To understand how companies with ambitions beyond their own markets think about and measure localization efforts, Common Sense Advisory interviewed 50 managers responsible for setting or implementing localization strategy at U.S.-based organizations.
Localization comprises the business practices by which a company prepares its product or service offering for worldwide markets. Without this practice a company would never bridge beyond its own borders. In preparing their report – “Beggars at the Globalization Banquet” - Common Sense Advisory found that localization investment happens to be very small compared to the big international revenue it enables. Even so, most American firms shortchange their budgets for translating and adapting products, services, support materials, and output for non-U.S. markets – but continue to expect increasingly more productivity.
Global business comprises on average 40 percent of assets at large companies, but accounts for 45 percent of corporate profits, according to a detailed analysis of 246 of the top 500 multinational enterprises in Oxford’s Templeton Global Performance Index for 2001. Common Sense Advisory sees localization and related activities as a vital part of the business landscape and asserts that this profit ratio should grab the attention of anyone wondering about the value of catering to buyers in global markets.
“Localization sits at the end of the value chain and gets little attention by corporate decision-makers, but enables the most return for its investment,” said Don DePalma, president of Common Sense Advisory and lead author of the report, “Beggars at the Globalization Banquet.” According to Common Sense Advisory, for many Fortune 500 firms, non-U.S. revenue – or xenorevenue - accounts for 20 percent to more than 50 percent of their global income. This fact alone makes it easy to see the value in catering to buyers in global markets with localized products and services in their native language. Still localization expenditures are minuscule — 2.5 percent and lower of non-US revenue—compared to the benefits of gaining market share and customer loyalty.
For Immediate Release
“Beggars at the Globalization Banquet” is the first in a series of quarterly reports produced by Common Sense Advisory focusing on this little-known field of translation and localization. This first report offers a stepwise process for measuring and ensuring the return on investment (ROI) of localization investments. Not focusing on cost-cutting measures, the report considers a wide range of standard business paybacks and offers formulas for calculating returns. Finally, it looks to the future of the localization support industry, helping practitioners, service providers, and technology suppliers prepare for the inevitable changes driven by the unavoidable need to prove ROI.
Don DePalma is well known as the author of the seminal research report on globalization, “Strategies for Global Sites,” published by Forrester Research in 1998, and as the author of the insightful “Business Without Borders: A Strategic Guide to Global Marketing,” published in 2002 by John Wiley & Sons.
“Beggars at the Globalization Banquet” is available as part of a subscription to clients. For information about subscribing, visit www.commonsenseadvisory.com.