UNDERSTANDING GLOBALITY
THE BCG’S HAL SIRKIN ON COMPETING AS A TRULY GLOBAL COMPANY
“A revolution in global business is under
way.” So starts Hal Sirkin’s new book,
Globality: Competing with Everyone from
Everywhere for Everything (Business Plus,
spring 2008). Sirkin, senior partner and
managing director at the Boston Consult-
ing Group, examines how emerging com-
panies from rapidly developing economies
are using their particular advantages to
challenge the leading developed-world
companies. He identifies 100 emerging-
market companies to watch, advises
how companies in the developed world
can maintain their competitive edge, and
details the struggles all companies face
in this new business climate. Folia Grace,
Oracle vice president of ERP (enterprise
resource planning) applications marketing,
spoke to Sirkin about the emerging era in
international business competition.
GRACE: What critical global trends are
you seeing now?
SIRKIN: The world is changing in a way
we’ve never seen. There is a wave of new
competition coming from countries with
large populations, such as China, India,
Brazil, and Russia. These countries—
and other countries in eastern Europe,
Latin America, and Asia—are home to
hundreds of thousands of emerging
companies that have very strong cost
advantages, such as operating and labor
costs that are about a quarter of those
in the developed world, a large number
of engineers, and a population hungry to
succeed. Also, there is unprecedented
access to resources such as R&D; intel-
lectual property; and the internet, which
enables companies to find each other
and communicate inexpensively. Because
of this, we’re beginning to see a wave
of new challengers to the “incumbents,”
the established leading companies in the
developed world.
GRACE: How did you come up with the
unique title of Globality?
SIRKIN: Most people talk about this
trend as globalization, and we think
globalization is something that’s already
happened. We picked the word global-
ity because it describes what we think is
going to happen. Globality is about being
able to compete not as a company from
the United States or France or China
but as a truly global company, one with
positions in both the developed and the
developing world—in terms of customers,
manufacturing, production, and R&D—
and one with access to all the resources
of the world, rather than a narrow slice
of geography.
GRACE: Tell us something about the
Boston Consulting Group’s list of emerg-
ing market leaders from rapidly devel-
oping economies—the “BCG 100 new
global challengers,” which you identify in
your book.
SIRKIN: Each year we identify what
we think are the top 100 challengers,
class enterprise in the near future. It’s no small objective, but
it’s one that ZTE seems well on the road
to achieving.
“Our goal is to become the market
leader in emerging markets; a credible
challenger in developed markets; and,
eventually, the telecom industry’s leading
global supplier of total solutions, including hardware, software, and services,” says
Zaisheng. So far, ZTE has been successful,
with more than 40,000 employees and
2007 revenues of US$3.14 billion.
As a result, ZTE is China’s largest wireless equipment provider and a leading
global provider of telecommunications
equipment and network solutions. It
was also one of the first Chinese telecom
equipment providers to pursue business
in overseas markets. It now has established partnerships with more than 500
operators around the world.
Underpinning this emerging global
success is ZTE’s reliance on application
infrastructure built on Oracle E-Business
Suite and other software, including
internally developed systems such as
ECC Contract Management System
and Supply Chain and Logistics Management System, in
addition to Oracle E-Business Suite
Financials. These systems are enabling
ZTE to continue its global expansion
while maintaining effective and efficient
management on both a local and world-
wide basis.
A key component of its growth strat-
egy has been to continue to invest heavily
in R&D, even at a time when many other
telecommunications equipment provid-
ers are cutting back. For example, ZTE
has set up 15 R&D institutes in countries
around the world and has taken a leader-
ship role in the development of interna-
tional standards, including ones such as
3G. In addition, ZTE segments its R&D
spending into both market-driven R&D,
such as its work with Sprint in the area
of WiMAX technologies, and customized
R&D, such as its work with Vodafone to
help the company realize additional value
through customized low-end cell phones.
Another component of ZTE’s globalization success has been its ability
to tailor its solutions for different customer and country needs. In emerging
>>SNAPSHOTS
SeverStal North America
www.severstalna.com
Location: Dearborn, Michigan
Employees: More than 100,000
(SeverStal)
Revenue: US$12.5 billion
(SeverStal)
Oracle products and services:
Oracle Database; Oracle E-Business
Suite, including Oracle iSupplier
Portal, Oracle iProcurement, and
Oracle Sourcing
Other products and services:
Consulting services from Perot
Systems and BearingPoint
ZTE
www.zte.com.cn
Location: Shenzhen, China
Employees: More than 40,000
Revenue: US$3.14 billion
Oracle products and services:
Oracle Database, Oracle E-Business
Suite 11i Financials
