To achieve higher company revenues, multinational executives recognize the importance of product localization efforts. Sixty-five percent of over 300 surveyed multinational executives believe that localizing products is “very important” in driving market growth. However, in a clear illustration of mismatched strategy and execution, the large majority of executives are not fundamentally altering their products when looking for market expansion.
From a multinational executive perspective, it is important to remember that local competitors are able to differentiate themselves and achieve success mainly because of two key factors:
1. Ability to customize products to local needs
2. Experience in devising innovative business models that overcome local challenges
These two factors are a testament to the priority that needs to be placed on product localization strategies. In order to compete with local competitors on their home turf, multinationals need to think about developing products to meet local needs and overcome local challenges. However, the global scale of multinationals that is often an advantage can work against multinational initiatives in combating local competitors. The image of a gigantic slow-moving ship readily comes to mind, as a huge global organization is much less adept at reacting to fast-moving local market dynamics compared with a locally-based company. Nonetheless, FSG has identified eight increasingly aggressive strategies that leading multinationals that have implemented to improve local agility and autonomy, thereby capturing additional local market opportunity.
A winning combination: transparency and extra capacity
Company Alpha International realized that becoming more agile to market conditions was absolutely critical for their emerging market strategy. However, they recognized that they still need to balance the local autonomy required for improving agility with centralized resources and support. So what they did was they created a Project Management Office that allows for simultaneous visibility from all levels and departments within the organization, creating more efficient usage of internal resources as well as incorporation of local insights.
The project management office has two key components. The first is the actual organizational component which consists of a team of FTEs, and the second component is the software component. This Project Management Software is opened to all departments and levels of the organization, allowing for a local sales manager to share information with a corporate finance manager or the international president. This fluid sharing of information has allowed Company Alpha to manage against situations of local teams running duplicative efforts across markets or deprioritizing important strategic objectives.