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Article | March 31, 1999
People, not technology, will drive global business
Like it or not--in fact, intentionally or not--virtually all U.S. businesses are already participating in the global marketplace, and the choice is not "whether" but "how well." So said Dana Mead, president of Pactiv, in remarks to The Aluminum Association's annual meeting last fall.
And he suggested that the biggest obstacle facing companies that want to compete globally is finding enough people skilled in doing business around the world. However he adds that this shortcoming isn't unique to the U.S. "American business has no choice about whether to participate big time in global markets. We must" he stressed. "The markets are too large too promising and too consequential for us to do anything less. Whether you sell overseas directly or you supply a manufacturer that does or you supply a manufacturer whose customers do--you are in the export business. We are all a part of the global economy--and your participation in it will grow." When you represent Pactiv and you're speaking to other suppliers of packaging materials such as at Alcoa and Alcan this message won't be disputed. However the same is true for major packaged goods manufacturers like Procter & Gamble Anheuser-Busch and Coca-Cola. Aside from new products either developed in-house or gained in acquisitions sales growth in the U.S. remains relatively static; most new sales and earnings must come from expansion overseas. In already-saturated domestic markets manufacturers jockey to tailor these existing products--and packages--to the changing needs and desires of consumers. In fact marketing savvy developed here can also be a major advantage if applied well in foreign markets. In broad terms Mead said he believes that the U.S. lead in technology is nowhere as significant as it once was. "Consider one of America's traditional areas of competitive advantage: technology. It's an advantage that can evaporate instantly. Drop a CD on a sidewalk in Southeast Asia and you'll find bootleg copies in the stores the next morning. It moves that quickly. "Technology advances...have in themselves become sources of instability when with several computer keystrokes the equivalent of the GDP of entire nations can be transferred anywhere in the world." Although his focus didn't narrow to packaging technology it's precisely this type of advantage that uniquely positions U.S. manufacturers for doing business around the globe. In this issue Packaging World's editors revisit the subject of global packaging that we first covered last June (see PW June '98 pp. 27 34 40 and 50 or packworld.com/go/global. In several articles in this issue and last June we report on both the strategies and implementation tools that are enabling manufacturers to address packaging on a global scale. Beyond the strategy of making manufacturers' and brand names recognizable in the global marketplace much of the implementation becomes very dependent upon technology. Computer networks and the Internet are being used to communicate packaging standards and even packaging artwork to offices and production facilities around the world. Performance specifications can often replace the testing measurements that we use domestically in the selection of packaging materials. Some companies consolidate end-product packaging where the best most consistent materials are located regardless of where products are made or assembled. Others try to package as close to end-use markets as possible to permit customizing of language accessory kits and manuals for the needs of each market. This follows the path set years ago by McDonald's Corp. as it expanded its business globally. When it couldn't find local sources of either ingredients or packaging it helped create production facilities in those countries that could produce to the company standards often using technology originally developed in the U.S. As advantageous as our technology can be in competing globally Pactiv's Mead identified one consistent obstacle to the development of global business: people skilled in working in the global environment. The real threat to global marketing success he said "is the lack of people to create and implement a global strategy. Most U.S. companies are woefully short of skilled experienced global leaders. Time after time success is not determined by capital or technology or machinery or markets or distribution. It's a question of having the human resources to cope with the challenges. "And it isn't just the U.S. that is inadequately prepared it's everybody" he pointed out. "The developing countries themselves are also unprepared--and that makes a strategy of relying on locals highly problematic as well." Because China is often cited as the greatest untapped market for U.S. manufacturers Mead explained how unprepared its companies are. "To meet its current development goals China will need 300 MBAs a year. That's frightening in itself right?" he asked. "But China only graduates 1 MBAs a year." Too often he cautioned his audience manufacturers early-on encounter the difficulties of entering the marketplace in foreign lands. "There are some tough lessons to learn and the natural reaction after learning them is to lose our sense of optimism and pull back from the global marketplace. I don't think we can permit that to happen" he said. "The truth is we do have great opportunities overseas. And we're in a position to take advantage of them if we are realistic and aggressive." Our packaging purchasing and marketing expertise finely tuned in the super-competitive U.S. marketplace should provide a strong competitive edge as manufacturers seek to expand around the world--provided we take the time to learn about foreign markets first. Arnie Orloski VP/Editor
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