Which is Better: A Global or a Local Operating Model? Hint – It Depends on You

Whether your business has a well-established international footprint or you’re in the process of expanding operations, all international enterprises face the critical decision of whether to adopt a global or a market-specific approach to operations. While a global approach to operations can introduce efficiencies to international enterprises, this approach comes with notable challenges that every business must eventually weigh.

Why Take a Global Approach?

“A global approach can give you consistency and standardization,” offers Kate Wallace, Senior Consultant with W. Capra. “Beyond the cost savings and potential negotiation power that a common global architecture can introduce, a global operating model gives businesses the power to ensure consistent branding and quality assurance, regardless of geography.” Under this model, key initiatives like training or change management can be reproduced, translated, and amended to account for any market-specific requirements.

While a domestic approach to solution selection may create a division in support across geographies, even introducing additional barriers to funding for region-specific initiatives, a global approach to operations may enable your business to streamline processes and reduce duplicate functions. Tracy Beazley Clark, Senior Consultant with W. Capra, adds, “A follow-the-sun model, which inherently accounts for market differences, is fundamentally the same across markets. This model is only achievable under a global approach to operations.”

Introducing a more collaborative cross-border model also promotes knowledge sharing and innovation within an organization. Beyond the ability to share information gleaned from market-specific pilots, enabling a cross-cultural exchange of ideas can ignite more creative ideas.

The Challenges of Going Global

While a global model can introduce countless efficiencies, businesses must always be aware of localized needs, both from an operational and a consumer perspective. “Looking at a process like checkout,” says Beazley Clark, “There are numerous opportunities to standardize the consumer experience and introduce efficiencies. However, certain components of that experience, like tax calculation or local payment method processing, must always be addressed at the market level.” Tax calculation, for instance, becomes much more complicated in the US market, where retailers must navigate regulations at the city, state, and federal levels. In addition, regardless of the scale of business you conduct in a specific market, you must account for handling the preferred payment methods in each market you enter, whether it’s Interac processing in Canada or Giro processing in Germany.

“Beyond providing support in local languages or catering to market-specific requirements, cultural differences can present incremental challenges when conducting business on a global scale,” Wallace advises. “Adapting to diverse cultural contexts, like hierarchies, mannerisms, and formalities, requires collaboration, understanding, communication, and immense flexibility.”

Moving Forward with an Operating Model

While certain principles, such as a streamlined vendor stack or a flexible, adaptable mindset are essential in either approach, your operating model will ultimately determine how you manage talent and investments across your international footprint. Regardless of whether your business adopts a localized or global approach to operations, it’s essential to tap into resources with a contextual understanding of the markets that you’re operating in. Fortunately, W. Capra has experience helping enterprise organizations to achieve either outcome. Leveraging unparalleled knowledge with vast real-world project experience, we support our clients in navigating cross-border commercial challenges by building custom strategies that are tailored to your business needs. Whether introducing payment efficiencies on a global scale or homing in on the needs of a specific geographic market, W. Capra helps retailers to develop, and maintain, an enterprise-wide strategy that’s optimized to meet your business needs.

Tracy Beazley Clark and Kate Wallace, both Senior Consultants with W. Capra, are passionate about helping retailers succeed in international markets. For further discussion, contact [email protected] and [email protected].

Verified by MonsterInsights