Why Are Some Multinationals Doing Better Than Others?

By Joyce Chan.

In a forum in the popular business website LinkedIn, a question was posed: “Which multinational companies have been most successful at globalizing customer relationship management/marketing and why?” Numerous LinkedIn members provided answers including companies IBM, Citi, Amazon, Toyota, PepsiCo, and Disney. So why are these multinational companies having better global results than others? It can be boiled down to one aspect – understanding the culture and market overseas.

Localizing management and Understanding Local Markets

Companies need to ensure that management is localized with better understanding of the culture, customers and employees of local overseas operations. Of course global outlook is important for these multinational companies, but local knowledge is also crucial in succeeding overseas. Not only can local managers be better informed about the local culture, they are also better at assessing competitors, recruiting local talent, and identifying potential business partners.

In an interview conducted by the Economist Intelligent Unit, 54% of senior executive respondents expect management to be more international in composition in the next decade. The CEO of Manpower, a US based employment agency currently operating in 82 different countries around the world says “I believe that you can’t achieve a breakthrough without harnessing the power of localness.”

As management is becoming more localized, it is easier for managers to recruit local talent that is crucial in driving the company’s success. At Enterprise Rent-A-Car, the largest American car rental company, recruitment is taken very seriously; “If we’re not getting the right people coming in the front door” Donna Miller, HR director of Europe says, “we’re not going to be able to grow and sustain our operations.”

This is the reason why recruiters from Enterprise are distributed across all of their markets in North America and Europe to make sure they recruit the best talent in the local market.

Although the key to success as multinational companies is to understand the local market – usually by having local management, it is important for companies to realize the recent need for greater centralized control; towards companies especially in the retail and travel industries, consumer expectations of global consistency is becoming increasingly important.Tony Voller, Senior Vice President of Intercontinental Hotel Group, a global hotel company based in the UK has a similar opinion regarding centralized control to ensure consistency: “Customers are becoming much more savvy and demanding about what they require. The challenge for every business is to make sure there is a high degree of consistency.”

 

 
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