MSL 711

Strategic Management

Why You Shouldn’t Go

Global

Presented By: Group 8

Khushee Namdeo (2020CH10095)
Pawan Kumar (2021SMN6653)
Saurav Kumar (2021SMN6643)
Surabhi Singh (2021SMZ8144) 1
“Even as companies are being told that the future lies in globalization, some are
severely punished for their international moves.
A simple test can help you decide what makes strategic sense for your organization.”

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Marcus Alexander and Harry Korine

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Introduction
• Globalization promises substantial advantages like new growth and scale
• Force driving globalization are powerful and help the businesses to become a global
player
• For some companies, it’s paid off handsomely, but global mania has also blinded many
firms to a hard truth: global strategies are devilishly tough to execute
• Removal of political and regulatory barriers (cross border trading) and adopting new
technology
(Help multiple industries to make their global presence)
• Economic Globalization: Best hope or greatest threat????

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 Reason of Failure:

Global strategies are deeply misguided

Avoiding III- Execution was difficult then anticipated

Fated Strategies
Government regulations limits the business
dimensions

Cultural barriers

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 1. Are there potential benefits for our company?

2. Do we have the necessary management skills?

Avoiding III-
Fated Strategies
3. Will the costs outweigh the benefits?

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Avoiding III-Fated Strategies
1. Are there potential benefits for our company?
Just because a move makes sense for a rival or for companies in other
industries doesn’t mean it makes sense for your own company or industry.
2. Do we have the necessary management skills?
Even if potential benefits do exist for your company, you may not be in a
position to realize them.
3. Will the costs outweigh the benefits?
Even if you are able to realize the benefits of a global move, unanticipated
collateral damage to your business may make the endeavor counterproductive.
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 Three Industries with Particular Globalization
Challenges
Deregulated Industries (telecommunications, utilities):
State-owned industries have responded to deregulation with aggressive global moves
and they globalized and increased competition in home markets
Sharing resources across international operations while follow “sticking to their
knitting”
Challenges:
With or reverse their strategic moves (International Market)
Difference in pricing and customer behavior
Environmental regulations
Distribution strategy 7
 Three Industries with Particular Globalization
Challenges
Service Industries (retailing, banking, insurance):
Industry have viewed globalization as a way to realize scale economies and to
generate growth beyond home markets threatened by foreign rivals
Globalization seems to make sense because customers and suppliers are also
becoming more global
Challenges:
Implementation of service
Co-ordination with process or people
Sharing resources
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 Three Industries with Particular Globalization
Challenges
Manufacturing Industries (automobile and communications equipment makers):
Global mergers and consolidation in order to survive
Benefits sought by service companies are often outweighed by operational and
organizational challenges
Challenges:
Local expectation
Economy slowdown
Operation
Organizational sustainability

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Royal Ahold’s Downfall
Dutch supermarket operator Royal Ahold - An accounting scandal that led to the
resignation of its CEO and its CFO in 2003 (Due to International expansion in the 1970s
– Europe, Asia, Latin America and USA)
• Cultural differences
• Frequent need to source fresh food locally
• Different information systems coexist across the company, sometimes even within
country
• Lack of integrated systems and processes
• Dissatisfied minority share owners
• Over Diversification of geographic locations
With the focus on governance at Ahold, the underlying story of failed globalization did
not receive adequate attention until activist shareowners jumped on it 10
 Think before Moving Global
• Could the move generate substantial benefits?

Redland, a UK manufacturer of concrete roof tiles, expanded around the world to

leverage its technical know-how beyond its home market
• Do we have the capabilities?

(Experience in postmerger integration needed to achieve those benefits)

Company BenQ’s acquisition of Siemens’s mobiledevices business failed because
BenQ lacked integration skills
• Will the benefits outweigh the costs ?

(complexity that comes with coordinating far-flung international operations)

The full costs of going global can dwarf even a sizable prize

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A yes to these questions suggests globalizing may be right for you

 A Continuing Danger
“We aren’t saying that all globalization strategies are imperfect, but the
conventional wisdom”
• Globalization strategy is a blanket requirement for doing business—which in turn leads
many companies to insufficiently scrutinize their proposed global initiatives.
• Expect this trend to continue, as firms in various industries recklessly pursue global
strategies.
• Problems may recur in industries that earlier rushed to adopt globalization strategies,
with activist shareowners ready to pounce on companies as evidence of poor
management choices surfaces
• Activist share owners and private equity firms may reproduce flawed globalization
strategies in their own portfolios
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Conclusion
• Not all globalization strategies are flawed
• Before moving globalization, need to conduct a self assessment to pre-determine whether the
planned global move makes sense for firm

• Ensure efforts make strategic sense to avoid disastrous consequences

• Briefly discussed the three industries (deregulated, service, and manufacturing) and coming
challenges while enhancing business globally

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Critique
• Article well illustrates:
Need of globalization
Value creation while expanding business globally
self assessment to pre-determine the need for diversifying business globally
• Missed : There any other factor that can be added in the self assessment questions,
for instance, will you able to adapt the cultural differences, would the planned global
expansion offer product development or market development or diversification, and
few others
• The article mentioned that the organizations should ask three questions before going
globalized. However, it is not mentioned that if the organization have yes to all the
mentioned questions and still it fails in the global market then what could be the next
strategic move they can come with
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