When You Shouldn’t Go Global

Marcus Alexander and Harry Korine

Harvard Business Review | December 2008

Presented by:
Diana Lim
2010.09.28
20th Century Walls

œ Political Walls
œ Trade Walls
œ Transportation Walls
œ Communication Walls
•
The Walls Come Tumbling Down
The Walls Come Tumbling Down
The Walls Come Tumbling Down
The Walls Come Tumbling Down
 Question

œ2 diseases: Rare and Common

œIf they’re not treated they are equally severe
œ
Economic Globalization

œ Perceived incentives
œ
œ Sense of inevitability
œ
œ Pressure on companies
to globalize
œ
Revlon

œ Revlon’s expansion in Brazil

œ in Brazil, the Camellia flower is for funeral
purpose
œ Revlon launched a perfume with the aroma
of Camellia
œ They need to recall back their product and
find other market to sell it
œ Brand name infected, spent extra time,
money and effort
Avoiding Ill-Fated Strategies

œ Are there potential benefits for our

company?
œ Do you have the necessary management
skills?
œ Will the costs outweigh the benefits?



eBay’s failure in Japan may well have been
prevented with a self-assessment like this
œ
eBay

œ from eBay’s foundation in 1995 they were

profitable
œ launched its Japanese site on February 28,
2000
œ Two years later when eBay pulled the plug
on its Japanese operations – pulverized by
Yahoo! Japan Auctions
eBay

œ they hired the wrong person as country

manager
œ tried to force Japanese consumers to fit the
company’s American-centric service model
œ made grandiose announcements about their
entry into the Japanese market, well before
they had a localized product ready to launch
in Japan
œ missing the first mover advantage was perhaps
eBay’s single biggest blunder
Globalization’s Siren Song

œ Deregulated Industries (telecom, postal

service, utilities) – increased competition
in home markets and new found freedom
œ Service Industries (retail, banking,
insurance) – scale economies and growth
beyond home markets
œ Manufacturing Industries (automobiles
and communication equipment) – mergers
and consolidation in order to survive
 Vodafone

œWorld's largest mobile telecom company

measured by revenues and the world's
second largest measured by
subscribers
œVodafone acquired J-phone in 2001
œfull range of mobiles with features and
styling almost a generation behind
those available from the other major
carriers
œDid not increase investment to catch up
œdelay in launching accompanying 3G
services
œUnloaded 98% of its share in 2006
Walmart

œRetail giant with a tremendous success story

œEntered in 1998, exited in 2006
œDifference in product preferences
œLocated outside cities
œDo not distinguish between discount and normal
prices – no compelling reason
œVisually oriented customers
(prefer the department store-like, neat,
clean, and sophisticated atmosphere)
œ
œ
 Daimler-Benz and Chrysler

œDaimler-Benz luxury vehicles had captured less than 1%

of the American markets.
œChrysler's primary reason for teaming with Daimler-Benz
is to extend its international reach

“Mercedes was universally



perceived as the fancy,

special brand, while
Chrysler, Dodge,
Plymouth and Jeep were
the poorer, blue collar
relations” -- James Holden,
President of Chrysler
The future will be more unpredictable
Globalization is getting more complex
and this change is getting more rapid.
here is a world market for maybe five com
Thomas Watson, chairman of IBM, 1943
“Sen. Obama cannot
possibly believe, and
doesn't even act as if
he believes, that he
can be elected
president of the
United States next
year.”

– Christopher Hitchens,
author/journalist, 2007
s to the outlook seem less threatening than m
IMF 2007 World Economic Outlook
Ikea

œ first came to Japan in the

mid 1970s
œ pulled out of Japan in
1986
œ reopened in 2006

“It’s not good enough just to land here and hope that
everything is going to work. You need to have everything
in place—the whole supply chain, the well-trained
workers and an organization that can actually expand
and grow.”
--Lars Petersson, CEO of IKEA’s Japan operations
Summary

œ Not all globalization strategies are flawed

œ But many have stumbled
œ Great vision, lousy execution
œ Before launching a global move, need to
conduct a self-assessment
œ Ensure efforts make strategic sense to avoid
disastrous consequences
Summary

œ Is this just a fad that is driven more by

“bandwagon” thinking than actual business
value?
œ Promoted by analysts, consultants, and
media as the only way to succeed?
œ Are we implementing solutions or
buzzwords?