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Copy of Case Study: Go Global - or No?
Transcript of Copy of Case Study: Go Global - or No?
Case Study: Go Global - or No?
Palo Alto, California
(cc) photo by Metro Centric on Flickr
(cc) photo by Franco Folini on Flickr
(cc) photo by jimmyharris on Flickr
(cc) photo by Metro Centric on Flickr
founded in 1998 by Greg McNally
venture capitalist: David Lester
both with no international experience
revenue in 1999: 2,2 million
revenue in 2000: easily going to reach 5,3 million
their main product: ClearCloud
2 versions were made: for the telecommunication and the financial providers sector
Susan Moskowski (spent 5 years in Singapore)
Tom Birmingham - business - development manager (20 years experience in chemical industry)
DataClear is interested in entering new business sectors, for what it needs little product development
They need to recruit more staff.
They are facing a new threats: competition is entering.
to diversificate or not
possibility in the USA:
diversification to the chemical, petrochemical and pharmaceutical industry
latent demand: $900 million
telecommunications and financial providers sector: $600 million
chemical, petrochemical and pharmaceutical sector: $660 million
Global issues: where and how?
Is it the best to use the Greenfield approach and to open subsidiaries by yourself (considered are the UK for the European and Tokio or Singapore for Asian market) or to go into a strategic alliance with Benro, a software development company in Norway.
to go global or not
to use alliances or the Greenfield approach
Question 1: What dilemma or strategic threat is DataClear facing?
global strategy vs. multidomestic strategy
global strategy - adpted by a firm which views the entire world as a single market
domestic market - each individual operation is treated as an independent business
Diversification is entering new areas of business for the company.
Threats coming from diversifying:
•losing control over your primal sector
•going in the new market
•high initial cost
•specialized sales and service infrastructure
Opportunities coming from diversifying:
there are new opportunities in market
the company does not depend on just one sector, so the risk is decreased
there is possibility for a great profit
transfer of technological know-how
Globalization is the growing integration of economies and societies around the world.
Opportunities coming from globalization:
•cross cultural benefits
Threats coming from globalization:
Thank you for your attention :)
Opportunities from alliances:
•Combined firm resources
•Access to intellectual property
•Economies of scale
Threats from alliances:
•Difficult to build trust among partners
•There is a possibility for one of the partners to use the chance and get the know-how of the other partner and one day to step out from the alliance and become strong competition
Question 2: Would you recommend that DataClear expand into international markets at this point in time? Either way, fully explain the basis for your recommendation.
Competition is coming and it will most probably affect DataClear, so they have to attack back and go global. Financial and telecommunication industry should be the basis for its international expansion.
They should put aside diversification to other sectors and wait until they have established a strong global network. Only then they should proceed with diversifying to other sectors.
ALTHOUGH GOING ABROAD IS A BIG RISK, IT BRINGS GREATER PROFITS.
Question 3: If your answer to question to was yes, lay out specific recommendations for exactly how DataClear should proceed to "go global" in the near term. If the answer to question 2 was no, what specific steps should DataClear take to position itself for possible future expansion overseas?
Our recommendation for DataClear is to go global with another company, and they should accept the deal with Benro. Experience in Europe should be a good platform for getting to know the potential market. Also, it could bea good basis for entering the Asian market.
Going abroad is not easy and it has many pitfalls, but if they collect all the necessary information and hire the right people DataClear should not have a dilemma about is going abroad a good idea or not.
Our recommendations for how DataClear should go global are:
• Determine your company's organizational needs for success in the global marketplace
• Properly analyze the strengths and weaknesses of your organizational structure and determine how maximize its effectiveness
• Sell the vision of globalization to employees at all levels, a critical and often overlooked task in order to assure widespread, ongoing support for the transformation process
• Serve needs of national or regional market
• Find personnel with local expertise
Practical tips according to Alex Miller and Gregory G. Dess
Do your homework
Analyze the foreign opportunity
Utilize host- counting contracts
Balance your needs for competitiveness
Globalizatiom is a process which requires a full estimation of opportunities and risks.
It is necessary to have as many inputs as possible before deciding on going global. You have to have a skilled global workforce and leadership team.
Going slow internationally is just an introduction to building a world wide strong brand name. The company should have experience so it doesn't go blind into a new market.
Consider all globalization is a great way to expand company and introduce one in a global market.
Now it is your turn. Tell us your opinion!
A move abroad at this time makes questionable strategic sense?
What is your opinion? Is it better to diversificate yourself in other industries or to go global?
Do you think that new competition should impact your strategic opinion about going aborod?
Are there other solutions besides alliances and the Greenfields approach?