globalEDGE Blog Archive February 2013

Have you been exposed to a company advertisement or website that translated their message word-for-word and missed the mark, instead of focusing on the marketing translation? Google Translate does this for many websites because many companies do not have a specific website for a particular language. This is a huge problem as businesses try to enter new foreign markets. Their messages do not communicate the correct message because language is not based purely on word translation; it also involves cultural meaning, context, style, and connotation. Localization and a global marketing strategy are becoming key drivers for companies as globalization expands. Getting your message across in a word-for-word translation is the wrong approach, but transcreation can be the solution.

How do you know if a currency is overvalued or undervalued?  Well, there are currently many measures that contribute to determining the fair value of a currency.   One common measure is evaluating purchasing-power parity (PPP) and another is determining whether or not a country’s trade deficit or surplus is representative of the country’s fundamental economic attributes.  Although these factors can together accurately determine a currency’s fair value, a universal method is still lacking.

Here at Michigan State University, basketball is not simply a sport; it has its own culture. Spartan basketball is a way of life. If you disagree, you need only watch the Izzone student section for a few minutes to understand the passion for MSU basketball. This season, though, has been somewhat different for the stars of the basketball team.

The team got a facelift in technology when they were given new software for free that enables head coach Izzo to almost instantly send recaps of plays with a detailed analysis to the players on any one of their devices. This sort of coaching technology has skyrocketed recently and is starting to make its debut in foreign countries.

Earlier this week, my colleague Kyle Brown asked the question “Isolated Issue or Global Supply Chain Problem?”  This question was addressing the recent uncovering that many of the products we believe to be 100% beef, actually contain a fair amount of horse meat.  It would seem that this question has been answered relatively quickly with a new Oceana report released yesterday. Oceana is an advocacy group for the world’s oceans that has sampled over 600 outlets in 20 states over a two year period in one of the most comprehensive food and health studies done in recent years.

For years, Africa has been viewed as a continent stricken by poverty with practically no chance of achieving sustainable economic growth. Just over 12 years ago, The Economist even labeled Africa as “The Hopeless Continent” plagued by war and disease.  However, that paradigm is beginning to radically change. Over the past decade, Africa has been the second-fastest-growing region in the world with an annual growth rate of 5.1 percent. To the surprise of many, over 500 African companies have annual revenue of $100 million or more. How has Africa been able to turn around its fortune in such a short period of time? Many believe this economic turnaround can be attributed to greater political stability and reforms that have unleashed the private sector in many African countries. Though, the main source for this economic resurgence has actually been globalization as you will soon see.

There is currently an ongoing investigation into a food scandal in Europe involving horsemeat found in beef products. Because of the bond that horses have shared with humans as companions throughout history, eating horsemeat is considered taboo in many cultures. The issue came to light when meat that was listed as beef in supermarkets in Ireland and the U.K. was found to contain horsemeat. This scandal poses a threat to international supply chains and brings up a very important topic: how safe is the global food supply chain?

While "made in China" products become wide-spread in the U.S and China-U.S trade continues to grow, the trade between the European Union (EU) and the U.S is actually the driving force behind world trade figures. Indeed, the EU-U.S trade is the largest trade in the world and comprises one-third of all trade, determining the shape of the global economy. Now, the debt crisis in Europe and the desire for American growth are pushing both sides to consider knocking down the barriers to trade. A trans-Atlantic trade talk is underway.

India’s trade gap, especially as of late, is increasing rapidly.  This is due largely in part to substantial percentage hikes in imports and stagnant export growth.  Some are growing concerned over the rising account deficit, which is directly correlated to the current trade deficit.  To put India’s trade deficit in perspective, exports grew by 0.8% in January while imports grew by 6.1%.

While we at globalEDGE have been talking about how the globalization of the media industry has difficulties for many involved in the industry, there is another way that this new trend impacts the industry: it is changing the business model of these companies forever.

Since many of these companies work with the internet and are focused primarily on providing their services that way, they are much smaller, more nimble, and entrepreneurial than their traditional counterparts. One simple way to confirm this is to look at the employees used by each firm.  Pandora and Netflix have around 500 and 2,000 employees respectively. That is far less than 126,000 employees that Comcast uses. To prove this isn’t a size issue, Google only has around 50,000 employees!

It can be argued that there is nothing more universal in the world than music. Music has brought people and cultures together from the beginning of time. To many people and cultures, music is an important part of life—an art form that enhances life’s appeal. Today, music is not only an art but also an extremely important industry in the global economy. Just as globalization and technology have changed the course of many other industries in the world, these two factors have both dramatically transformed the music industry for better or for worse. Consumers, artists, retailers, record labels, and businesses have all been affected by these changes. Now the question is: “Has globalization created a sustainable shift in the music industry and how have these changes affected the art of music?”

When taking a company, product, or service internationally one has to take into consideration the variability of laws they will encounter. This tends to be quite the process, and a very complex one at that. Few may be more complex (and more of a hindrance) to business expansion than copyright law, specifically when it comes to the music industry. This makes for a wide array of complications that music empires have to deal with and has even derailed some.

One third of the world’s population is now connected to the internet, a surprising statistic considering where we started not too long ago.  As more people become connected, consumer consumption patterns around the globe are changing. The mediums people use to consume content are changing as well, caused by cultural differences as well as different regulations across countries. Many regions, such as Scandinavia and India, are a much different market than the United States. We will explore these differences by analyzing how they affect consumption patterns and their impact on business in a global context.

“Export or Die”, a phrase that Americans and other countries seem to neglect, has become an emergent dilemma in Japan. An annual trade balance report released last Thursday triggered a sense of crisis in Japan by displaying a huge trade deficit. This is the second straight year that exports have been in the red for Japan. As an export-reliant country, Japan is going to be hit hard by this news without doubt.

In the annual employment report by the International Labour Organization, analysts said that the number of unemployed people globally rose by four million last year and is expected to rise by over five million people this year to reach 203 million. This is primarily blamed on the slow labor market for youth, and as the number of jobseekers is growing, so will the number of unemployed.

The traditional model for young start-ups has been to establish a foothold in the United States for a couple years, before branching out to Europe and Asia. These traditional models are out of date and only constrict your company's growth potential.

The United States used to be worth twice as much as Europe and three times that of Asia. Times have changed though; the world is becoming one market, a global market. The language of this global market is currency, which can take on multiple forms, but it's uniting all. If you aren't doing business in Europe and Asia, that's 2/3's of your potential revenue streams you are missing out on.

2013 might just be the year emerging markets have been anticipating. Throughout the past year, investors have been pouring money into emerging markets in developing countries. There are other factors that point to success for emerging markets, but are they enough to boost the small businesses to profits and prosperity?

The lackluster global economy is now going on its fifth year and new information suggests that it is still a series of ebbs and flows. Economists’ predictions about the United States’ fourth quarter growth was off by over a percent and the U.S. experienced a contraction of the economy for the first time in a few years. The unemployment rate ticked up .1% to 7.9%, not the kind of news a recovering economy wants.