Going global pays off
Annual WEF, Deloitte Touche Tohmatsu study says globalization helps companies beat S&P500.
Want your company's financial performance to outpace the S&P 500?
Well, then, going global may be the answer.
A new study shows that going global can have big payoffs. The study, released from the World Economic Forum (WEF) and Deloitte Touche Tohmatsu, measures the impact that going global has on corporate enterprise values. It shows a distinct correlation between going global and successful financial performance. This year's findings from the WEF/Deloitte Touche Tohmatsu "Innovative Leaders in Globalization" multiyear study show that 84% of companies that ranked highly, according to a proprietary Globalization Index, have outperformed the S & P 500 over the last five years.
The Globalization Index was derived from results of a diagnostic survey completed by 25 of the world's leading companies. It is designed to help companies gauge how global they are in relation to their peers. The index ranks six organizational capabilities: governance and responsibility; strategy and finance; marketing, sales and service; operations and technology; research and development; and human resources management. The framework categories were selected based on their respective role in affecting ultimate shareholder value.
Other key findings from this year's "Innovative Leaders in Globalization" study were:
- Global leadership is key to global success: Senior executives and board members must have global business experience to succeed at globalization in the long run
- The marketing and R & D functions are the least global functions at most of the companies surveyed
- The Internet is fundamentally realigning perceptions about markets and customers, as business opportunities that were once considered too remote due to distance and language are now prime targets for doing business
The findings reflect the second phase of a multiyear collaboration between the WEF and Deloitte Touche Tohmatsu, the two organizations say. Last year, Deloitte Touche Tohmatsu and the WEF presented the results of the first phase of the program: a globalization framework and a common globalization lexicon with the aim to demystify the term and clarify what globalization means. Next year's focus will be to isolate and measure those distinct practices associated with going global that create value. For more information on the study, contact Deloitte Touche Tohmatsu at www.deloitte.com