hub strategy - Blog - Global Risk Community2024-03-29T13:33:35Zhttps://globalriskcommunity.com/profiles/blogs/feed/tag/hub+strategy3 Pillars of Business Globalizationhttps://globalriskcommunity.com/profiles/blogs/business-globalization-3-pillars2021-12-17T15:51:33.000Z2021-12-17T15:51:33.000ZMark Bridgeshttps://globalriskcommunity.com/members/MarkBridges<div><p style="margin:0px 0px 1.2em;padding:0px;border:0px;font-size:15px;line-height:21px;font-family:Georgia, serif;vertical-align:baseline;background-position:0px 0px;color:#333333;"><a href="{{#staticFileLink}}9920145277,original{{/staticFileLink}}"><img class="align-right" src="{{#staticFileLink}}9920145277,RESIZE_400x{{/staticFileLink}}" alt="9920145277?profile=RESIZE_400x" width="322" height="215" /></a>Early 2000s saw a change of mind regarding the <strong><a style="margin:0px;padding:0px;border:0px;vertical-align:baseline;background:0px 0px;color:#001a66;" href="https://flevy.com/business-toolkit/globalization">Globalization</a> </strong>of commerce by members of the political and economic arenas. This change of mind was instigated by myths perpetuated against commerce Globalization because of the dichotomy that appeared between existing Operating Models of companies and needs of the emerging markets.</p><p style="margin:0px 0px 1.2em;padding:0px;border:0px;font-size:15px;line-height:21px;font-family:Georgia, serif;vertical-align:baseline;background-position:0px 0px;color:#333333;">These perceived trade-offs that were myths included ideas like choosing between centrally-controlled<strong> <a style="margin:0px;padding:0px;border:0px;vertical-align:baseline;background:0px 0px;color:#001a66;" href="https://flevy.com/business-toolkit/target-operating-model">Operating Model</a></strong> and local responsiveness model.</p><p style="margin:0px 0px 1.2em;padding:0px;border:0px;font-size:15px;line-height:21px;font-family:Georgia, serif;vertical-align:baseline;background-position:0px 0px;color:#333333;">Proponents of the central model had the view that intellectual power and Innovation<strong> </strong>capability had to be centralized, all products and services brought in line everywhere, foregoing catering to diverse needs and demands of customers in every emerging market.</p><p style="margin:0px 0px 1.2em;padding:0px;border:0px;font-size:15px;line-height:21px;font-family:Georgia, serif;vertical-align:baseline;background-position:0px 0px;color:#333333;">The converse view was that in order to have locally applicable distribution systems, proactive Supply Chains, and reduced costs of emerging-market management, it was necessary to devolve the company and operation as a loose federation.</p><p style="margin:0px 0px 1.2em;padding:0px;border:0px;font-size:15px;line-height:21px;font-family:Georgia, serif;vertical-align:baseline;background-position:0px 0px;color:#333333;">This trade-off incompatibility was addressed by the Hub Strategy where, in place of a single center, companies set up principal office “hubs” in as many of the 20 gateway countries of the world as required—a global corporate structure with no headquarters.</p><p style="margin:0px 0px 1.2em;padding:0px;border:0px;font-size:15px;line-height:21px;font-family:Georgia, serif;vertical-align:baseline;background-position:0px 0px;color:#333333;">These 20 gateway countries represent 70% of the world population and generate 80% of the world income. The gateway countries include Australia, Canada, France, Germany, Italy, Japan, the Netherlands, Spain, the United Kingdom, and the United States from the developed economies. Rest of the 10 are emerging markets of Brazil, China, India, Indonesia, Mexico, Russia, South Africa, South Korea, Thailand, and Turkey.</p><p style="margin:0px 0px 1.2em;padding:0px;border:0px;font-size:15px;line-height:21px;font-family:Georgia, serif;vertical-align:baseline;background-position:0px 0px;color:#333333;">This new <strong><a style="margin:0px;padding:0px;border:0px;vertical-align:baseline;background:0px 0px;color:#001a66;" href="https://flevy.com/business-toolkit/business-model-design-bmodel">Business Model</a> </strong>covers both the recognized advantages of developed markets and the possibilities of emerging economies. A model that handles decentralization, centralization, existing practices, and possible disruptions not as trade-offs, but as complements.</p><p style="margin:0px 0px 1.2em;padding:0px;border:0px;font-size:15px;line-height:21px;font-family:Georgia, serif;vertical-align:baseline;background-position:0px 0px;color:#333333;">It is, however, important to understand that for the model to have its full impact, 3 core pillars have to be integrated and pursued simultaneously. The 3 Pillars of Globalization are:</p><ol style="margin:0px 0px 15px;padding:0px 0px 0px 30px;border:0px;font-size:13px;vertical-align:baseline;background-position:0px 0px;list-style:none;font-family:Georgia, serif;"><li style="margin:0px;padding:0px;border:0px;font-size:15px;vertical-align:baseline;background:0px 0px;line-height:21px;color:#333333;list-style-type:decimal;"><span style="margin:0px;padding:0px;border:0px;vertical-align:baseline;background:0px 0px;font-weight:bold;">Customization</span></li><li style="margin:0px;padding:0px;border:0px;font-size:15px;vertical-align:baseline;background:0px 0px;line-height:21px;color:#333333;list-style-type:decimal;"><span style="margin:0px;padding:0px;border:0px;vertical-align:baseline;background:0px 0px;font-weight:bold;">Unity</span></li><li style="margin:0px;padding:0px;border:0px;font-size:15px;vertical-align:baseline;background:0px 0px;line-height:21px;color:#333333;list-style-type:decimal;"><span style="margin:0px;padding:0px;border:0px;vertical-align:baseline;background:0px 0px;font-weight:bold;">Arbitrage</span></li></ol><p style="margin:0px 0px 1.2em;padding:0px;border:0px;font-size:15px;line-height:21px;font-family:Georgia, serif;vertical-align:baseline;background-position:0px 0px;color:#333333;"><a style="margin:0px;padding:0px;border:0px;vertical-align:baseline;background:0px 0px;color:#001a66;" href="https://flevy.com/browse/flevypro/3-pillars-of-globalization-6014"><img class="aligncenter size-full wp-image-10177" style="margin:0px auto 15px;padding:3px;border:1px solid #e2e4e5;vertical-align:bottom;background:rgba(255,255,255,0.7);text-align:center;height:375px;display:block;" src="https://flevy.com/blog/wp-content/uploads/2021/12/Slide-Deck-image-3-pillars-of-globalization.png" alt="" width="494" height="752" /></a></p><p style="margin:0px 0px 1.2em;padding:0px;border:0px;font-size:15px;line-height:21px;font-family:Georgia, serif;vertical-align:baseline;background-position:0px 0px;color:#333333;">Only business leadership<strong> </strong>that has taught itself and its teams to be very careful about where to customize, how to develop capabilities, and what to arbitrage are the ones reaping benefits from this model.</p><p style="margin:0px 0px 1.2em;padding:0px;border:0px;font-size:15px;line-height:21px;font-family:Georgia, serif;vertical-align:baseline;background-position:0px 0px;color:#333333;">Let us delve a little deeper into the details of the 3-pillar Business Model.</p><h3 style="margin:0px 0px 0.5em;padding:0px;border:0px;font-size:20px;line-height:1.5em;font-family:Arial, sans-serif;vertical-align:baseline;background-position:0px 0px;color:#222222;"><strong><span style="margin:0px;padding:0px;border:0px;vertical-align:baseline;background:0px 0px;">Customization</span></strong></h3><p style="margin:0px 0px 1.2em;padding:0px;border:0px;font-size:15px;line-height:21px;font-family:Georgia, serif;vertical-align:baseline;background-position:0px 0px;color:#333333;">Variation in needs, wants, and cultures of consumers makes it impossible to customize centrally. Providing products and services in a locally competitive manner is therefore central to become a global enterprise.</p><p style="margin:0px 0px 1.2em;padding:0px;border:0px;font-size:15px;line-height:21px;font-family:Georgia, serif;vertical-align:baseline;background-position:0px 0px;color:#333333;">Customization entails fulfilling the requirements and wants of varied consumers, in areas such as product or service features, affordability, and cultural alignment. Hub Strategy provides the leverage to fulfill this demand by enabling companies to customize only in the 20 gateway countries.</p><h3 style="margin:0px 0px 0.5em;padding:0px;border:0px;font-size:20px;line-height:1.5em;font-family:Arial, sans-serif;vertical-align:baseline;background-position:0px 0px;color:#222222;"><strong><span style="margin:0px;padding:0px;border:0px;vertical-align:baseline;background:0px 0px;">Unity</span></strong></h3><p style="margin:0px 0px 1.2em;padding:0px;border:0px;font-size:15px;line-height:21px;font-family:Georgia, serif;vertical-align:baseline;background-position:0px 0px;color:#333333;">Unity entails worldwide alignment of the company with, a unified central purpose, a body of exclusive first-rate knowledge, and capabilities that differentiate the company from all others.</p><p style="margin:0px 0px 1.2em;padding:0px;border:0px;font-size:15px;line-height:21px;font-family:Georgia, serif;vertical-align:baseline;background-position:0px 0px;color:#333333;">Core purpose must be understood in the same manner by all functions of the company, in every geographical location.</p><h3 style="margin:0px 0px 0.5em;padding:0px;border:0px;font-size:20px;line-height:1.5em;font-family:Arial, sans-serif;vertical-align:baseline;background-position:0px 0px;color:#222222;"><strong><span style="margin:0px;padding:0px;border:0px;vertical-align:baseline;background:0px 0px;">Arbitrage</span></strong></h3><p style="margin:0px 0px 1.2em;padding:0px;border:0px;font-size:15px;line-height:21px;font-family:Georgia, serif;vertical-align:baseline;background-position:0px 0px;color:#333333;">Arbitrage is a methodical initiative that consists of increasing effectiveness and <a style="margin:0px;padding:0px;border:0px;vertical-align:baseline;background:0px 0px;color:#001a66;" href="https://flevy.com/business-toolkit/cost-reduction"><strong>Cost Reduction</strong></a> by discovering materials, manufacturing methods, logistics practices, funds sourcing, or infrastructure that are less expensive.</p><p style="margin:0px 0px 1.2em;padding:0px;border:0px;font-size:15px;line-height:21px;font-family:Georgia, serif;vertical-align:baseline;background-position:0px 0px;color:#333333;">Interested in learning more about the 3 Pillars of Globalization and its Case examples? You can download <a style="margin:0px;padding:0px;border:0px;vertical-align:baseline;background:0px 0px;color:#001a66;" href="https://flevy.com/browse/flevypro/3-pillars-of-globalization-6014">an editable PowerPoint on <span style="margin:0px;padding:0px;border:0px;vertical-align:baseline;background:0px 0px;font-weight:bold;">3 Pillars of Globalization</span> here </a>on the <a style="margin:0px;padding:0px;border:0px;vertical-align:baseline;background:0px 0px;color:#001a66;" href="https://flevy.com/browse">Flevy documents marketplace</a>.</p><h3 style="margin:0px 0px 0.5em;padding:0px;border:0px;font-size:20px;line-height:1.5em;font-family:Arial, sans-serif;vertical-align:baseline;background-position:0px 0px;color:#222222;"><strong>Do You Find Value in This Framework?</strong></h3><p style="margin:0px 0px 1.2em;padding:0px;border:0px;font-size:15px;line-height:21px;font-family:Georgia, serif;vertical-align:baseline;background-position:0px 0px;color:#333333;">You can download in-depth presentations on this and hundreds of similar business frameworks from the <a style="margin:0px;padding:0px;border:0px;vertical-align:baseline;background:0px 0px;color:#001a66;" href="https://flevy.com/pro/library">FlevyPro Library</a>. <a style="margin:0px;padding:0px;border:0px;vertical-align:baseline;background:0px 0px;color:#001a66;" href="https://flevy.com/pro">FlevyPro</a> is trusted and utilized by 1000s of management consultants and corporate executives. 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