed the cataract-surgery model to suit market conditions in the rapidly developing economies," the authors say.

"Expensive medical equipment is scheduled for around-the-clock use to drive down the cost per surgical procedure. Doctors and staff are extraordinarily efficient and productive, carrying out more than 4,000 cataract surgeries a year, in comparison to an average of 400 performed by other surgeons in India."

Sirkin and his co-authors point out that "altogether, Dr V's ingenious adaptations of business processes and his reverse engineering of materials have positioned his company to provide cataract surgery operations at one-fifth of what patients typically pay in the US."

Yet another fascinating challenger is Goodbaby, which has become the biggest maker and seller of baby strollers in China.

Founded by Song Zhenghuan, a former schoolteacher, the company makes some 700 innovative products each year -- or one every 12 hours. The company has been awarded more than 2,300 patents since 1990.

The company's innovations include strollers that can be converted into car seats. "The group held an 80 percent share of the Chinese market from 1996 to 2006, and has had the top spot in the US for five years running -- 2001 through 2006."

Ties that Bind

What binds together companies like Embraer, Aravind Eye Care and Goodbaby?

According to Sirkin and his co-authors, it is a strand with three threads.

The first is their country origins. Brazil, China and India historically have not been -- and are still not -- easy places to do business. A company that wants to survive, much less thrive, in those markets must overcome a constant series of obstacles.

One of the biggest is having to deal with millions of demanding customers, most of whom don't have much money. Having come from such a business climate leads these companies to develop a kind of hardiness.

It makes doing business relatively easy when they enter more business friendly and well developed markets.

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