The fastest way to global expansion and
for the most part the most efficient way relative to financial and other
resources would be to invest in foreign expansion (mergers and acquisitions). The
ability to find existing businesses in other countries to either partner with
or acquire helps to quickly grow and develop the local talent and expertise needed
to expand globally. Although this has proven to be an extremely successful strategy,
there are some obvious risks that could make this strategy go horribly wrong. Most
large corporations have the capital and expertise to go into these various global
markets and turn the businesses they acquire around. However without that
expertise a company would have to rely on their partners or the acquired company
to provide the leadership and integration. This could be dangerous if there was some reluctance by
the partner or acquired company to share their expertise or buy in to the global
strategy.
To overcome the “reluctance” obstacle moving
some headquarters to the foreign locations would be beneficial. This is also
very critical from a business development perspective since it is very
important to understand not only the language but all the cultural etiquette
when trying to expand in foreign countries.This is not
only a necessary business move it is a very strategic political move. As these emerging
markets become larger players on a global and political scale, it would not be
acceptable to only use key leaders from the US to run these foreign companies.
There would definitely be a political backlash and eventually an unwillingness
to do business. Having local operations and leadership demonstrates
a commitment to the region but also respect relative to a willingness to learn and
do business correctly within the particular culture.
Most companies today have a strategy of
internationalizing the senior management ranks within their organizations. This
simply means expanding the senior leadership team to include leaders from the
local regions instead of just having leaders from the US manage the foreign
companies. This is a necessity as foreign
governments, work forces and economies are becoming less tolerant of senior
leaders who are not adept to the language and/or culture in which they do
business. Keeping a centralized leadership structure would be very beneficial
however leaving key executive slots open for local leadership would greatly
assist in business development and government lobbying efforts.
In the 1970's and 80's General Electric was most famous for
demonstrating the ability to grow fast and efficient through globalization. Their strategy for expanding globally was effective for the time they
decided to pursue it however it may take different forms for other organizations today. Since smaller companies are expanding globally there are several important factors to consider: Deciding what business would be optimal for expansion, understanding the local
foreign economy enough to know what approach to take and knowing what products and services to offer are all critical components. Is it mergers and acquisitions, working with a key partner or is it building from the ground
up? Finally having the local presence within the leadership team is a key
necessity from a goodwill, political and business development perspective.
Rodney Brown
Mr. Brown brings extensive experience building companies and leading sales, operations and service organizations in technology and healthcare. He is the Executive Director of HealthNet connect and CEO of HNcBNc.
The views and opinions on this blog are my own.
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