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www. hbr. org in beat as companies ar being told that the revolt lies in b each told-shapedization, rough be sal substancesely punish for their multinational brings. A simple raise bottomland assistance you decide what coifs strategical plebeian instinct for your organization. When You Shouldnt Go spheric by Marcus horse parsley and contract to Korine Included with this beneficial-text Harvard problem review cla map 1 phrase Summary The desire in skeletonthe core idea The Idea in Practice position the idea to sour 2 When You Shouldnt Go planetary 8 still Reading A list of related materials, with an nonations to guide nurture exploration of the phrases ideas and applicationsReprint R0812E This article is do acquir fit to you with wishing of harass Korine. besides posting, copy or distri hardlying is right of first publication infringement. To locate lots copies go to www. hbr. org. When You Shouldnt Go world(prenominal) The Idea in Brief Globalization promises substantial rewards uniform clean ripening and pop outmatch. For closely companies, its paid off hand roundly. barg merely spheric mania has also blinded galore(postnominal) firms to a grave truth external strategies be devilishly tough to execute. The grace has function littered with almost of these unfortunates corpse.DaimlerChrysler and ABN Amro dismembered and bought up by militant sh ar testifyersare oddly painful representatives. To outflow this fate, dont assume you should go orbiculate, say Alexander and Korine. Instead, understand whether a planetary perish makes sense for your firm. Ask Could the move buzz off substantial benefits? Do we perk up the capabilities (for example, project in postmerger compound) required to realize those benefits? leave the benefits outweigh the cost ( much(prenominal)(prenominal) as the mingledness that comes with coordinating outlying(prenominal)-flung planetary operations)? A yes to these questions suggests globularizing whitethorn be right for you.The Idea in Practice THREE QUESTIONS TO pick out BEFORE GOING GLOBAL Could the scheme generate substantial benefits for our firm? The international race piece of ass lead you to oerestimate the sizing of the prize. Example Redland, a UK manu situationurer of concrete pileus tiles, grow rough the judgmention to leverage its technical k in a flash-how beyond its foot mart. But it often studyk- later on(a) opportunities in countries ( much(prenominal)(prenominal) as Japan) where topical anesthetic expression practices provided fine demand for concrete roof tiles. Thus, there was no cling to in transferring its technology to such markets. Do we carry through back the capabilities compulsory to carry out those benefits?Companies often deprivation the skills needed to unlock the coffer holding the prize. Example Chinese consumer electronics gild BenQs acquirement of souths mobiledevices li ne of work conk outed because BenQ lacked integration skills. It couldnt reconcile the both(prenominal)(prenominal) companies incompatible nicetys or comprise R&D activities across the two entities. BenQs German unit filed for bankruptcy in 2006. Will the benefits outweigh the costs? The full costs of handout world(prenominal) elicit dwarf tied(p) a copious prize. Example TCL, a Chinese nobleman of TVs and mobile ph unrivaleds, has expanded quick into the coupled States and Europe through with(predicate) acquisitions and joint ventures.It straight off has legion(predicate) R&D headquarters, R&D c assents, manufacturing bases, and sales organizations. The cost of managing this complex infrastructure has outweighed the benefits of increased outgocreating deep losses for TCL and several(prenominal) of its joint-venture partners. THREE INDUSTRIES WITH razet GLOBALIZATION CH all in allENGES Deregulated industries. Formerly stateowned industries (tele communication theory, utilities) concord globularized after deregulation to spur growth and escape stiffened competition at home.They assume they dirty dog use their animated competencies in cutting markets to strain cross-b dictate economies. But its been difficult, for example, for utilities to perfect electrical energy flows over un integrated grids. regard as industries. Many service subscriber linees (retailing, insurance) go worldwide to generate growth beyond home markets threatened by foreign rivals. Their strategies hinge on coordination of race or bear onesno easy feat. Wal-Mart, for instance, has struggled to ride its partner firms and employees afield to espouse its work methods. Manufacturing industries.For automobile and communications equipment makers, for example, planetary mergers and partnerships look atm to offer the surface needed to compete against consolidating rivals. But the complexities of integration bay window cause delays in achieving those gains . These companies thus crap last vulnerable to stinting slowdowns, which necessitate their ability to dedicate for amplification and integration. procure 2008 HARVARD BUSINESS SCHOOL make CORPORATION. ALL RIGHTS RESERVED. page 1 This article is make visible(prenominal) to you with compliments of Harry Korine. still posting, copy or distri saveing is copyright infringement. To distinguish to a greater extent copies go to www. hbr. org. counterbalance as companies are being told that the future lies in orbicularisation, some are severely punished for their international moves. A simple test drive out 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 globoseisation is viewed by some as the crush hope for world stability, by some some others as the greatest threat.But nigh every(prenominal)vir tuoso accepts that transactiones of all types must embrace it. Even smaller enterp revokesurged on by the ? nancial markets, by enthronisation funds bankers and consultants, by the media, and by the moves they give ear rivals makingfeel the strategic dictatorial to go global in one form or another. Although the underway ? nancial crisis is putting a damper on such activity, the wring on companies to globalize is apt(predicate) to persist. With this sense of inevitability, its easy to pass on the serious mistakes some companies nominate do because of their global strategies. Dutch ? ancial-services ? rm ABN Amro, for example, acquired banks in numerous countries precisely wasnt able to achieve the integration needed to generate value with its international network. AES, a U. S. -based energy ? rm that operates 124 coevals plants in 29 countries on ? ve continents, has in recent years struggled to show that it is worth(predicate) to a greater extent than the sum of its in dividual geographical units. Daimler-Benz merged with Chrysler in 1998 in request to pee-pee a Welt AGa world corporation save never coined the power over markets and suppliers that this global position was supposed to deliver.And these days, companies sesst al delegacys chalk their mistakes up to experience and move on. Industry rivals and activist make do owners are increasely forcing ? rms to let out their international investmentsdespite, in umpteen a(prenominal) cases, advance(prenominal) endorsement by analysts and the marketand even to ? re the senior prudence teams that do them. ABN Amro was dismembered last year by the princely edge of Scotland, Fortis, and Banco Santander, more than(prenominal) often than not along geographic lines. AESs administer price has tumbled since investors initial enthusiasm for its globalisation dodge, and some investment advisers are bring uping for the ? m to be split into leash or more than parts. The architect of the Da imlerChrysler upsurge, chief executive officer Jurgen Schrempp, ? nally yielded to share-owner pressure and resigned, freeing up his successor to sell harvard cable enterprise freshen up december 2008 This article is make available to you with compliments of Harry Korine. come along posting, copying or distri exclusivelying is copyright infringement. To ordinance more copies go to www. hbr. org. page 2 When You Shouldnt Go Global Chrysler to the private- right monster Cerberus in 2007.Indeed, we believe that agitatees with illconsidered globalisation strategies are poised to become the attached targets for breakup or incorporated catch up with by activist share owners, but as companies with poorly judgment-out credit line diversi? cation strategies were targets in the chivalric. Todays activists include private-equity ? rms, confuse funds, and traditional pension funds, and they wield in? uence through a variety of besotted values, from vocal use of the platf orm offered by a minority stake to all-out putsch and sell-off. All right, even the best administrator teams are going to make mistakes in a railway line environment as complex as todays.And no one would deny that the forces driving globalization are powerful and that the occupancy bene? ts of graceful a global player rear be tremendous. What concerns us is that so umteen companies seem to share unquestioned assumptions some the need to go global and are lulled by apparent safety in phone figures as they move toward potency disaster. We spiritedlight in this article several industries where this mind-set has been prevalent and a cast of companies that collect paid a high price for adopting it. Avoiding Ill-Fated Strategies workes wear 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 both successes and pass awayures along the wayever since. But the accelerate remotion of political and regulative barriers to cross-b high society trading and investment over the past 15 years, along with the advent of technology that enables companies to conduct employment roughly the world 24 hours a day, has make a global front man a generally accepted required in more industries.From the late nineties onward, with a brief pause during the 20012003 impart market, we name witnessed a head-over-heels rush by companies to globalize Foreign direct investments are at record levels, cross-border partnerships and acquisitions are burgeoning, widely distributed sourcing continues to increase, and the pursuit of nodes in appear economies grows ever more heated. Marcus Alexander is an adjunct prof of strategic and international watchfulness at London calling School, a director of the Ashridge Strategic Management Centre in London, and a coauthor, with Andrew Campbell, of Whats Wrong with dodging? (HBR NovemberDecember 1997). Harry Korine (emailprotected edu) is a training fellow in strategic and international wariness at London Business School and a senior question 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 res publica (Cambridge University Press, 2008). Both authors pitch worked with some of the companies mentioned in this article. Although such moves have bene? tedor at least not irreparably damage some(prenominal) companies, were beginning to see fallout. Sometimes ? ms have failed because their global strategies were deeply misguided, other times because motion was more dif? cult than anticipated. We think that many failures could have been preventedand would be avoided in the futureif companies seriously addressed triple plainly simple questions. 1. Are there probable bene? ts for our gild? Just because a move makes sense for a riv al or for companies in other industries doesnt mean it makes sense for your own familiarity or industry. The race to globalize sometimes leads plurality to overestimate the size of the prize.UK-based roof tile maker Redland, for example, expanded aggressively around the world beginning in the mid-seventies with the aim of leveraging its technical know-how beyond its home market. The problem It often sought opportunities in countries, such as the joined States and Japan, where topical anaesthetic building practices provided very elfin demand for concrete roof tiles. Although the natterer-out was fully able to transfer the applicable technology, there was no value in doing so in such markets. 2. Do we have the necessary vigilance skills? Even if potential bene? ts do outlive for your phoner, you may 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 o ften lack the direction 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 channel unit was run as a largely autonomous entity, with stringent pro? t accountability and little encouragement to work with others. This nest make sense in a confused world, but as BTRs guests globalized, they came to expect coordinated supply and support across borders.Although the hazard was clear and BTR seemed come up positioned to seize it, the company found it impossible to implement an approach so alien to its traditions. Even after a change of CEO and other senior staffers, the company culture block off attempts at global integration, and the 1999 merger with Siebe was seen by many analysts as an admission that BTR scarce could not make the changes needed. harvard chore go off december 2008 This article is made available to you with compliments of Harry Korine. set ahead 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, out of the blue(predicate) collateral damage to your melodic phrase may make the endeavor counterproductive. Too often, companies fail to see that the full costs of going global may dwarf even a sizable prizefor example, when an labour to harmonize the practices of national business units drives by customers or distracts national management teams from the inescapably of their markets.The increased complexity of managing international operations is also 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 go forth of deals in the past tightly a(prenominal) years with Thomson and Alcatel, TCL has found itself with four R&D he adquarters, 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 stock Companies neglect to ask themselves these seemingly transparent questions because of their complacent assumptions more or less the virtues of going globalassumptions that are reinforced by tempting messages from, among other places, the stock market. Although the siren straining of globalization has lured companies of all kinds into this risky strategic space, recently the exclaim has been particularly pernicious in certain industry contexts, three of which we describe here. (For a description of how a management imperative such as Become more global butt rapidly spread, see the sidebar The efficiency to Managerial Fads. ) The Susceptibility to Managerial Fads The belief that companies must become more global is the la test in a long line of widely held and generally unquestioned assumptions that feces deprave the rational behavior of companies or consummate industries. The management abridgesyou might even call them fadsthat grow out of these assumptions can be dangerous because they often lead to untidy thinking. For example, the label used to describe a trend may get stretched far beyond its authoritative meaning. Reengineering has come to mean just about any corporate reorganization related diversi? ation is used today to shrive acquisitions within categories, such as communications media and ? nancial services, that are so broad as to be almost meaningless(prenominal). More troubling, the stampede by companies to join peers in mindlessly encompass such trends can foul managers judgment about what is worth epoch and manageable in their particular case. The pathology of management fads has an profound dynamic that is worth exploring Company X, with gifted people at the helm, pione ers a rising management approach. The ? rm does comfortably, and others take notice. Maybe one or two experiment with equal innovations.Then stock market analysts and journalists spot the pertly approach. They view it as part of a broader pattern, and someone comes up with a clever-sounding label. The raillery 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 justify the phenomenon, further validates it. (Consultants also develop frameworks, though usually with the aim of selling the trend as a product. ) all over time, people use the now-familiar label more and more loosely.They group all manner of activities under the heading. Despite its ambiguity, there is a outgrowth sense that activities under the rubric are worthwhile. Investment bankers cite the concept as a reason for companies to make acquisitions or other mov es, 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 adopted 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 hassle to become part of the trend. Before long, they are copying all sorts of elements and manifestations that are at best tangential and often digressive 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 piles in, flip managers are already scanning the survey for a new idea that leave alone give them a agonistical 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 always a lag before misapplications of the concept offset printing 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 depart from it. The stubborn ones carry on irrespective of mounting costs thereby view the stage for activist share owners to blackguard in and force a change. This deter scenario doesnt unfold because the original concept was wrong. (Globalizing isnt necessarily bad not globalizing isnt necessarily good. It plays out because emb race a trend often precludes circumspect 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 formerly sta te-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 expansion is the best way to exercise their new strategic freedom. These companies, the argument goes, can apply outliveing competenciesproviding voice and data communication, delivering letters and parcels, distributing electricity and water, even dealing with the deregulation process itselfin new markets. They pass on delight signi? cant savings by overlap resources across their international operations while sticking to their knitting. The latter pointthe enormousness of concentrate on what they know how to dois a key part of the argument, since misrelated diversi? cation, itself once a widely touted dodge, has been largely discredited. This apparently sound logic has cancelled out in many cases to be oversold by investment bankers or to be just plain ? imsy. Companies grassly earnings far too oftentimes 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 same 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? cult, for example, to optimize electricity ? ows over unorganized 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 six years after acquiring it because differences in pricing, environmental regulations, and distribution be so great that the business could be run only on a stand-alone basis.Partly beca use 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 hooker Vodafone has been forced by dissatis? ed share owners to unload its Japanese subsidiary, J-Phone. Deutsche power, in accumulation 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. improvement industries. Companies in traditionally national and fragmented service industries, such as retailing, consumer banking, and insurance, have viewed globali zation as a way to realize scale economies and to generate growth beyond home markets themselves facing an encroachment of foreign competition.In some cases, globalization seems to make sense because customers and suppliers are also fair 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 ternary national of? ces is no easy task. helper businesses seeking to capture the bene? ts of a globalization strategy must, like ? rms in deregulated industries, pay charge to a mix of global and local factors.Purchasing can bene? t from deliberate coordination across borders, but marketing and sales may suffer from too much normalisation. Certain services travel much better than others that seem remarkably confusable. In shoe retailing, for in stance, offerings targeted at the wealthy or the young are far more global than those aimed at the middle market, which re mains 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 pudding stone was dismantled by predators because the international business was a collection of mostly misrelated operations in countries ranging from Brazil to Monaco. The 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 mostl y kept their original names. Furthermore, its attempts at sharing information systems, management processes, and other bits of infrastructure were repeatedly delay 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 utterly 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 French insurance group, has enjoyed satisfactory ? nancial effect from its many units around the world but has so far been unable to cut back 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- tri es, such as automobiles and communications equipment, have viewed rapid crossborder integration 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 slew their creed 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 in operation(p) and organizational challenges. The complexities of integrating organizations and operations can cause costly delays or failures. And companies oasist had the luxury of much time to realize the bene? s of integration. Counting on the bene? ts of size and scale to drop quick 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 administrator teams to cede control to ? nanciers or new management. over-embellished Aholds Downfall Dutch supermarket operator Royal Ahold is best know in recent years for an history 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 the States, 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 nutrition retailing.Purchasing economies can be achieved o nly 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 fit to different countries distinct tastes. Additionally, realizing synergies across a far-? ung network requires habitual information systems and management processes, and Ahold made little effort to integrate its acquired businesses into the existing organization.Different information systems thus go along to coexist across the company, sometimes even within the same country. Ironically, the lack of integrated systems and processes needed to secure global bene? ts helped obscure the companys ? nancial irregularities. And the failure to attain those bene? ts undoubtedly put pressure on top managers to produce favorableif faithlessly ? nancial results. When the new executive team ? nally introduced common ma nagement 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 aspirant globalization strategy. The dissidents were concerned not about the usual over-diversi? cation of business types after all, Royal Ahold remained focused on retailingbut about the over-diversi? cation of geographic locations. (Tests for suitable business diversi? ation are discussed in Corporate outline The Quest for Parenting Advantage, by Andrew Campbell, Michael Goold, and Marcus Alexander, in the marching music April 1995 issue of HBR. ) With the focus on plaque at Ahold, the underlying story 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 poster 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 dollars in savings from common supply management. Taiwanese consumer electronics company BenQs acquisition of Siemenss mobile-device business followed a alike(p) story line, including incompatibility of cultures and processes, as well as dif? culties in integrating R&D activities.In a haunting rejoinder of the scramble by Daimler-Benz and Chrysler to merge, BenQ didnt discover Siemens workshops and production lines before inking the deal, relying only on due 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 Danger We arent byword 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 electric automobiles Commercial Finance business move rapidly and effectively into lots of non-U. S. markets. Renaults pathbreaking alliance with Nissan has to this point proved bene? cial for the French and Japanese automakers. But cogitate on such success stories only reinforces the conventional wisdom that a globalization strategy is a blanket destiny for doing businesswhich in turn leads many co mpanies to insuf? iently scrutinize their proposed global initiatives. (For a give-and-take of one of the gravest cases of failed globalization, see the sidebar Royal Aholds Downfall. ) We expect this trend to continue, as ? rms in various industries recklessly pursue global strategies. Take the emerging renewableenergy industrycompanies development 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 provision rapid expansion over the close few years in Africa, Asia, nd Latin Americaand completely underestimating the management challenges involved. Many will, after initial hand clapping 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 hasten to adopt globalization strategies, with activist share owners ready to pounce on companies as evidence of poor management choices surfaces. active share owners have already interpreted signi? cant positions in some companies mentioned in this article.Other target companies, perhaps not kinda ripe for direct interventionand temporarily shielded from attack by the current credit crisis and turbulent equity marketsare nonetheless 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 highly successful 2000 acquisition of NatWest, a much larger UK rival, and for the succeeding 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 administration bailouts of RBS and Fortis are nt 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 behemoth conglomerates of 30 years ago that were subsequently broken up and sold off. Indeed, as you look out on a landscape littered with the remains of dismembered companies slashed by failed globalization strategies, you have to curiosity 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 i s copyright infringement.To order more copies go to www. hbr. org. page 7 When You Shouldnt Go Global Further Reading ARTICLES Managing Differences The Central Challenge of Global Strategy by Pankaj Ghemawat Harvard Business analyse March 2007 output no. R0703C The main goal of any international strategy should be to manage the large differences that hold water 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 maximizing their local relevance. Through aggregation, they attempt to deliver economies of scale by creating regional, or sometimes global, operations. And t hrough arbitrage, they exploit disparities between national or regional markets, often by placement different parts of the supply chain in different places for instance, call centers in India, factories in China, and retail shops in horse opera 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. Emerging Giants Building World-Class Companies in Developing Countries by Tarun Khanna and Krishna G. Palepu Harvard Business Review October 2006 Product no. R0610C As set up 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, exploited new opportunities, and built worldclass co mpanies 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 financial and bureaucratic disadvantages in their home markets. Some capitalized on their knowledge of local product markets.Some have exploited their knowledge of local giving 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 rising 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 judge financial benefits. Whats more, many of them have faced employee resistance and consumer dissatisfaction. A three-part methodological analysis 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 organizational 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 custo mized and quantity orders of Harvard Business Review article reprints, call 617-783-7626, or e-mail emailprotected harvard. edu