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'Going global' seems tough journey

By Jalal Alarmgir (China Daily)
Updated: 2008-05-19 11:48

This environment is particularly threatening to midsize firms. The first part of their globalization strategy, therefore, should be informed by a strategic risk management approach. It requires a bit of research into understanding overall risks to the firm, the industry and the economy, the level of control over these risks, strategies to mitigate them, and implementing a flag-raising mechanism that kicks in toward suggesting alternative strategies when risks increase.

Global opportunities

Beyond risk, the global economy, of course, offers manifold economic opportunities. To maximize them, a midsize firm will once again need to put on its strategic hat. It will need to juggle multiple geographies and products, and understand and manage them on a timeline from present to future.

But doing this successfully requires two fundamentals that mid-market firms in emerging economies cannot take for granted. The first is information, as noted earlier.

While information sources are not available easily in the public domain, there are boutique firms that specialize on providing information on how to go global, from marketing and selling, to tax, laws, and regulations, to organizational structure and communication, to infrastructure needs, and to managing people.

The second is a strategic mindset or capability. An example will make this clear. To make use of global opportunities, many firms decide to acquire another firm abroad. But acquisition is the easy part. Most firms struggle to manage the post-acquisition reality because they have either not thought through the strategies or neglected to build the capabilities ahead of time. And so, almost 70 percent of all mergers and acquisitions fail to deliver the intended results. Here, too, specialized consulting firms that focus on capacity development in a global context can help.

Like it or not, the world economy is a reality even for domestic-focused firms, and the value of global information and strategy is something that mid-size firms can no longer afford to ignore.

The author is an assistant professor of international relations at the University of Massachusetts, Boston, USA, and a Principal at Red Bridge Strategy Inc, a specialist consultancy that helps clients develop globalization strategies. The views expressed in the article are his own.

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