International Business – How to Jump to Global Company?

Good morning and welcome back readers.

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Assume you have a start-up business and want to expand to another countries in same continent. Or, you are a senior executive in Regional Office who get a mandate from Head Quarter to expand to another countries in your territory (e.g. Region Asia Pacific expand to Vietnam, etc). Maybe it’s too high, let say you want to expand to another island in same country. Or, in small area, your kid want to take university degree in another island. As a business owner / senior executive / parents, want do you do? Of course, you will do a feasible study / cost-benefit analysis / capital investment analysis, etc. Or research about what, who, why, when, where, and how.

Many peoples tend to see from external impact while forget to see internal capabilities. As a risk consultant, I see the big part of top ten risk and inherent risk, come from internal factors. You will put company / business in a danger if only focus on how react to external and international factors. Indeed its important, but don’t put all egg in one basket. Its like giving your kid with all things that might be not needed most, rather than asking question “what do you need”?

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Company

What actually company need most? As example of global integrated enterprise, IBM create (source: http://beta.fortune.com/2014/11/03/sam-palmisano-how-to-become-a-truly-global-company/).

  1. Single organic entity.
  2. Integrating operational horizontally & globally.
  3. Collaborate with external partners.
  4. Maximize value creation by choose the best location.
  5. Stay competitive.
  6. Emphasizing values and principles to foster agility, innovation, and productivity.

Of course, some company were not fully succeed to implement global idea, like Snapple, Kellogg’s, and Walmart. Most reasons were due to change global/local market, channel complexity, aggressive competitors, local culture, change on legal compliance obligation, etc.

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Before start to jump to global competition, there are some measurement to check readiness of company, it called “seven tudes” (source: http://www.ceo.com/flink/?lnk=https%3A%2F%2Fhbr.org%2F2016%2F04%2Fdoes-your-company-have-what-it-takes-to-go-global&id=334548). The tools and results are:

  1. Attitude (prioritization of global expansion): international initiatives, international leadership.
  2. Aptitude (knowledge and skills): blending internal company experts with the international team.
  3. Magnitude (ability to align opportunities with capabilities): understand international opportunities.
  4. Latitude (ability to adapt): training and sensitizing stakeholders on cultural differences.
  5. Rectitude (legal and ethical practices: bench marking competitive practices in country.
  6. Exactitude (tolerance for uncertainty: considering strategic objectives versus only financial ones.
  7. Fortitude (commitment to global initiatives): publicly reinforcing stated goals.

The tool consists of 28 statements, four for each of the seven ‘tudes. For each overseas initiative being considered, respondents rate on a 1–5 scale. It also divided respondents into two groups: winners (expansion efforts met business performance objectives such as sales, profit, and market share goals), and losers (efforts failed to achieve goals). This tool is similar with mine when conducting risk maturity assessment to clients. On risk maturity, I have more than 50 statement for two type of respondent (senior management and middle-low employee).

(Image: biztalkmaturity.com)

 

Own Business

Okay, what else? Maybe we pull back for awhile to our own business. As a business owner, we have a right to decide go or no go in short time, no high bureaucracy like big company. It similar with me when my client consult about project risk, and how to measure “go or no go decision”. Start ask your self why? Its need by or want to? Similar like when we want to buy expensive things, ask first your self many times. Ask about:

  1. Target market.
  2. Familiarization of product/service.
  3. Understanding sales impact of local culture & local competitors.
  4. International partner.
  5. Legal Compliance obligation.
  6. Physical / online presence.
  7. Financial stability.

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Family

When your kid wants to continue to senior high or university with different city / island / country, the first come to your mind is “why”? Then, after debate with kid with no results, then you as a parent start to prepare the best for kid. You will prepare:

  1. Documentation (legal compliance obligation): passport, visa, ticket, other important documents.
  2. Management: financial (money), operation (packing, communication way).
  3. Multicultural differences: mental, improve language, research destination (local culture).

(Image: mindset-eg.com)

 

Conclusion

Become a global company is not a mandatory way to expand your business. It could minimize risk of decline local market and improve sustainability of company’s growth.

How to jump to global area? It’s similar way for you as senior executive in company, business owner, or parent for 18 years old go to university. There are similar pattern.

Main goals are maximize value for customers, employees, and business partner. Basic things are developing:

Soft structures:

  1. Different skills & behaviors.
  2. International initiatives, international leadership.
  3. Understand international opportunities.

Hard structures:

  1. Transparency, accountability, responsibility, in-dependency, & fairness.
  2. Discipline on financial and investment management.
  3. Multicultural differences.
  4. Less bureaucracy and organization structures.
  5. Single and global supply chain for product, services, capital (include human capital), etc.
  6. Blending internal company experts with the international team.
  7. Understanding sales impact of local culture & local competitors.
  8. International partner.
  9. Legal Compliance obligation.
  10. Physical / online presence.

 

Have a good day!

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