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World Economy - Comment
Cultivating the world
Published: September 21 2000 17:13GMT | Last Updated: December 12 2000 20:56GMT
imf-article-generic ct faces. On the one hand, they are huge, and striving to become more huge - mer ging, acquiring and integrating in a constant process of aggrandisement. They pr oduce and sell everywhere, and often seek to lead consumers everywhere to buy th e same products. All this gives fuel to the protesters gathering in Prague for t he annual meetings of the International Monetary Fund and World Bank.

But they have another characteristic. They are at pains to be sensitive, creating d epartments and divisions to assist ecological and human rights campaigns. They a re bringing campaign groups, which have in the past regarded them as the enemy, into their corporate embrace. They are becoming both empires and social organisa tions.

It is a struggle for the heads of global companies to master all t his. Interviews with four leaders of such companies - Sir John Browne, chairman of BP; Douglas Daft, president of Coca-Cola; Anders Dahlvig, chief executive of Ikea; and Nick Scheele, chairman of Ford Europe - show the complexity of the tas k they are being set by globalisation.

They like the process, of course. "We couldn't be doing what we are doing now if the world were not growing more c o-operative, allowing more free movement, more free trade, allowing us to make p roduct in one country and sell it in another: that's all positive," says Sir Joh n. But equally they feel under pressure as a result. Their prominence in the wor ld brings with it a demand for transparency that many traditional managers find uncomfortable.

In some industries, global scale is increasingly seen as a condition of success. "You have to be in the three main markets of America, Eur ope and south-east Asia now if you are to have the scale to allow the investment in a technological change process that is more rapid than it ever was," says Mr Scheele. BP is driven by the same logic. It needs huge scale and cash flow to b e able to afford to pour more than $500m (£355m) into Russia and wait many years for a return.

The need for global scale has been less apparent so far in many consumer industries but Mr Dahlvig argues that this is changing. "Ikea has a small home market [Sweden] and that pushed us out. But it was also a delibera te decision, a philosophy. Now we produce and sell almost everywhere. And you se e it happening to the big groups now. Wal-Mart is coming into Europe. Carrefour of France has been in Latin American and Asian markets for a while. Tesco is goi ng abroad. They are all looking at each other and saying 'if he is doing it, I h ad better do it'."

With global scale comes an increasingly global approac h to hiring people. Each of these companies largely hires domestic nationals for their overseas operations. Both Ford and Coca-Cola are US companies but Mr Daft is Australian - as is Jac Nasser, Ford's chief executive - while Mr Scheele is British.

As BP has taken over other companies, including Amoco of the US, its nationality has gradually become blurred - a point emphasised by its recent re-branding. "When I started in BP there was an international department. That' s inconceivable now. The whole thing is international. We have to build a global company with people from every part of the world - not just white males," says Sir John.

The companies are also adopting a more local approach in dealin g with the outside world. Coca-Cola last year not only mishandled a product reca ll in Europe but fought with the European Commission on competition issues. Mr D aft, who became chief executive after these problems, says it was wrong. "In the US, the reflex is to throw the whole thing into the courts and let the lawyers sort it out. It isn't the case in Europe: it's more of a negotiation culture. An d in this case, it was as if we were saying to the government of Europe: 'You're wrong, and we know better'," he says.

The companies retain a fondness fo r the global standard but try to adapt it to different markets. Jaguar, one of F ord's luxury car subsidiaries, brought out its S Type model simultaneously in ea ch market. "If you don't, your customers, who are global people, will come back at you," says Mr Scheele, who formerly ran Jaguar. Jaguar ran the same advertisi ng campaign for the S Type everywhere, assuming that senior executives of the wo rld have similar tastes. Yet cars with the Ford name are promoted differently ac cording to national and regional tastes. Mr Scheele points out that the Ford Foc us is presented as a youth car in the US, where "adult" cars still tend to be la rger. In Europe, it is marketed as a "mature" purchase.

Furniture - unlik e petrol or Coke - is still largely a matter of national taste, but Ikea is chan ging that. "We don't sell differently to different national markets. We could no t. About 95 per cent of what we sell is the same across all markets," says Mr Da hlvig. In part, it gains from national association. Swedish virtues are generall y thought to include reliability and a certain austere style. Ikea has added Swe dish cafes to many stores to underscore the point.

Paradoxically, the com pany that does least to emphasise its national character is Coke, which is indel ibly associated with America in many people's minds. "I think that after the war , when people in Europe and elsewhere looked to America as a lucky place, it see med natural then to promote Coke as an American drink. Now, we try to associate it with values that may or may not be American but are also universal - such as freedom and integrity," says Mr Daft.

Mr Daft, who worked for many years in Asia and headed Coca-Cola's operations in China, says openly that he is tryin g to wrench his company away from an over-centralised approach. "I was different from others at the top of Coke: I came up from outside. I have houses all over the place: I like to live in the countries I visit. You have to get to feel the difference. Global companies like this one have to devolve to the localities to stay global."

Each company emphasises its environmental commitment - mean ing both the ecology and the regions and communities in which it operates. Both of these feature strongly in BP's marketing campaigns, and the blending of the c oncerns appeals to many pressure groups. For Coke, this implies being sensitive to the implications of its demands for water. "We have to become more deeply inv olved in issues of water availability and purity. Sooner or later, water will be come much scarcer, and it will cost more; we have to be part of that debate and that process," says Mr Daft.

Ikea, like Ford and BP, works with campaigni ng groups - in its case, Greenpeace and the World Wildlife Fund - to address pro blems of deforestation. Mr Scheele says Ford has a close relationship with envir onmental and some transport-related pressure groups. It plans to fix a label to its cars giving emission levels, recyclability and other environmental details. Bill Ford, the company's chairman, has even emphasised the need to make sports u tility vehicles, such as the Ford Explorer, more environmentally friendly.

< P>BP has done a great deal to try to overcome a distrust of big oil companies' e nvironmental depredations. Yet John Browe sounds guarded about what the campaign ers seek. "We don't agree with everything they say. Some of it is sensible and f ruitful. And our own people are the keenest of all that BP acts as a good citize n - they want to have a sense of worth in working for it," he says.

Wheth er they like it or not, the companies now accept that globalisation brings with it the need to convince outsiders of their good intent. "The world has changed e normously in the past decade," says Mr Dahlvig. "All of us now act in ways we di d not 10 years ago. Globalisation means stakeholders and responsibilities everyw here, which have to be managed. It's a quite different level of complexity."

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