When You Shouldn’t Go Global: Article from Harvard Business Review

Question

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When You Shouldn’t Go Global

Abstract

Economic globalization was a bright theory and a general trend for many years. It was shrouded in romanticism, caused by an overestimation of global business opportunities. However, the global financial crisis and several international companies’ defeats put this trend in doubt. Marcus Alexander and Harry Korine were among the first scholars and practitioners, who put this paradigm into question. Their paper “When You Shouldn’t Go Global” was aimed to show the imperfection of business globalization, its weaknesses, and its failures. This work was an important step in the globalization study. Nevertheless, it looks superficial and raises many questions and pretensions.

Article by Marcus Alexander and Harry Korine

Economic globalization was a strong trend before 2008. However, the last international financial crisis has put this trend in doubt and has inspired a considerable number of articles, criticizing it. One of them is “When You Shouldn’t Go Global” by Marcus Alexander and Harry Korine, published in Harvard Business Review, December 2008. The main goal of the work is to show the imperfection of business globalization. The authors gave examples of well-known companies, whose globalization strategies had more failures, than benefits. However, Alexander and Korine stressed that this strategy is not always a mistake. They offered a list of questions that any company must meet before it decides to penetrate the international market.

The authors’ critical attitude to business globalization seems to be quite adequate, and their examples from the personal professional backgrounds only confirm the idea of imperfection of the globalization strategy. Nevertheless, Alexander and Korine did not give a clear and deep explanation of why global strategy does not always lead to success. There are only some hints on possible causes of failure (like lack of the necessary managerial skills or relevant experience). However, this modest explanation is generic and not convincing enough. As a result, readers have more questions than answers. It is necessary to find a better explanation of globalization imperfection reasons.

For example, in the article “Going Global - 3 Lessons from Those Who Failed” Mike Gomez (2014) described three main reasons why global strategy can lose. He argued that some global companies “failed because of poor advanced planning, refusing to localize (their people, sales strategy, product), and spending cash unwisely and excessively”. Neil Kokemuller made a slightly longer list, which includes: lack of planning, poor communication, lack of adaptability, and poor market acceptance. However, despite a large number of critiques, it is difficult to find some works that present a deep and comprehensive analysis of the causes of international business failure. It is an issue for further studying.

Alexander and Korine (2008) also proposed three simple questions that can help to decide on the acceptance or rejection of the global strategy. They pointed out that companies must determine the size of the potential benefits, the necessary costs, and the level of management competence in this subject. Of course, these questions are important to make such a critical decision. However, it looks like a minimal list of questions. The process of global strategy research must be more inclusive. As Zhang Kehu (Accenture, 2013) said, “A business never goes global just in the pursuit of pure profit—there has to be a long-term fit.” Companies have to examine all aspects of the law, culture, labor protection, environmental protection, communications, etc. It is a long and difficult process without any specific formulas for success.

Besides, Marcus Alexander and Harry Korine (2008) argued that globalization is a siren song that attracts companies of all industries. They gave examples of this siren song, based on three business areas – deregulated, service, and manufacturing industries. Nevertheless, the authors did not explain, why they chose these three businesses for illustration. What is unique about these business sectors? Are they the most susceptible to the influence of the globalization song? Are they the most unfortunate areas for the application of the globalization strategy? What is the reason? Unfortunately, the authors did not explain, why they had chosen these particular industries, as well as they did not give an in-depth analysis of their examples. Their new thought was again superficial.

In the context of studying the problems and disadvantages of economic globalization, it is advisable to examine the anti-globalism problem. It is noteworthy that this international movement began much earlier than the global financial crisis in 2008 and the article by Alexander and Korine. According to Mike Peng (2006), it originated in 1999. Modern anti-globalists are represented by numerous non-governmental organizations. Ignoring their interests and (or) open confrontation can be fatal to any business. Anti-globalization NGOs have a high impact on society and stakeholders, and that is why companies should have partner relations with them. Therefore, it is important to consider this issue in the study of the global business strategy and, particularly, the reasons for its failure.

Speaking about the failures of the global strategy, it is difficult not to question the existence of globalization. Is it true that the world community is extremely homogeneous? Perhaps, discussion about various global processes and phenomena is an exaggeration or even a complete fallacy. If to put aside globalization romanticism, it becomes obvious that this idea makes sense and should be examined by experts more closely. Defeats of the globalization theory in the economy as well as other fields of human life had to challenge it a long time ago.

Summary

Global strategy and international business is an important subject for study, but this study must be objective and inclusive. Overvaluation of business globalization opportunities as well as the company’s capacity and power can lead to serious consequences, which examples are described in the article “When You Shouldn’t Go Global” by Marcus Alexander and Harry Korine (2008).

Further study of the problems and disadvantages of economic globalization should be more profound and thorough. Indeed, to date, there is still no clear understanding of the reasons for the global strategy failure. The business needs a clear understanding of why some companies can succeed in the global marketplace, while others cannot. In addition, the current list of globalization weaknesses and failures is sufficient to challenge the existence of the paradigm. It is time to ask: “How real is globalization? Is not it fiction?”

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