K.S.K.KAUSIK. (R.

no:132), PG-B,
Email-id: kausik.ksk@gmail.com

The Cosmopolitan Corporation :

The article The Cosmpolitan Corporation is written by Pankaj Ghemawat, who is the
professor of Global Strategy at IESE Business School, Barcelona. He is also the author
of World 3.0 ( Harvard Business Review Press, 2011). In this article, the author tries to
emphasize how the global success of the companies requires the companies to
appreciate diversity and cross-national distance instead of trying to eliminate the
diversities. Quite contradictory to the general notion that persists among us about how
the world has been transforming post-globalization, the author mentions the threats
protectionism has brought about in the developed countries.
Reality of Roots :
In the words of the philosopher Immanuel Kant, Globalization essentially means
ignoring the geographical boundaries when supply chains and markets are considered.
Though he generally held belief is that a truly global nation does not have a home base,
the reality shows a contradictory picture. According to the surveys conducted examining
the expanse American Businesses have overseas, less than 1% of the companies had
foreign operations and of those, a majority held operations only in a single country.
Among the companies that held business outside US, 60% were in Canada and 10% in
the United Kingdom. Even with the companies that were once considered as icons of
globalization like the ABB, the reality, in fact, stands in stark contrast to what is claimed.
The years after the merger were marked by internal rows between the Swedes and the
Swiss. Though it has expanded its operations across the globe, its roots remain to be
concentrated in Northern Europe, where it has significant operations.
As another example of the companies not trying to transcend their set beliefs and trying
to adapt to the cross-cultural environment, the author quotes the case of Rupert
Murdroch and News corporations satellite TV network, Star TV. Despite crossing its
national boundaries i.e., beyond Australia, The News Corporations beliefs were in favor
of Anglo democracies. They failed to realize the fact, despite their experience in
operating in European countries, that though the people across Asia were comfortable

K.S.K.KAUSIK. (R.no:132), PG-B,

Email-id: kausik.ksk@gmail.com

with English or other foreign languages, they still preferred content in their local
languages.
The author poses a few questions with respect to the relevance of a corporations
nationality or the nationality of its owners and its impact on operating cross-national
businesses viz. the foreign-restrictions imposed on industries like media, governments
involvement in the world trade organizations dispute, fear among the employees of the
foreign-owned companies about their career opportunities etc.
The author refers to this reality of a semi-globalized world as World 3.0, which is neither
World 2.0 ( a set of nation-states) nor World 1.0 ( a world with stateless ideals). As the
differences in the culture, geography, politics, economy increase, the cross-border
interactions cease to increase. Its not only the firms that have their beliefs deeply
rooted in their home countries but also employees as well as customers. The
companies should be striving at embracing the cultures, roots and distinctive
characteristics of the nations where they are trying to operate instead of trying to
eliminate them by employing a global citizenship model. The companies should not only
try to chalk out the similarities as well as the differences between the cultures but also
brace themselves up for seemingly different characteristics that are worth watching out
for. That is to say necessarily that the companies should have a cosmopolitan
perspective and should be looking forward to working with differences rather than
against them.
Building a Cosmopolitan Approach:
Talking about developing a cosmopolitan approach, the author suggests what is known
as a rooted map approach. Instead of the usual assessment of markets by the
executives based on factors such as size, growth rate, demographics, he recommends
that assessment be done in a rooted map approach. In a rooted map, the ranking is
done based on factors such as the population and GDP of a country, with a focus on
the factors that showcase a particular countrys perspective. The author takes the
example of an Indian IT services company to explain the rooted map approach. In this
process, a first map is constructed based on the Indias foreign trade which considers

K.S.K.KAUSIK. (R.no:132), PG-B,

Email-id: kausik.ksk@gmail.com

the geography, availability of resources and history. A second map shows the rankings
of the countries based on the market share for Indian IT services percapita income of
the developed economies is considered in this map. A third map comprises of both the
above two maps ranking countries on the basis of the demand of Indian IT services.
This is based on the fact that linguistic differences matter the most almost 85% of the
exports from India that are IT related go to English-speaking countries. It is also
important that the type of product that is exported also determines whether the linguistic
differences are significant. For example, language is not as important a matter of
concern when cars are the exports as it would be when offering IT related or online
services. The ability to perceive external distances depends on the individuals as well
as the companies. For example, companies in small countries are concerned as to how
the customers in their target countries think whereas companies in bigger advanced
nations expect the customers in other countries to adapt to the changes. In the current
scenario where protectionism is seen across nations, the US and European
multinationals operating in the emerging economies including smaller cities should try
to eliminate the gaps in political and cultural differences. The viewpoints gathered by an
analysis helps in organizational as well as strategic decision making.
Crafting the Cosmopolitan Strategy :
The author cites references to his 2007 book Redefining Global Strategy describing
what are known as AAA strategies i.e, Adaptation, Aggregation and Arbitrage.
Adaptation implies adapting to the local needs of the country where the business is
operating, Aggregation is associated with achieving the economies of scale in crossborder businesses. Arbitrage implies leveraging through cross-national business
activities, for example, by buying at lower costs from one country and selling at higher
costs in another. Understanding the mindset of the people towards globalization, its
rational for the companies to concentrate more on adaptation rather than aggregation
and arbitrage among the three strategies. If the companies change their outlook
towards cultures by respecting the differences cross-borders, then they can expect the
people of other countries to show lesser traits of protectionism. Also the companies
shouldnt look at acquisitions abroad without proper rationale. The companies have to

K.S.K.KAUSIK. (R.no:132), PG-B,

Email-id: kausik.ksk@gmail.com

learn to respect the sovereignty and the diversity of the other nations in order to make
their businesses operate. With an eye to venture into emerging markets like India and
China and given the fact that the locus of growth is shifting, the firms need to
concentrate not only in the elite cities of these developing economies but also make an
effort to look beyond these cities and concentrate on tier-2 and tier-3 cities. Having said
that, it is implausible for a firm to think of extending its operations in every possible
market. Hence, the firm needs to select the markets where it expects to add real value.
Designing the Cosmopolitan Corporation:
Internal distances determine the effectiveness of the supply chain. Many firms are
planning to market their supply chains shorter and simpler. Innovation and research
need to be done at locations closer to the home countries for the benefit of better
availability of advanced technologies. However, regarding the development part, one
can get a true picture only if it is carried out in those countries where the operations are
held as that creativity can be offered only by those who are well-versed with operating in
that particular location.
The decision making processes need to be evaluated as the companys activities
across countries differ i.e., whether the decision making should involve the regional
heads or the global heads, whether the headquarters should get involved in every
decision making process of each region. In this aspect, the composition of the
management team is a significant factor to be looked at. Even in companies like GE that
are renowned for having cosmopolitan managers, 80% of the managers in the top 200
are Americans. Another important factor to be considered when looking at the diversity
in a cosmopolitan corporation is that the diversity has to be managed. Unmanaged
diversity is likely to have negative effects on the organization. People have a propensity
to get involved more closely with people from their regions which will have negative
effects on the operations of the organization. People who have exposure to different
cultures and backgrounds multicultural and tricultural help in bridging the gaps
between people of different backgrounds. But it is not always feasible to find such
people with multicultural backgrounds and ethnocentric outlook towards businesses.
Hence, such cosmopolitan traits need to be developed in an individual.

K.S.K.KAUSIK. (R.no:132), PG-B,

Email-id: kausik.ksk@gmail.com

Cultivating the cosmopolitan leader:

The author mentions certain suggestions that can help shape a cosmopolitan leader.
The first Conceptual framework. This involves categorizing distance on the basis of
CAGE Culture, Administration, Geography and economics. Such frameworks shape
the mindsets of the executives during short trips to foreign countries hence reducing the
risks involved in operations overseas. A longer and a deeper immersion into the
cultures, politics and history of the countries is essential for a firm in order to fully
comprehend the intricacies involved in businesses abroad. That is to say, the
executives need to stay for longer durations months or years and not weeks or days.
Projects and networks eliminate the traits of protectionism and help in developing an
ethnocentric attitude among the employees from different nationalities. Finally,
assessment tools helps the firms to evaluate the skills the managers have developed
over a period of time with respect to global skills and cosmopolitan way of doing
business. Sometimes the executives tend to ignore the smaller ones while
concentrating on the most obvious ones. The cultivation of a cosmopolitan attitude
amongst the managers should aim at eliminating such traps.