or companies for incumbents to watch,
in about 22 countries. All these compa-
nies—such as the Russian steel producer
SeverStal, Chilean shipping leader CSAV,
Chinese telecom networking manufacturer
ZTE, and Indian outsourcer Infosys—have
found success by challenging traditional
business models.
GRACE: What are some of the key
struggles challengers and incumbents
face as they go into this global competi-
tive environment?
SIRKIN: Perhaps the most important
struggle is minding the cost gap. You
cannot let costs get too far out of line. If
you’re producing in high-cost countries,
you must find a way to capitalize on low-
cost countries as either supply or manu-
facturing sources. Incumbents must be
able to think big and act fast. They have
to recognize that they’re not alone in the
world, that they’re facing competition from
everywhere, and that they have to take
bold steps to be able to compete. Execu-
tives will have to embrace “manyness”—
thinking about their company as having
not a single center but multiple centers,
so that they can be entrepreneurial
around the world. These struggles are
very difficult for both the incumbents and
the challengers. The ones that do the best
are the ones that will succeed.
GRACE: How can companies in the de-
veloped world compete successfully with
these emerging giants?
SIRKIN: The first step is to recognize
what is taking place: a threat is looming,
and you should take action now. Second,
understand where your future competi-
tors will come from. Third, make sure you
have the right talent in the right place.
Fourth, recognize and segment the op-
portunities. Go after the areas in which
you’re advantaged and where there is the
biggest profit. Finally, CEOs, CFOs, and
COOs must be leaders and push their
organizations forward. This means getting
on airplanes and traveling around the
world, so the biggest downside may be
massive jet lag. But incumbent companies
will be able to survive these challenges—if
they’re prepared.
markets, ZTE’s success has been based on cost leadership
and the breadth of its product line. In developed countries
and more-mature markets, ZTE remains competitive by
delivering differentiated products and services for multinational operators. The result has been a steady increase in
the percentage (currently 45 percent) of sales outside ZTE’s
home market of China.
BUILDING THE BRAND
Although ZTE does not rule out the future acquisition of
partners or competitors, acquisition is not a key focus of
ZTE’s globalization process. Instead, the company is still
focusing on building its own brand based on customer
service and focusing on tailoring its solutions to specific
market and customer needs.
“Branding is part of our core strategy and very important;
we’ve registered the ZTE brand in dozens of countries worldwide,” says Zaisheng. “We will be a world-class company with
an internationally renowned and recognized brand. Having
accomplished that, we hope to become the industry’s leading
provider of total solutions to the market.”
Growing a global giant such as ZTE takes more than
just creating the right products and services—it also means
creating a corporate culture that supports and enables an
effective and efficient decision-making process that balances
local needs and opportunities against more-global corporate
requirements and abilities.
To do that, ZTE has created a centralized decision-making
process, along with appropriate delegation of authority for
local decisions. Major projects and contract authorizations are
all decided upon by the senior headquarters team. Decisions
are typically based on project scale, profitability, and risk
assessment. Small or regionally focused decisions are delegated to one of ZTE’s 12 overseas regions and are to be made
in accordance with corporate policies. The headquarters management team provides leadership and oversight, but for ZTE,
collective wisdom gained from delegating decisions regionally
plays an important role in striking a balance between centralization and democratic process.
For ZTE, the result has been a highly focused and highly
effective globalization strategy that’s taken the company from
selling only within China 10 years ago to competing globally with companies such as Nokia and Ericsson. Today ZTE
is focused on delivering innovative custom-developed and
manufactured products and services to the world’s major
telecom operators, helping them achieve revenue growth with
increased efficiency. <>
DAVID A. KELLY is a freelance writer based in Newton, Massachusetts.
>> FOR MORE INFORMATION
Oracle E-Business Suite
oracle.com/applications/e-business-suite.html
