The huge wave of globalization that took place over the last two decades has come to an end. The big winners are those companies that have established a significant international footprint—especially in emerging markets—pulling ahead of companies with a regional or domestic focus. Over the last decade, Volkswagen, the German automaker, has increased its annual revenues by an average of 10.5 percent, whereas Peugeot, its French rival, has seen revenues grow by an average of only 2.5 percent. Likewise, Procter & Gamble, the U.S. consumer giant, has enjoyed average annual growth rates of 7.6 percent, twice the 3.1 percent average achieved by Clorox, one of its regionally focused U.S. competitors. And, in the oil-field services industry, two rivals have taken divergent paths, with the more global Schlumberger recording an average annual growth rate of 16 percent, compared with 8.6 percent for Halliburton.
To succeed in today’s more complex phase of globalization, CEOs must ask themselves not if their companies should go global but how they can do so in a way that works for the long term.