Name -Prayag Das Reg.

No FMS/MBA/2020-22/057

GOING GLOBAL: DO YOU HAVE THE NECESSARY STRATEGIC AND RESOURCES

FIT?

Summary

 Under the category of internal factors, one can easily group the potential causes that are
proposed by the professional and experts under categories such as “Stakeholders”
(management, owner, employee, supplier, customers, etc.), and “Organizational
Culture” (innovativeness, leadership orientation, presence of psychological safety,
interpersonal trust, etc.) (Carmeli, 2007; Carmeli, Brueller, & Dutton, 2009; Edmondson,
1999; Evan & Freeman 1997; Nembhard & Edmondson, 2006; Robbins et al.
 For example, topics such as the slowing of the American economy; the economic crisis
that the European Union countries are having; the act of some unethical traders /
executives of organizations; the corruption of certain country’s public sector employees;
the change of the ruling party of the government of certain country; gridlocks in the
public policy making processes of certain country; and the reorganizing, restructuring,
reshuffling, or occurrence of changes in certain organizations are all quite common in
reports that are published in the year 2012 (for e.g., see Cendrowski 2012; Chua 2013;
Reuters 2013; Taylor 2012).
 To achieve this fit, an organization should be able to have enough cash flow to pursue
the plan, should be able to find the right type of manpower to work over sea, and should
have the right structural features for it to pursue the plan.
 First of all, the organization must ask itself whether the plan to go global is really fitting
to its current context, and whether it can really achieve what it intends to achieve via its
implementation.
 Next, given that an organization’s plan to expand globally is fitting to its strategic
consideration, it should consider whether it can achieve resources fit with the plan.
 Although many organizations tried to handle these issues via going global, we propose
that there are factors that must be considered by an organization first.

Globalization = Growth?

 If the growth achieved via globalization is not in-line with an organization’s strategy,
and if it does not contribute to its core competency in the long term, what such growth
does is merely making the organization looks better from the exterior in the short term.
 When one tries to measure organizational growth, one will usually quantify it in such
terms as: increment in manpower, increment in revenue, increment in stock price,
increment in market share, increment in assets owned, etc.
 Although an organization may achieve so-called “growth” in terms of organizational size
in the short term, it should be noted that such “growth” achieved might have a short
life.
 However, in this case, no matter which quantifier we would use, the closing of hundreds
of stores and the elimination of thousands of jobs are definitely not signs of growth (Ng
2012).
Factors That Should Be Considered in Globalization Decision:

 From the above discussion, we can see that although globalization may lead to growth
and competitive advantage to some organizations, it is not a necessary outcome for
organizations that do not base such decision on sound and adequate analyses.
 Hence, we propose that the following factors should be considered by an organization
first before it decides to go global / expand further globally.
 These factors should be considered even before an organization starts to think about
how they may want to go global / expand further globally.

Strategic Fit:

First of all, an organization has to be very sure about its current situation, and what it really
needs. For example, for an entrepreneurial firm that is facing low revenue flow, what it
needs is most probably additional revenue. However, for the case of such organizations,
going global may not be a viable option for it as the additional cost flow that may result
from such action may kill it before the additional revenue flow can be realised from such
global expansion. What it needs might be finding more ways to expand its customer base
locally at the minimal cost.

Resources Fit:

 In view that new businesses tend to make losses or have zero initial revenue returns for
a period of time (Frederick & Kuratko 2010), an organization should consider itself to be
“up to the challenge” if its already existing cash / cash flow is sufficient to sustain a zero
profit, but high cost, new over sea venture.
 Such cash flow calculation must not be limited to whether the organization is able to
pay the upfront and initial costs of the strategy.
 First of all, the organization must consider whether it has enough cash flow to pursue
and sustain the strategy.
 After deciding that the organization can achieve what it intends to achieve via going
global, the next question should be whether the organization has the competency to
pursue the opportunity perceived (Barney & Hesterly 2010).
 As an organization expands, the amount of workload and issues that it must handle will
definitely only increase as time passes, unless the expansion fails subsequently.
 If the organization does not currently have the relevant features yet, then it must make
sure that it is ready to implement such feature in the future.
 For example, when Shangri-La Hotel expanded to China, it faced problems with getting
the type of employees that can execute their spirit of going all the way out to serve its
customers (Thompson, Peteraf, Gamble & Strickland 2012).
 Hence, when an organization is thinking of going global, it must also think about
whether they can get the talents that they need for the process too.