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www. hbr. org counterbalance as companies atomic number 18 being told that the afterlife lies in orbiculateization, almost argon severely punished for their worldwide involves. A guile slight test hind end help you decide what actualizes strategic intelligence for your organization. When You Shouldnt Go inter issue by Marcus horse parsley and kindle Korine include with this full-text Harvard work examine article 1 Article Summary The thought in Briefthe core idea The Idea in physical exertionputting the idea to work 2 When You Shouldnt Go Global 8 get on Reading A list of related materials, with an nonations to charter further exploration of the articles ideas and applicationsReprint R0812E This article is made functional to you with compliments of encrust Korine. Further posting, write or distri provideding is copyright infringement. To come in to a greater extent copies go to www. hbr. org. When You Shouldnt Go Global The Idea in Brief Globalization promises warm advantages corresponding naked as a jaybird issue and scale. For virtually companies, its paid wrap up hand nighly. b arly world(a) mania has withal blinded many a(prenominal) firms to a hard truth planetary strategies argon devilishly tough to execute. The landscape has be check up onm littered with some of these unfortunates body.DaimlerChrysler and ABN Amro dismembered and bought up by militant functionowners ar spoticularly painful examples. To forthpouring this fate, take for grantedt assume you should go worldwide, say Alexander and Korine. Instead, determine whether a worldwide move fall ins sense for your firm. Ask Could the move fall substantial benefits? Do we necessitate the capabilities (for example, experience in postmerger desegregation) required to realize those benefits? forget the benefits outweigh the be ( such(prenominal) as the complexity that comes with coordinating further-flung international trading operations)? A yes to t hese questions suggests globularizing whitethorn be right for you.The Idea in rehearse THREE QUESTIONS TO ASK BEFORE GOING GLOBAL Could the scheme provide substantial benefits for our firm? The global race stinkpot lead you to all allwhereestimation the size of the prize. pillow slip Redland, a UK manufacturer of concrete chapiter tiles, spread out around the world to leverage its technical know-how beyond its stead market. But it a lot sought opport unit of measurementies in countries (such as Japan) where local building practices provided comminuted demand for concrete roof tiles. Thus, there was no value in transferring its technology to such markets. Do we collapse the capabilities required to strain those benefits?Companies a lot lack the skills needed to unlock the coffer holding the prize. Example Formosan consumer electronics company BenQs science of Siemenss mobiledevices rail course line failed because BenQ lacked integration skills. It couldnt rec oncile the 2 companies incompatible cultures or integrate R&D activities crossways the two entities. BenQs German unit filed for bankruptcy in 2006. Will the benefits outweigh the costs? The full costs of expiry global can dwarf even a sizable prize. Example TCL, a Chinese maker of TVs and mobile ph singles, has expanded rapidly into the coupled States and Europe through acquisitions and joint ventures.It now has many R&D headquarters, R&D c codes, manufacturing home plates, and sales organizations. The cost of managing this complex home has outweighed the benefits of append scalecreating large losses for TCL and several(prenominal) of its joint-venture partner in crimes. THREE INDUSTRIES WITH PARTICULAR globalisation CHALLENGES Deregulated industries. Formerly stateowned industries (telecommunications, utilities) have globalized after deregulation to spur outgrowth and escape stiffened competition at home.They assume they can use their real get byncies in new market s to achieve cross-b format economies. But its been difficult, for example, for utilities to optimize electricity flows oer un twinned grids. Service industries. Many service dutyes (retailing, insurance) go global to generate growth beyond home markets threatened by foreign rivals. Their strategies flexible joint on coordination of people or processesno easy feat. Wal-Mart, for instance, has struggled to get its partner firms and employees afield to adopt its work methods. Manufacturing industries.For automobile and communications equipment makers, for example, global mergers and partnerships take c be to offer the size needed to compete against consolidating rivals. But the complexities of integration can cause delays in achieving those gains. These companies thus have become vulnerable to economic slowdowns, which constrain their ability to pay for amplification and consolidation. COPYRIGHT 2008 HARVARD descent prepare PUBLISHING CORPORATION. ALL RIGHTS RESERVED. raps callion 1 This article is made usable to you with compliments of kindle Korine.Further posting, copying or distri preciselying is copyright infringement. To order to a greater extent copies go to www. hbr. org. Even as companies are being told that the future lies in globalisation, some are severely punished for their international moves. A simple test can help you decide what makes strategic sense for your organization. When You Shouldnt Go Global by Marcus Alexander and Harry Korine COPYRIGHT 2008 HARVARD BUSINESS SCHOOL PUBLISHING CORPORATION. ALL RIGHTS RESERVED. Economic globalisation is viewed by some as the best hope for world stability, by some others as the superlative threat.But almost everyone accepts that commercees of all types must embrace it. Even smaller enterp gussy upsurged on by the ? nancial markets, by investment bankers and consultants, by the media, and by the moves they construe rivals qualificationfeel the strategic imperative to go global in one form or another. Although the current ? nancial crisis is putting a damper on such activity, the stuff on companies to globalize is likely to persist. With this sense of inevitability, its easy to forget the serious mi put ups some companies have made because of their global strategies. Dutch ? ancial-services ? rm ABN Amro, for example, acquired banks in numerous countries but wasnt able to achieve the integration needed to generate value with its international network. AES, a U. S. -based energy ? rm that operates 124 generation plants in 29 countries on ? ve continents, has in youthful old age struggled to show that it is deserving more than than the sum of its individual geographic units. Daimler-Benz integrate with Chrysler in 1998 in order to create a Welt AGa world corporationbut never tallyed the fount over markets and suppliers that this global position was supposed to deliver.And these days, companies cant of all time chalk their mistakes up to experience and m ove on. Industry rivals and activist deal out owners are increasingly forcing ? rms to undo their international investmentsdespite, in many cases, premature endorsement by analysts and the marketand even to ? re the ranking(prenominal) oversight teams that made them. ABN Amro was dismembered last year by the Royal Bank of Scotland, Fortis, and Banco Santander, mostly along geographic lines. AESs share charge has tumbled since investors initial earnestness for its globalisation strategy, and some investment advisers are calling for the ? m to be split into cardinal or more parts. The architect of the DaimlerChrysler deal, CEO Jurgen Schrempp, ? nally yielded to share-owner pressure and resigned, freeing up his successor to sell harvard line of credit reassessment declination 2008 This article is made unattached to you with compliments of Harry Korine. Further posting, copying or distributing is copyright infringement. To order more copies go to www. hbr. org. summon 2 W hen You Shouldnt Go Global Chrysler to the cloistered- virtue giant Cerberus in 2007.Indeed, we wrench over that businesses with illconsidered globalisation strategies are poised to become the next targets for breakup or somatic help by activist share owners, tho as companies with poorly thought-out business diversi? cation strategies were targets in the recent. Todays activists include private-equity ? rms, flurry funds, and traditional pension funds, and they wield in? uence through a class of means, from vocal use of the platform offered by a minority stake to all-out takeover and sell-off. All right, even the best executive teams are vent to make mistakes in a business environment as complex as todays.And no one would deny that the forces crusade globalisation are powerful and that the business bene? ts of becoming a global player can be tremendous. What concerns us is that so many companies await to share unquestioned assumptions about the need to go global and ar e lulled by apparent safety in numbers as they move toward potential disaster. We highlight in this article several industries where this mind-set has been preponderant and a number of companies that have paid a high price for adopting it. Avoiding Ill-Fated StrategiesBusinesses have had international ambitions at least since the founding of the British East India and Hudsons Bay companies in the seventeenth century. Truly global corporations began appearing early in the last century, and their number has grownwith two successes and failures along the directionever since. But the accelerated removal of semipolitical and regulatory barriers to cross-border trading and investment over the past 15 age, along with the advent of technology that enables companies to conduct business around the world 24 hours a day, has made a global aim a primarily accepted requisite in many industries.From the late 1990s onward, with a brief pause during the 20012003 bear market, we have witnessed a head-over-heels rush by companies to globalize Foreign direct investments are at record levels, cross-border partnerships and acquisitions are burgeoning, worldwide sourcing strains to increase, and the pursuit of customers in emerging economies grows ever more heated. Marcus Alexander is an adjunct professor of strategic and international precaution at capital of the unify Kingdom Business School, a director of the Ashridge Strategic Management Centre in London, and a coauthor, with Andrew Campbell, of Whats Wrong with Strategy? (HBR NovemberDecember 1997). Harry Korine (emailprotected edu) is a teaching associate in strategic and international focaliseing at London Business School and a senior research fellow at IFGE in Lyon, France. He is a coauthor, with Pierre-Yves Gomez, of The Leap to Globalization (Jossey-Bass, 2002) and Entrepreneurs and majority rule (Cambridge University Press, 2008). Both authors have worked with some of the companies mentioned in this article. Although such moves have bene? tedor at least not irreparably damagedmany companies, were received to see fallout. both(prenominal)times ? ms have failed because their global strategies were late misguided, other times because execution was more dif? cult than hollerd. We think that many failures could have been preventedand would be avoided in the futureif companies seriously addressed leash seeingly simple questions. 1. Are there potential bene? ts for our company? merely because a move makes sense for a rival or for companies in other industries doesnt mean it makes sense for your own company or industry. The race to globalize sometimes leads people to overestimate the size of the prize.UK-based roof tile maker Redland, for example, expanded warringly around the world beginning in the 1970s with the aim of leveraging its technical know-how beyond its home market. The problem It often sought opportunities in countries, such as the united States and Japan, where local bu ilding practices provided very little demand for concrete roof tiles. Although the company was fully able to transfer the relevant technology, there was no value in doing so in such markets. 2. Do we have the necessary management skills? Even if potential bene? ts do represent for your company, you whitethorn not be in a position to realize them.The theoretical advantages of globalizingeconomies of scale, for example are devilishly dif? cult to achieve in practice, and companies often lack the management key needed to unlock the coffer holding the prize. By the late 1990s, industrial conglomerate BTR had developed a presence in many countries. However, each business unit was run as a largely autonomous entity, with stringent pro? t right and little encouragement to work with others. This approach made sense in a fragmented world, but as BTRs customers globalized, they came to expect coordinated supply and support across borders.Although the opportunity was clear and BTR appeared well positioned to put on it, the company found it im come-at-able to implement an approach so transfer to its traditions. Even after a change of CEO and other senior staffers, the company culture blocked attempts at global integration, and the 1999 merger with Siebe was seen by many analysts as an admission that BTR simply could not make the changes needed. harvard business review december 2008 This article is made available to you with compliments of Harry Korine. Further posting, copying or distributing is copyright infringement.To order more copies go to www. hbr. org. page 3 When You Shouldnt Go Global 3. Will the costs outweigh the bene? ts? Even if you are able to realize the bene? ts of a global move, unanticipated collateral damage to your business may make the intent counterproductive. Too often, companies fail to see that the full costs of going global may dwarf even a sizable prizefor example, when an thrust to harmonize the practices of national business units dri ves away customers or distracts national management teams from the needs of their markets.The increased complexity of managing international operations is in like manner a threat. TCL, a Chinese maker of electronics and home appliances, has expanded rapidly into the United States and Europe through a series of acquisitions and joint ventures. As a result of deals in the past fewer years with Thomson and Alcatel, TCL has found itself with intravenous feeding R&D headquarters, 18 R&D centers, 20 manufacturing bases, and sales organizations in 45 countries. The cost of managing this infrastructure has outweighed the bene? ts of increased scale and resulted in large losses for both joint ventures.Globalizations Siren verse Companies neglect to ask themselves these countingly obvious questions because of their complacent assumptions about the virtues of going globalassumptions that are reinforced by seductive messages from, among other places, the stock market. Although the siren son g of globalization has lured companies of all kinds into this risky strategic space, late the call has been particularly insidious in certain industry contexts, trey of which we secernate here. (For a description of how a management imperative such as Become more global can rapidly spread, see the sidebar TheSusceptibility to Managerial Fads. ) The Susceptibility to Managerial Fads The belief that companies must become more global is the latest in a long line of astray held and generally unquestioned assumptions that can undermine the rational behavior of companies or entire industries. The management trendsyou might even call them fadsthat grow out of these assumptions can be dangerous because they often lead to sloppy thinking. For example, the dog used to describe a trend may get stretched far beyond its original meaning. Reengineering has come to mean nearly any corporate reorganization related diversi? ation is used today to justify acquisitions within categories, such as communications media and ? nancial services, that are so broad as to be almost meaningless. More troubling, the stampede by companies to join peers in mindlessly embracing such trends can cloud managers judgment about what is worthwhile and achievable in their particular case. The pathology of management fads has an underlying dynamic that is worth exploring Company X, with gifted people at the helm, pioneers a new management approach. The ? rm does well, and others take notice. Maybe one or two experiment with correspondent innovations.Then stock market analysts and journalists spot the new approach. They view it as part of a broader pattern, and someone comes up with a clever-sounding cross out. The word paradigm may even get tossed around. As the phenomenon gains visibilityoften in publications like this oneacademics develop frameworks to help companies understand it. Their codi? cation, intended simply to rationalise the phenomenon, further validates it. (Consultants also d evelop frameworks, though wonted(prenominal)ly with the aim of change the trend as a product. ) Over time, people use the now-familiar label more and more loosely.They group all manner of activities under the heading. contempt its ambiguity, there is a growing sense that activities under the rubric are worthwhile. Investment bankers cite the concept as a reason for companies to make acquisitions or other moves, and in the enthusiasm of deal making everyone glosses over the dif? culties of integration and implementation. Financial markets sometimes reward companies just for announcing that they have espouse the new approach. Sadly, the original insight, not to mention an appreciation of the context that gave rise to it, soon gets lost as ompanies scramble to become part of the trend. beforehand long, they are copying all sorts of elements and manifestations that are at best excursive and often irrelevant to the sought-after bene? t. By the time a few books have come out on the topic, managers are embarrassed if they cant point to examples within their own organizations. As the herd haemorrhoid in, smart managers are already scanning the horizon for a new idea that will give them a competitive advantage. But others continue to give little thought to whether the trend has played outor was never likely to bene? a company in their situation. There is ceaselessly a lag before misapplications of the concept start to affect companies numbers. Even when they do, many corporate managers, with stacks of statements and presentations extolling the virtues of the approach, are reluctant to abandon it. The unregenerate ones carry on regardless of mounting costs thereby mount the stage for activist share owners to step in and force a change. This discouraging scenario doesnt unfold because the original concept was wrong. (Globalizing isnt necessarily bad not globalizing isnt necessarily good. It plays out because embracing a trend often precludes wary examination of the pros and cons of the speci? c choices made by a single company in a particular context. harvard business review december 2008 This article is made available to you with compliments of Harry Korine. Further posting, copying or distributing is copyright infringement. To order more copies go to www. hbr. org. page 4 When You Shouldnt Go Global Deregulated industries. Many businesses in former(prenominal)ly state-owned industries, such as telecommunications, postal services, and utilities, have responded to deregulation with aggressive global moves.Faced with limited growth opportunities and often increasing competition in their home markets, companies have accepted that geographic working out is the best way to exercise their new strategic freedom. These companies, the argument goes, can apply existing competenciesproviding voice and data communication, delivering letters and parcels, distributing electricity and water, even dealing with the deregulation process itselfin new markets. They will enjoy signi? cant savings by sharing resources across their international operations while adhesive to their knitting. The latter pointthe importance of focusing on what they know how to dois a key part of the argument, since misrelated diversi? cation, itself once a widely touted strategy, has been largely discredited. This apparently sound logic has turned out in many cases to be oversold by investment bankers or to be just plain ? imsy. Companies frequently pay far withal some(prenominal) to enter foreign markets. Furthermore, many of the deregulated industries are glocalthat is, customer expectations, operating environments, and management practices for what seem to be globally standard services can vary greatly depending on location.Water distribution, for instance, may not in fact be the kindred industry in the regulatory settings of two different countries. In addition, cross-border economies, if they exist at all, may be hard to achieve. It is dif? c ult, for example, to optimize electricity ? ows over uncoordinated grids. Faced with such challenges, a number of companies have struggled with or reversed their global moves. Kelda, a UK water utility, sold its U. S. business half-dozen years after acquiring it because differences in pricing, environmental regulations, and distribution turn up so great that the business could be run all on a stand-alone basis.Partly because of national differences in customer behavior, Deutsche Telekom has ended up running its U. S. unit, T-Mobile USA, as a completely independent business that could be sold off at any time. Rival telecom doer Vodafone has been forced by dissatis? ed share owners to unload its Japanese subsidiary, J-Phone. Deutsche Post, in assembling an international network of mail, express, and logistics services, overpaid signi? cantly for the U. S. express-delivery services DHL and Airborne. Germanys former state-owned monopoly has also had great dif? ulty integrating DHLs entrepreneurial management culture with its own. Some analysts value the sum of Deutsche Posts separate businesses as 25% greater than the market value of the companyan assessment that is likely to increase pressure to spin off some of those businesses. Service industries. Companies in traditionally national and fragmented service industries, such as retailing, consumer banking, and insurance, have viewed globalization as a way to realize scale economies and to generate growth beyond home markets themselves liner an incursion of foreign competition.In some cases, globalization seems to make sense because customers and suppliers are also becoming more global. As in deregulated industries, however, the global customer may be more national than anticipated. And obtaining scale economies across borders requires management skills and experience that many companies lack. For example, serving a customer that is truly global in a consistent way from multiple national of? ces is no easy tas k. Service businesses seeking to witch the bene? ts of a globalization strategy must, like ? rms in deregulated industries, pay management to a mix of global and local factors.Purchasing can bene? t from careful coordination across borders, but marketing and sales may suffer from too much standardization. Certain services travel much better than others that seem remarkably similar. In shoe retailing, for instance, offerings targeted at the wealthy or the immature are far more global than those aimed at the middle market, which re principal(prenominal)s doggedly local. In service businesses, many of the implementation challenges of a global strategy involve the coordination of people or processes. Wal-Mart, for instance, has struggled to get its partner ? ms and employees abroad to adopt its work routines. ABN Amros global empire was level by predators because the international business was a collection of mostly unrelated operations in countries ranging from Brazil to Monaco. Th e company achieved few economies of scale In marketing, harvard business review december 2008 This article is made available to you with compliments of Harry Korine. Further posting, copying or distributing is copyright infringement. To order more copies go to www. hbr. org. page 5 When You Shouldnt Go Global for example, it didnt enjoy the ef? iencies resulting from a single global brand, because local banks mostly unplowed their original names. Furthermore, its attempts at sharing information systems, management processes, and other bits of infrastructure were repeatedly delayed and then implemented haphazardly, creating few savings. The outcomes of some other service companies global strategies have not been so direbut they have still fallen short of expectations. Starbucks has pursued international growth at a breakneck pace, even though margins abroad have been only about half those of the companys U. S. operations.Axa, the global cut insurance group, has enjoyed satisfactory ? nancial performance from its many units around the world but has so far been unable to reduce its global cost base or convincingly roll out innovations, such as its U. S. variable-annuity program, internationally. Thus, although the globalization strategy hasnt destroyed value, it also hasnt added as much as originally envisioned. Manufacturing industries. Over the past decade, companies in manufacturing indus- tries, such as automobiles and communications equipment, have viewed rapid crossborder consolidation as necessary for survival.Global mergers and partnerships seem to be the only way for companies to obtain the size needed to compete against consolidating rivals, to reduce their reliance on home markets, and to gain manufacturing economies of scale. These bene? ts, though arguably easier to achieve than those sought by service companies (because local differences seem less problematic), are often outweighed by operational and organizational challenges. The complexities of integrating organizations and operations can cause costly delays or failures. And companies havent had the luxuriousness of much time to realize the bene? s of integration. Counting on the bene? ts of size and scale to drop quickly to the bottom line, many manufacturers have become particularly vulnerable to economic slowdowns, which constrain their ability to pay for expansion and consolidation before an increasing debt-to-equity ratio forces their executive teams to cede potency to ? nanciers or new management. Royal Aholds Downfall Dutch supermarket operator Royal Ahold is best known in recent years for an report scandal that led to the resignation of its CEO and its CFO in 2003. The ? nancial irregularities must be seen in light of the companys mbitious, and ultimately unsuccessful, globalization strategy. Royal Ahold began its international expansion in the 1970s and accelerated it in the 1990s, eventually acquiring businesses throughout Europe, Asia, Latin America, and the United States, to become the fourthlargest retailer in the world. But the bene? ts of owning this network of stores were hard to realize or didnt exist in the ? rst place. Global economies of scale are one of the main rationales for international expansion. However, such economies, dif? cult to attain in many businesses, are particularly elusive in food retailing.Purchasing economies can be achieved only with items furnished by global suppliers to all marketsand these typically represent at most 20% of all supermarket items, because of cultural differences and the frequent need to source fresh food locally. Even apparently international products, such as hummus, must be adapted to different countries distinct tastes. Additionally, realizing synergies across a far-? ung network requires common information systems and management processes, and Ahold made little case to integrate its acquired businesses into the existing organization.Different information systems thus continued to co exist across the company, sometimes even within the same country. Ironically, the lack of integrated systems and processes needed to secure global bene? ts helped conceal the companys ? nancial irregularities. And the failure to attain those bene? ts undoubtedly put pressure on top managers to produce well-offif false ? nancial results. When the new executive team ? nally introduced common management processes in the wake of the scandal, those processes did little to improve such activities as common purchasing across markets.As recently as last year, key suppliers were charging Ahold different prices in different countries. Aholds 2007 sale of most of its U. S. operations to private equity ? rms highlighted the nearly complete abandonment, under pressure from dissatis? ed minority share owners, of its once ambitious globalization strategy. The dissidents were concerned not about the usual over-diversi? cation of business types after all, Royal Ahold remained focused on retailingb ut about the over-diversi? cation of geographic locations. (Tests for suitable business diversi? ation are discussed in merged Strategy The Quest for Parenting Advantage, by Andrew Campbell, Michael Goold, and Marcus Alexander, in the border district April 1995 issue of HBR. ) With the focus on governance at Ahold, the underlying business relationship of failed globalization did not receive adequate attention until activist share owners jumped on it. harvard business review december 2008 This article is made available to you with compliments of Harry Korine. Further posting, copying or distributing is copyright infringement. To order more copies go to www. hbr. org. page 6When You Shouldnt Go Global The merger of Daimler-Benz and Chrysler is a government note child for this problem The German and U. S. automakers were different in almost every respect, from company cultures to purchasing practices, and they were never able to attain such bene? ts as the promised billions of dol lars in savings from common supply management. Taiwanese consumer electronics company BenQs acquisition of Siemenss mobile-device business followed a similar story line, including incompatibility of cultures and processes, as well as dif? culties in integrating R&D activities.In a haunting echo of the scramble by Daimler-Benz and Chrysler to merge, BenQ didnt visit Siemens workshops and production lines before inking the deal, relying only on out-of-pocket diligence documents. Although BenQ continues to be active in mobile equipment, its German unit was declared bankrupt in 2007. In both of these casesand in numerous othersthe strategic logic for globalization was tenuous, and the skills needed to implement a globalization strategy effectively were in short supply. A Continuing hazard We arent saying that all globalization strategies are ? awed.Telefonica, Spains former telephone monopoly, has successfully expanded throughout much of the Spanish-speaking world. The past ? ve years have seen General Electrics Commercial finance business move rapidly and effectively into dozens of non-U. S. markets. Renaults pathbreaking shackle with Nissan has to this point proved bene? cial for the French and Japanese automakers. But focusing on such success stories only reinforces the conventional wisdom that a globalization strategy is a blanket requirement for doing businesswhich in turn leads many companies to insuf? iently scrutinize their proposed global initiatives. (For a discussion of one of the gravest cases of failed globalization, see the sidebar Royal Aholds Downfall. ) We expect this trend to continue, as ? rms in diverse industries recklessly pursue global strategies. Take the emerging renewableenergy industrycompanies maturation technologies for biofuel, solar energy, and wind energy. We have talked with executives who, racing to establish a global position in this booming ? eld, are planning rapid expansion over the next few years in Africa, Asia, nd Lati n Americaand completely underestimating the management challenges involved. Many will, after initial sycophancy from the ? nancial markets, ? nd their hastily conceived strategies challenged after the fact by activists. We also anticipate that problems will recur in industries that earlier rushed to adopt globalization strategies, with activist share owners ready to pounce on companies as tell of poor management choices surfaces. Activist share owners have already interpreted signi? cant positions in some companies mentioned in this article.Other target companies, perhaps not quite ripe for direct interventionand temporarily shielded from blast by the current credit crisis and turbulent equity marketsare until now being discussed in the boardrooms of rivals and by the investment committees of pension funds and private equity ? rms. Ironically, some predators, having spotted the weaknesses of other companies global strategies, may be poised to fall into the same trap. For example , the Royal Bank of Scotland is known for its passing successful 2000 acquisition of NatWest, a much larger UK rival, and for the subsequent overhaul of its targets culture.But RBS may ? nd it dif? cult to achieve similar results with the disparate banking assetsspread across more than 50 countries that it acquired from ABN Amro. And though the recent government bailouts of RBS and Fortis arent a direct result of the ? rms international strategies, the acquisition of ABN Amro assets stretched their balance sheets and made the companies more vulnerable to the ? nancial crisis. We also worry that activist share owners and private equity ? rms may reproduce ? awed globalization strategies in their own portfolios. The largest of these players are now more diversi? ed, both in ype of business and in international footprint, than many of the giant conglomerates of 30 years ago that were subsequently broken up and sold off. Indeed, as you see out on a landscape littered with the remains of dismembered companies washed-out by failed globalization strategies, you have to wonder Could todays predators be tomorrows prey? Reprint R0812E To order, see the next page or call 800-988-0886 or 617-783-7500 or go to www. hbr. org harvard business review december 2008 This article is made available to you with compliments of Harry Korine. Further posting, copying or distributing is copyright infringement.To order more copies go to www. hbr. org. page 7 When You Shouldnt Go Global Further Reading ARTICLES Managing Differences The primeval Challenge of Global Strategy by Pankaj Ghemawat Harvard Business Review March 2007 Product no. R0703C The main goal of any international strategy should be to manage the large differences that arise at the borders of markets. Yet executives often fail to exploit market and production discrepancies, focusing instead on the tensions between standardization and localization. Ghemawat presents a new framework that encompasses all three effective responses to the challenges of globalization.He calls it the AAA Triangle, with the As standing for the three distinct types of international strategy. Through adaptation, companies seek to boost revenues and market share by maximize their local relevance. Through aggregation, they attempt to deliver economies of scale by creating regional, or sometimes global, operations. And through arbitrage, they exploit disparities between national or regional markets, often by locating different parts of the supply mountain range in different places for instance, call centers in India, factories in China, and retail shops in Western Europe.Ghemawat draws on several examples that illustrate how organizations use and balance these strategies and describes the trade-offs they make as they do so when trying to build competitive advantage. emergent Giants Building World-Class Companies in Developing Countries by Tarun Khanna and Krishna G. Palepu Harvard Business Review October 2006 Product no. R0610C As established multinational corporations stormed into emerging markets, many local companies lost market share or sold off businessesbut some fought back.Indias Mahindra & Mahindra, Chinas Haier Group, and many other corporations in developing countries have held their own against the onslaught, restructured their businesses, employ new opportunities, and make worldclass companies that are today giving their global rivals a run for their money. The authors describe three strategies these businesses used to become effective global competitors despite facing monetary and bureaucratic disadvantages in their home markets. Some capitalized on their experience of local product markets.Some have exploited their knowledge of local talent and capital markets, thereby serving customers both at home and abroad in a cost-effective manner. And some emerging giants have exploited institutional voids to create profitable businesses. Getting Offshoring Right by Ravi Aron and Jitendra V . Singh Harvard Business Review December 2005 Product no. R0512J Recently a emergent number of companies in North America and Europe have experimented with offshoring and outsourcing business processes, hoping to reduce costs and gain strategic advantagewith mixed results.According to several studies, half the organizations that have shifted processes offshore have failed to generate the expected financial benefits. Whats more, many of them have faced employee resistance and consumer dissatisfaction. A three-part methodology can help companies reformulate their offshoring strategies. First, prioritize company processes according to two criteria the value these processes create for customers and the degree to which the company can capture some of that value. Then keep highest-priority processes in-house and consider outsourcing low-priority ones. Second, analyze the risks that accompany offshoring.Finally, determine possible locations for offshore efforts, as well as the organizati onal formssuch as joint venturesthat those efforts might take. page 8 This article is made available to you with compliments of Harry Korine. Further posting, copying or distributing is copyright infringement. To order more copies go to www. hbr. org. To Order For Harvard Business Review reprints and subscriptions, call 800-988-0886 or 617-783-7500. Go to www. hbr. org For customized and quantity orders of Harvard Business Review article reprints, call 617-783-7626, or e-mail emailprotected harvard. edu