Publishers (Jossey-Bass/Wiley) have just released The Quest for Global Dominance, 2nd edition - a major update to one of the world's most respected guides to how a company can design, implement, and reassess its global strategy. Co-written by China India Institute’s co-founders Anil K. Gupta and Haiyan Wang, the The Quest for Global Dominance is based on the authors' twenty plus years of research and consulting work with over two hundred corporations (including Caterpillar, IBM, Infosys, Marriott, Microsoft, Nokia, Procter & Gamble, and Wal-Mart), this book addresses some of the most central questions pertaining to global strategy.

First, the global economy today is driven far more by the logic of the market than by the logic of the government. Look at the economic ideology being practiced in China, Russia, Eastern Europe, and India today versus twenty years ago. Second, the global economy is far more multi-polar today than was the case even ten years back. In 2007, China and India contributed more to global economic growth than any other country including the United States. Third, national economies are much more integrated with each other today than used to be the case. Look at the emergence of entities such as the EU, Nafta, Mercosur, ASEAN, and of course the WTO. Fourth, sovereign wealth funds play a much greater role in capital markets today than used to be the case. Oil-rich nations (such as Saudi Arabia, the UAE, and Norway) as well as industrial powerhouses (such as China) now have several hundred billion dollars in sovereign wealth funds looking for investment opportunities around the world. Fifth, today’s globalization is much more multi-dimensional than was the case in say 1980. Until the late 1970s, globalization was largely about looking for new customers i.e., globalization of market presence. With the integration of China into the global economy, the 1980s and 1990s witnessed the globalization of manufacturing. In the current decade, we are also beginning to see full-scale globalization of R&D. Microsoft’s largest research center outside Redmond is in Beijing. GE’s largest research center outside New York state is in Bangalore.

Wal-Mart serves as a good example here. It has done well in Mexico, Canada, the U.K., and China but has suffered resounding failures in Germany and South Korea and is struggling in Japan. We present a detailed analysis of the lessons from Wal-Mart’s globalization in chapter three of The Quest for Global Dominance. As Wal-Mart has expanded globally, it has not always taken into account the underlying economics of the discount retailing industry. In this industry, all key elements of the cost structure (sourcing, supply chain logistics, store operations, and advertising) are local. Thus, for a discount retailer, it is critical that its local market share be large vis-à-vis other local competitors. This was not an issue in emerging markets such as Mexico or China where most players were starting from scratch. However, in mature markets such as Germany and South Korea, Wal-Mart faced incumbents with large market shares. In these markets, it was a fundamental mistake for Wal-Mart to enter via small toe-hold acquisitions. The company could never recover from this mistake in these markets.

The first major question to ask is: how central are foreign markets to the future of our company? The vast majority of U.S. headquartered Fortune 500 companies still view foreign markets as an add-on supplement to the domestic U.S. market. Very few business leaders have internalized the fact that 75 percent of the world’s GDP is outside the US and that emerging economies are growing three times faster than the U.S. economy. It may well be more prudent to view market opportunities outside the U.S. as even more central to the company’s future than those within the U.S. The second major question to ask is: what’s our company’s global market share and is it growing or declining? In a rapidly integrating global economy, for most large companies, global market share is as an increasingly crucial measure of market share. You may have a large market share in the U.S. but if your global market share is low or declining, it is a certainty that, at some point, an aggressive player from another corner of the world will mount an attack on you in your home market. The third major question to ask is: looking at the entire world as our playing field, how optimal is (a) our market presence, (b) the global architecture of our value chain, (c) our global R&D network, and (d) our capital base? Once we have identified the sub-optimalities, what should we do to fix them?