The most critical global developments for businesses include the increase in economic activity in emerging markets, the free flow of information across the globe, and increasingly global labor markets.
The implications are clear: To grow and flourish in a global economy requires building strong business relationships across international boundaries. “Like it or not,” one expert points out, “knowledge of the world is no longer a luxury.” According to a McKinsey survey of executives around the world, the most important strategies for capturing growth include building a local presence, developing partnerships and joint ventures with local businesses, and recruiting talent from emerging markets. American companies must compete with companies around the world, whose leaders may be far more knowledgeable about U.S. culture than American leaders are about theirs.
For some years now, U.S.-based corporations have been acquiring businesses based abroad, establishing local branches in other countries, and assembling virtual teams to work across international boundaries. Even so, too many businesses are still unprepared to work with customers and coworkers from different cultures. The most common problems—misunderstandings and communication breakdowns—have a significant impact in terms of lowered productivity, lost sales, and unsuccessful product launches. “Effective cross-cultural skills are critical,” according to the global program manager for a large telecommunications manufacturer. “We are a global organization. We have clients around the world requiring global support and many cross-cultural project teams. If we can improve the global effectiveness skills of our team leaders and members, this will have tremendous impact on our bottom line.”