As digital flows command a growing share of trade and economic growth, executives must answer new questions. This McKinsey article stipulates the economic impact caused by digital globalization and proposes five main critical areas that executives and top teams must emphasize and manage adequately.
The continuous and rapid changing technology allows for large streams of data and information to be transmitted per minute. Via e-mail, social media, video, and e-commerce, these digital networks associate everything, everyone and everyplace and thus, must encourage companies to re-think about what it means to be global.
Large corporations contain a platform which allows for the company to connect with customers, manage suppliers, and facilitate international communication and data sharing. With just a few clicks, customers can receive details on products, services, prices and other alternative suppliers around the world.
The business models that were created for the globalization of the 20th-century does not stand against the digital globalization era. As companies better comprehend the upcoming opportunities and threats, five questions are asked.
Firstly, does one have a clear view of the competitive pool? Competition intensifies as digital platforms facilitates companies of any size and any origin to produce and deliver products at an exceptional rate. Digital competitors from all over the world are placing unpredicted pricing pressures and speeding up the overall product cycles.
Secondly, does one have the right assets and capabilities for competition? Businesses from all industries must look at their positive attributes (customer relationships and market data) in order to find new ways in which economic growth could be stimulated. For this to occur, exceptional digital capabilities, competitive advantage and skilled workers are needed.
Thirdly, can one simplify the product strategy? Digitization is the main cause of simplification of tailoring products, brands and pricing. Which in turn creates products to potentially be distributed worldwide.
Fourthly, should one alter the organization and supply chain? Digital technologies permit large companies to communicate within each other from differing and remote areas of the world.
Lastly, what are the new risks? The main concern for companies should be maintaining data security. As well developed hackers continue to evolve, companies must in fact prioritize the privacy of their assets, test continually, and take preventative measures. In addition, companies no longer contain exclusivity to their new products and services as copycat versions are often launched before the originators have time to present it to the market.
For more information on the five priorities for competing in an era of digital globalization, click here.