Although globalization is often hailed as the future of business, in Harvard Business Review, Marcus Alexander and Harry Korine of London Business School warn that some companies suffer from "going global".
The authors say that companies with poorly conceived globalization strategies could become targets for breakup or overhaul by activist share owners. Despite this, "many businesses (particularly in deregulated, service, and manufacturing industries) have made complacent assumptions about the need to go global and moved full steam ahead toward failure".
Alexander and Korine say these mishaps can be avoided by answering three basic questions:
1) Are there potential benefits for our company? Global strategies that worked for some companies won't have the same benefits for others.
2) Do we have the necessary management skills? It might be that the potential benefits exist for the company but there might not be the required talent or leadership to realise them.
3) Will the costs outweigh the benefits? As the authors explain, "Global efforts can be rendered counterproductive through unanticipated collateral damage." The costs of managing the global strategy can outweigh the benefits and result in large losses.
When You Shouldn’t Go Global
Marcus Alexander and Harry Korine, Harvard Business Review, December 2008
