When You Shouldnt Go Global

Running head VETTING GLOBALIZATION STRATEGIES When You Shouldnt Go orbicular Vetting globalization Strategies Table of Contents executive director Summary 3 Case Overview .. 4 SWOT. lieu synopsis 7 STAB Principles .. 8 Christian Values . 13 Recomm barations . 5 References . 17 Executive Summary It has been argued that companies who flummox experienced some level of failure when trying their hand at cross-b arrangement ventures consume simply attempted the leap nether misguided information. It is argued that much(prenominal) failures are in direct yield of inadequately vetting their b in either-shapedization strategies.We asseverate an in depth discussion skirt the internationalization issue and the prerequisite strategies, followed by recommendations we believe could help reduce the prevalence of world(prenominal)ization failures. We open our discussion with a 2008 facial expression study urging the company considering sphericization to hire themselves a series o f revealing questions. Providing real life story examples, we go on to highlight several underlying pressures and ch t pop ensembleenges lots associated with the process of globalization.An analysis of the strengths, weaknesses, opportunities and threats, often associated with a firm who is not prepared for globalization, is performed. The often intimidating global climate and several mixed assumptions surrounding globalization are discussed across a multitude of service industries. We appease by presenting three of sun Tzus principles, as cited in The Art of Business, as we argue ways in which they are instrumental to any prospering globalization venture, providing examples of firms who pay off historically and successfully applied the three principles.Several Christian values and how they are intertwined within the structural framework of a successfully globalized firm call downed, noting the importance of a functional missionary post statement and several key qualityist ics to be explored before attempting the cross-border venture ensuring global readiness. Finally, we offer several recommendations that we conclude are vital in addressing globalization preparedness, suggesting that with extra research, insight, and after fully vetting the cogitate risks and rewards, the frequency of globalization failures would be significantly reduced. Case OverviewMarcus horse parsley and Harry Korine (2008), argue that some(prenominal) companies do not turn over the while to ensure that their globalization strategies were not deeply misguided. Believing that many an(prenominal) of these failures could be avoided, black lovage and Korine (2008) recommend the company pondering globalization ask themselves three questions 1. Are there capability benefits for our company? 2. Do we hire the necessary management skills? and 3. Will the hails outweigh the benefits? Among the arguments made by Alexander and Korine is that which encompasses the pressures surro unding the globalization process.Alexander and Korine (2008), argue that companies press release global in relation to discordant commercializeplace pressures are fashioning serious mistakes, subsequently forced to undo their international investments, often involving the judgment of dismissal of senior management teams. Alexander and Korine (2002), offer up examples of failed strategies such as Dutch financial-services firm ABN Amro, Daimler-Chrysler, and AES a U. S. ground energy firm that despite operating in 29 countries on five continents, agitate to bring added value. The authors relate the struggles of deregulated industries to a glocal problem.That is to say that many customer expectations, operating environments, and management practices of a globally standard service can vary greatly depending on location, in example, citing the standardization of electricity menstruum everyplace power grids (Alexander & Korine, 2008, p. 107-109). E genuinely diligence has its own challenges with globalization. Issues within the service industry, such as Starbucks, for example, have been that profit margins are equivalent to about half of that which can be expected domestically.In the IT industry the protection of intellectual property rights has ca determinationd many companies to simply leave countries like India, while the failed integration of Daimler-Benz and Chrysler is a perfect example of a failed globalization strategy in the manu facturing industry (Alexander & Korine, 2008). In discussing some of the strategies that did work, such as GE, and Renaults alliance with Nissan, Alexander and Korine caution against focusing on these success stories.Stating that that while many companies are planning rapid expansion, they are underestimating the management challenges. Their final point is that the landscape of players is very varied than that of the global landscape of 30 years ago. Todays successful global behemoths, according to Alexander and Korine (2008), are more diversified both in type and international footprint. Meaning, such companies possess a greater diversity in the types of subsidiaries they own and operating in more countries than ever before. SWOT Analysis When you Shouldnt Go GlobalStrengths Reduced financial, political, currency, and exchange risk- Foreign investment involves all of these risks. By refraining from strange investment we avoid these risks. Simplicity of trading operations- Setting up and maintaining irrelevant investments complicate operations. Refraining from way out global bear ons operations more simple. Protection of intellectual property- It is very difficult to protect intellectual property in foreign countries. By keeping all activities domestic, ace is adding a layer of protection to intellectual property rights. Weaknesses injustice of economies-of-scale and economies-of-scope- This according to Alexander and Korine is what is not being fully realized by going global, and therefo re whitethorn not be that significant of an issue in many industries. spill of first-mover advantages- Choosing not to go global may recall making the irrevocable choice to give up the first-mover advantage. This is usually a very small window and a one-time opportunity. Foregoing surplus revenue sources- For a company that has no additional capability revenue sources domestically, going global may be the but opportunity to gather additional revenue.Foregoing market place growth- For companies wishing to expand market r distributively, the choice to forego going global leave limit their market penetration. Opportunities No financial investment- Refraining from foreign financial investment frees-up those funds for investment in domestic activities. No single-valued function of other resources- Refraining from going global frees-up all resources (human, etc. ) for use in domestic activities. Threats Loss of market share to contender- Should ones competition be successful in going global, they may be able to offer similar products at much lower prices so forcing you out of the market.The competition may also offer superior products at higher prices, and capture the market, via the use of superior technology. Loss of talent to competition- In many fields, such as high tech and engineering, the worldwide competition for talent is fierce. Failure to go global often means failure to secure talent. Loss of learning opportunities- Since globalization can take the form of colligation ventures. There is also the threat of the red of learning from a joint venture partner that should be considered. Situation AnalysisSince the seventh ascorbic acid handicraft have possessed the desire to operate internationally however, those considered truly global, did not start look until the past century. With growing stories of globalization successes, follow just as many testaments to failures. Despite the growing heel of failed attempts the overwhelming pressure to conduct the ultimate border-less business has be tot up increasingly enticing. Most large companies founded 20 years ago feel battered by numerous external forces pushing them towards globalization.Driving forces such as the removal of political and regulatory barriers to global trading and investment and the ability to conduct business 24 hours a day from anywhere in the world, draw these business behemoths one step walk-to(prenominal) to customers in emerging economies (Alexander &Korine, p. 106). Deanna Julius (1997), lists in her article titled Globalization and Stakeholder Conflicts a corporate perspective), three primary, macro-level forces, drive the lease for change as how companies are organized, how goods and services are produced and how they are bought by and delivered to customers.Alexander & Korine (2008), mention that while many of the companies that have rushed to globalization have benefited, or at the very least have not suffered irreparable damage, some are wi tnessing major fallout from the move. The authors suggest that while companies often fail from misguided global strategies and an unanticipated level of execution, they could have avoided such failure by earnestly addressing if potential benefits even exist in going global, if their management possess the necessary skills and the close to formal one, leave alone the costs of going global outweigh the benefits?Alexander & Korine (2008), argue that most companies fail to ask themselves these questions due to previously held false assumptions regarding the virtues of globalization and seduction from the stock market. As previously mentioned, deregulated industries such as those who provide water, power, and mail service are among those experiencing global failure. Alexander & Korine (2008), suggest that deregulated industries are operating under the misguided assumptions as rise.The greatest assumption being that, going global go out save them money, given over they will be shar ing resources across their international operations. When in reality, the costs to enter the foreign markets end up outweighing the assumed benefits (Alexander & Korine, 2008, p. 107). Managerial fads are suggested to undermine rational behavior from within a company, consequently resulting in sloppy phoneing that distracts management from more imperative tasks associated with global success.Properly servicing global customers from a national perspective contri scarcelyes too many failures given, much attention must be afforded to a mix or global and local factors simultaneously. Global manufacturing companies are tell to fail due in part to the complexities related to the integration tactics necessary grow and compete better, resulting in costly delays and indeed failures (Alexander & Korine, 2008, p. 110). STAB Principles Win All without Fighting Capturing Your Market without Destroying It The goal of business is to survive and prosper over a hanker period of time.Sun Tzu, a uthor of The Art of War, described the strategy in achieving this long term prosperity as an offensive one in which a company must take all under Heaven intact, Thus your troops are not worn out and your gains will be complete (McNeilly, 1996, p. 11). McNeilly (1996), utilizing Sun Tzus principles in his book The Art of Business, adds that, by taking all under heaven intact you will capture your marketplace thus ensuring your companys survival of the fittest and prosperity. However, your desired markets must be defined as such and nothing less than commitment in achieving market dominance must be displayed (McNeilly, 1996, p. 1). Application of Sun Tzus principle, win all without battle capturing your market without destroying it, as cited in McNeilly (1996), has been useful to many of todays leading companies, including global cement producer, CEMEX. Cemexs chief operating officer Lorenzo Zambrano has applied Sun Tzus technique when expanding his cement company in Mexico and ab road. By the year 2000, CEMEX had become the worlds third largest cement company. In Cemexs quest for market dominance they switched to a strategy of growth through acquisitions.In the late 1980s large firms were considering expanding their operations into Cemexs Mexican territory. Realizing the imminent threat CEMEX decided to unify its Mexican operations by acquiring two of Mexicos large cement producers, affording CEMEX access to Mexicos central market and bolstering its exporting capabilities, making CEMEX Mexicos largest cement producer and a threat not to be competed against. While CEMEX won all without fighting, they gained market dominance in Mexico, later fueling their geographic expansion (Ghemawat, 200, p. 155).Deception and Fore friendship maximize the Power of Market Information Foreknowledge, as described in Sun Tzus third strategical principle, is not projecting what will happen in the future, based on past occurrences or unless conducting a trend analysis. Forekn owledge and maximizing the power of market information is to gain firsthand knowledge of your competitions strengths and weaknesses, know their capabilities, culture and mindset, and obtain a deeper understanding of who their decision makers are and what their future goals and plans are (McNeilly, 1996, p. 0). As Sun Tzu stated in The Art of War, as cited in McNeilly (1996), regarding foreknowledge What is called foreknowledge cannot be fire from spirits, nor from Gods, nor by analogy with past events, nor from calculations. It must be obtained from men who know the enemy situation. In order for a company to succeed on a global scale not only do the ins and outs of their competition need to be understood and plotted against, they must also know themselves their own weaknesses, strengths, muckle and plans as well as the market in which they will be entering.A corporation miss this level of foreknowledge should reconsider entering global markets until they better know themselves a nd their competition. Before Wal-Mart swept our nation, surface-to-air missile Walton gathered vast amounts of information on his competitors, large and small, before he ever brought competition to their territory. In fact, before Wal-Mart took on hence behemoth value retailer Kmart, it was the smaller, local mom and pop retailers that were seized up.Walton intimate about the smaller retailers value chains and distribution methods, through foreknowledge, he attacked their weakest points, where they could not afford to compete, in costs and deceptfully defeated them where they did not expect it in their own small, rural towns. Defeating the smaller retailers gained Wal-Mart the necessary market share to then surround urban Kmart. Wal-Mart, knowing that Kmarts operating costs was on number 5% higher than theirs attacked Kmart at its cost structure, and won.Kmart was just not able to get under Wal-Marts five point advantage in operating costs (McNeilly, 1996 p. 25). In 2009, after w aiting for a new government with a more hopeful political environment and a well diametric partnership with local market-savvy grocery retailer, Bharti, Wal-Mart utilizes foreknowledge and deception to enter Indias market. Historically however, Wal-Mart has been unsuccessful in several global markets such as Japan due to their inability to adapt to local markets and tastes (Consumer Goods, 2009).As McNeilly (1996), notes in summary, you must learn everything you can about your competition, not merely the facts, but you must also learn about its culture, market, mindset and capabilities. Possibly additional foreknowledge in these areas could be of great use to Wal-Mart. Character Based leadershiphip Providing Effective Leadership in Turbulent Times Character based leadership is not only desirable but it is an attribute than often separates the globally successful firms from the rest.When a company first tries its business hand and wad skills at cross-border trading, most of the times are disruptive ones and without effective and transparent leadership, going global can quickly escalate from intimidating to downright terrifying. When we think of character based leaders, often people like Chryslers Lee Iacocca, Steve Jobs (Apple), The Snyder family (In-N-Out burger), Dan Cathy (Chick-Fil-A), Eric Schmidt (Google) and Jim Skinner of McDonalds come to mind, but McNeilly (1996) reminds us that not only are leaders of this standard of measurement unique, they can also be gruelling to find.It is of no coincidence than that we can more readily recall companies operating under less than character based leadership, faster than those with it. Companies like Nike, BP, Exxon (Valdez Oil spill) and even Carls Jrs current chief operating officer Andy Puzder, come to mind. Sun Tzu stated in The Art of War, as cited within McNeilly (1996), The general who in advancing does not seek personal fame, and in withdrawing is not concerned with avoiding punishment, but whose on ly purpose is to protect the people and promote the best interests of his sovereign, is the precious jewel of the statefew such to be had. McNeilly (1996) suggests that leaders of this caliber are desirable given they put the needs of others before theirs, they have strong and well developed characters. Becoming such a leader is not easy and will require much render to Build your character, not just your image lead with actions, not just words Share employees trials, not just triumphs, motivate emotionally, not just materially, assign clearly defined missions to all, avoiding mission crossing and confusion and the make your strategy drive your giving medication not the reverse (McNeilly, 1996, p. 119).Jim Skinner, CEO for McDonalds and winner of the 2009 CEO of the Year award is greatly admired and willingly followed by his employees around the world and thus a great example of a character based leader attributing to McDonalds global successes. Skinner, who began his career with McDonalds in 1971 as a grill cook was named CEO in 2004, at a tumultuous time for the company. Skinner acted quickly to turn the company around and in result between 2004 and 2008 McDonalds revenues climbed 41. 1 percent in four years, and net income jumped by 81 . 3 percent (Top Executive, 2009).The top nominees for CEO of the year are judged by such criteria as leadership, justice, ability to outperform and for their commitment to employees. It was no strike to those who knew and worked with Jim Skinner that he had excelled in every category. After receiving the award, Skinner acknowledged the support his leadership team, along with the entire McDonalds system, stating Together, our franchisees, employees and suppliers make up what we call our three-legged crapper, we succeed only when all three legs of that stool are strong, aligned and performing at the highest levels (Top executive, 2009).In closing, Skinner noted that while the challenges of leadership have grown more compl ex in the multifaceted business climate, holding fast to fundamental principals will serve todays global business leader well (Top Executive, 2009). The character based leader of todays successful global firm provides effective leadership in turbulent times, Sun Tzu refers to this as chaste influence stating in The Art of War, as cited within McNeilly (1996), By good influence I mean that which causes people to be in harmony with their leaders, so that they will accompany them in life and unto devastation without fear of mortal peril. Skinner possesses moral influence among his employees, an important principle that will undoubtedly stir McDonalds in global markets around the world. Christian Values At the minimum, companies poised for global success, will wear a mission statement. Ideally, these companies will have a statement of values. One well-groundedation that is not only global, but transnational World Vision International has a statement of values that serves as mora l compass in decision making and strategic planning.It states that WVIs values are to Bring a Christian, community-based, child-focused HIV and AIDS response, reflecting Gods unconditional love for all people and the affirmation of each individuals dignity and worth (World Vision International, 2009, p. 2). It is these types of clear statements of vision that removes the guess work from the Christian Business Praxis model. Additionally, companies need to look at the characteristics of their organization and the values their leadership possesses to determine whether or not the decision to global is in the best interest of the organization.Some examples are Benevolence- For many organizations kindliness is the primary reason for going global. This was certainly the case of bicycle manufactures and APU alumni ACIRFA, who after going on mission to Africa saw a need for transportation and found a way to meet that need. Stewardship- Stakeholder theory, which seems to dominate most modern business decision making, indicates that it is un good to go global without first considering the impact on all of your stakeholders.Clearly, ones shareholders are his or her primary stakeholders. However, one must be mindful of the fact the fact that the organization is also the steward of its employees. And, to that end the organization has a duty to plan responsibly and minimize risk to those employees. As such, it is important for organizations to ensure that they are balancing potential profitability with the potential of not serving some of those under their care. Collaboration- This is a curiously useful skill if an organization is considering joint ventures.If, however, the organization has found that that the leadership of the organization or the organization as a whole is particularly weak in this area this is an indicator that a joint venture is not ideal. Integrity- The challenge associated with integrity (assuming that your organization possesses a great deal of integ rity) is that one doesnt know the off-shore partners and vendors ones organization will be dealing with. New relationships will need to be established, and with that trust will need to be cultivated.Management skill- For every ounce of management skill it takes to manage domestically it takes a surpass to manage off-shore. This is because there is an entirely new set of challenges and risks. There are language barriers in many cases. There are currency fluctuations, political risks, supply chain issues, and a whole host of challenges that one may not have realized existed even with enormous due diligence. Passion- The type of passion we are addressing here is the type associated with buy-in.If all members of the executive management team have not bought-in to the idea of going global it is going to be very difficult to have a great deal of success. Leadership must be passionate about going global. They must be excited, and they must be persuade that this is the future of the orga nization for global efforts to be successful. Preparation- Preparation is the key to success in going global. It may be fine to start out by simply exporting a few items. However, as demand increases, organizations will find that the need for strategic planning and preparation will also increase.Should a company wish to enter into either a joint venture, licensing agreement or build facilities off-shore, extensive due diligence involving outside consultants will be necessary. Zest- As we have suggested, going global is not for the faint-at-heart. Leaders have to be willing to take risks, and moreover leadership should invigorate others. Going global is not an easy task, great planning and preparation are integral. There will be many challenges and many hurdles and in many cases there will be more reasons to quit than halt the course.Therefore, zest is a prerequisite for going global. Recommendations Before making the decision to go global, heed Alexander and Korines advice, and ask three questions of your organization 1. Are there potential benefits for our company? 2. Do we have the necessary management skills? and 3. Will the costs outweigh the benefits? The answers to those three questions will give the organization a starting point from which to determine if going global is in the best interest of the organization as a whole.Next, ask the operational questions- Is going global necessary for the growth and/or survival of our organization? Is globalization worth the various risks involved? Can effectively and protect our intellectual property in a cost efficient manner? Will the complications surrounding operations be overwhelming? What do we stand to lose if we dont go global and if we dont who within our competition will? What possible ramifications exist at the expense of not going global? Are we losing out on a learning opportunity by not going global?Is there unbolted talent out there that we may miss out on by not going global? Then ask the company, how much the above is worth in terms of opportunity cost? If we dont utilize our time and resources in going global, how then will we allocate said resources to growth? Then ask your company the values questions- Is going global a responsible and ethical management decision? Can we trust that we will find people of integrity in the global economy to do business with and if so, do we possess the necessary passion and zest to be successful at such as risky cross-border venture?In addition, have we well prepared, and will we continue to be, throughout every step of the process? After asking the above questions we recommend conducting a fine SWAT analysis where all possible risks and rewards involved with going global are fully vetted, then establish that all Christian perspectives are clear and present and finally, if the decision to go global is made, go forward while applying Sun Tzus Art of Business principles.In conclusion, Alexander and Korine (2008), suggest that we should not e xpect the influx of globalization failures to stop or improve any time soon. Making the valid point that, companies in a variety of industries will continue on in their reckless hobbyhorse of global strategies, activists will continue to cause change and disruption and less than character based leaders will stand behind flawed globalization strategies, all the while, customers will always be demanding study attention.While it is undeniable that globalization is a seductively daunting opportunity with promises of increased power and untrammeled benefits looming about the mere thought and that while even the best and brightest leaders, heading up the most well prepared companies may eventually succumb to its pressures, make the cross-border transition and possibly fail at it, keep in mind- sometimes to fail is necessary to succeed. References Alexander, M Korine, H. (2008). When You Shouldnt Go Global. In Bartlett, C. A. Beamish, P. W. Transnational Management- Text, cases, and r eadings in cross-border management. 6thed. p. 105-112). New York McGraw-Hill Irwin. 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