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EXPORTS ACCOUNT FOR a full 95 percent of Cochlear's $40 million sales -- sales that have been growing at a real annual compounded rate of over 25 percent throughout the last five years. Cochlear is a company specializing in the production of implants for the profoundly deaf. Based in Australia, it maintains an international technological lead through its strong links with hospitals and research units around the world and through its collaborative research with a network of institutions in Australia, Switzerland, Germany, and the United States. It is a prime example of a company that was "born global."
A recent study of Australia's high-value-added manufacturers (see insert, page 51) identifies two very different types of exporting firm. The first, domestic-based firms, fit the traditional idea of an exporting firm. Their core businesses are well established, with strong skills, solid financial capability, and a sound product portfolio. Having achieved a sustainable base in their home markets, these firms then turn their sights to the potential growth available through export. Even so, the primary focus of their competitive activity remains the home market. The average age of these traditional firms at first export was 27 years, and their exports averaged 20 percent of total sales (Exhibit 1)(Exhibit 1 omitted).
By contrast, the second group -- the "born global" firms -- began exporting, on average, only two years after their foundation and achieved 76 percent of their total sales through exports. Though small, with total average sales of $16 million, these firms are successfully competing -- and winning -- against larger established players worldwide. Despite their relative youth -- their average age is only 14 years -- they are currently responsible for almost 20 percent of Australia's high-value-added manufacturing exports.
Exhibits 2 and 3 contrast the profiles of the domestic-based and born global firms, and show some of the key issues they face at different phases in their evolution (Exhibits 2 and 3 omitted).
Born global firms are important for two reasons. Although small, they are:
*Strikingly competitive against larger established players, and their competitiveness has increased significantly in the past two decades.
*Managing profitable, fast-growing global business systems in a way that was impossible 20 or even ten years ago.
WHY THE OLD RULES NO LONGER HOLD