The Global Company

Some companies have understood what globalization can mean to their business. Philips is a well respected brand in India. They have gone through the 3 phases of globalization:
1. Representative office to sell western products
2. Local factories to manufacture cheaply
3. A true global delivery system, that leverages the local resources and creates products that meet the market needs of many, not just the happy few.

They have leveraged their world famous design capabilities to come up with products that improve the lives of the poor: a wood burning oven that makes cooking safe, their SMILE Sustainable Model In Lighting Everywhere lighting initiative for people with limited electricity and very low cost water purifiers. This is not just an exercise in philanthropy; it is a healthy $4Bn business. Philips runs factories, a large R&D lab in India as well as their global finance and accounting back-office. Many Indians think that Philips is actually an Indian company. Of course moving their HQ from Eindhoven to Amsterdam was a big move, but the company should make the next big move and become truly global, maybe have their other HQ in Beijing or Delhi. Running a global business is not just for the big guys.

Take for instance the Dutch Hospital Group, Maasstad Ziekenhuis. They couldn’t find the accountants to manage their financial administration and turned to our company to help them out. They have saved 30% of their administration cost. They now ramp up and down their administration staff as the needs arise. At the end of the month when the books have to be closed the team can work in shifts around the clock. It will not take a big leap for them to collaborate with an Indian hospital group to have records maintained and X-rays examined or get second opinions on treatments by doctors in India overnight. An Indian doctor may even perform remote surgery. Or if that is too farfetched, the patient can travel to Asia to have the treatment delivered in one of the world class hospitals. My son was born at Bumrungrad hospital in Bangkok. He was the only blond baby in a room of 40 dark skinned babies. The doctor who delivered him was educated in Germany. My wife had a huge private room with a seating area and a kitchenette, as well as 24 hour private nurse. This was in 1991 and we were about the first westerners there. Last year this hospital treated 400,000 patients from 150 countries, fully covered by their insurance!

The other day I talked to the CEO of Princess, Aad Ouburg, a medium sized kitchen appliances company. He told me the company has headquarters both in Amsterdam and Shanghai. The products are designed and marketed from Holland, but manufactured in China. The company could have never grown without this dual citizenship.

The advantages of global sourcing are obvious:
- Cost advantages: Executing the work overseas should give you cost savings of over 30+% compared to local alternatives.
- Flexibility: With markets becoming more dynamic and events like mergers and acquisitions leading to sudden spikes in resource needs, working with and offshore partner can help you with rapid ramping up and down of project teams. A change in demand (for instance when a recession looms) allows you to quickly scale down without incurring the cost.
- Response time improvements: Working in shifts across the globe can collapse the time to complete an urgent project by as much as 30%.
- Skill availability: In many of the professions, like accounting, sciences, ITC or healthcare, the required talent may not be available in the local market.

And now increasingly innovation capabilities: most Hi tech companies have R&D labs in India and China. With China investing $600Bn to boost its economy, there will be new opportunities in this market. The Economist: "When Deng Xiaoping set China on the road of economic reforms in 1978, Western economists argued that 'Only capitalism can save China.' Exactly 30 years later, some pundits are claiming that 'Only China can save capitalism.'"