International Business: Global Communication

In this IB series post I am planning to talk about importance and effectiveness of communication in global business and cross border business.

Communication in any organization take a huge role. It is the cogs that connect things together and get things moving. Without proper communication things will fall apart. There is nothing as enough communication, communication can never be enough. In a business setting you need to get as much information as you can to successfully complete tasks.

Going to global communication create new barriers that don't show up in local organizational level. Language difference is the first tackle. Most of the time someone that speaks that language effectively can be used to solve this issue easily.

In the previous posts I discussed important issues in global business. If it is difficult or costly for you to have someone physically present in the foreign business location it is hard to communicate. But with the internet and increasingly developing new ways of communication through internet make this easier task.

Instant messenger services are a great way to communicate with foreign location and keep them upto date. Programs like Skype make voice over internet extremely effective and low cost.

Keeping information synchronized with foreign location and local parent or the branch is another difficult problem that FAARO experienced. With the help of synchronizing data program like Microsoft Groove, things were easier to keep track of and up date and share information and data.

With the development of communication techniques over internet, global communication for a business have become much easier.

International Business: The Road to Global Readiness

How can Mexico compete globally? — Adolfo Navarro, Monterrey, Mexico

Your question says "Mexico," but put any developing nation, from Turkey to Brazil, in its place, and our answer is the same. First, we'd state what you may already know: that countries whose businesses are trying to gain a foothold abroad need an educated workforce, affordable sources of energy, and supportive trade policies. But right out of the gate, we'd add another factor that is, in our view, equally important. The businesses that will compete most effectively in a fierce global economy will be those that have benefited from intense competition at home.

Think of it this way: No speed skater or pole-vaulter heads to the Olympics before years of intense competition with the hotshots in his own backyard. The same goes for companies heading into the business "world games." First, they need to train and prove themselves against hometown rivals.

Make sense? Sure. But it still doesn't happen enough. Your own country is a good example. Its economy became "free" in 1994 when the government essentially stopped allowing (some would say anointing) companies to control entire industrial sectors. But 14 years later, conglomerates still dominate, meaning too few entrepreneurial ventures have been able to emerge and deliver the critical lessons about agility and innovation that only they can. Yes, there are exceptions: Cemex (CX), the cement producer, and Grupo Bimbo, the food manufacturer, among others, are companies that grew at home and now thrive in foreign markets. But Mexico remains a country with too little local competition, which puts those "unconditioned" companies back on their heels as they enter the global ring.

By contrast, both Japan and South Korea sent their companies into the world economy swinging. In the 1970s, Japan's government encouraged its zaibatsu to reform and compete locally before setting their sites on foreign foes. Then they landed resounding blows, most notably against U.S. electronics, automotive, and steel interests. A decade later, Korea unleashed its chaebol with similar results, as companies like Daewoo and Samsung entered the global markets with productivity levels that quickly made them formidable rivals. Although China still has a largely state-controlled economy, its entrepreneurs have long been irrepressible. When GE (GE) bought a light bulb factory in Shanghai in the '90s, for instance, Siemens (SI) and Philips (PHG) were the main concern. But within a year or two, scores of Chinese startups acquired bulb-making equipment from Eastern Europe, and a slugfest ensued. No wonder so many Chinese companies enter the global market loaded for bear. They've been practicing.

So what is Mexico to do? If we're right about local competition being a prerequisite for global success, the government obviously needs to encourage it, or at least allow it. That seems to be what's now going on in India. Its economy began liberalization efforts in the '90s, but since 2000 they seem to be accelerating. New technologies have helped. One young company with an exciting business model—Airtel—has been able to compete fiercely in the cellular phone market with mainstays Tata (TTM) and Reliance Communications. For all three companies, the innovations sparked by competition have driven growth and profitability, and provided the ability and confidence to expand overseas.

The power of local competition is not, incidentally, just relevant to developing nations. If only! In the U.S., established semiconductor and biotechnology companies are constantly pushed to new heights by feisty upstarts. This happens in mature businesses, too. Case in point is business news channel CNBC (GE). It had no real rival for years, until Rupert Murdoch, a tough competitor, announced that he would launch the Fox Business Network (NWS). Almost overnight, CNBC looked like a new place, with reenergized anchors, bolder programming, and a revamped Web site. Fox won't stop coming at CNBC, of course, but both organizations will be better for the fight.

Look, no normal person seeks competition. It makes everything harder. But it also creates excellence and verve—in a word, edge. And you don't want to leave home without that.

Article by: Jack and Suzy Welch

International Business: Global organization

An organization that will have its branches located in different parts of the world and challenges faces in implementation is what I am going to discuss in this post. To further explain the matter, I will be referring to my global Venture - FAARO Jewelry.

Global expansion of an organization is a tough task. Expanding into a foreign territory without trustable support is another challenge. Strategy formulation and implementation for new global venture is another topic that will need lot more time to go deep into, rather an interesting topic. But today I will focus only basic implementation of business in foreign territory.

When you are planning to expand into global business you need to keep in mind the amount of capital requirements, which can be rather tedious and unexpectedly expensive than predicted. I am not talking about acquiring a foreign business but starting a new branch in a different country. So Capital requirement is key issue here.

Having a trustable party that to continue operations over in the foreign country is an invaluable advantage. If you could pay several visits per month to check on the status and operations of the new business, lack of a trustable party could be not extremely important. But if you can not physically be present at the foreign location it is very important to have a trustable and honest party. For example, at FAARO when we start our jewelry manufacturing facility in SriLanka to extract the low cost Gems and jewelry making talent in SriLanka, my mom taking control over the operations of the facility helped greatly as I could not be physically be there. In my next post I will talk about communication barriers in international business.

Another important thing to plan ahead is government's rules and regulations of the foreign country. Starting a business while abide by to their government regulations is important to maintain the business long time and to avoid unnecessary problems.

Culture and traditions of the new foreign location is another area which most organizations fail to focus on before they implement. When Volkswagen started their Shanghai Branch they were having numerous problems with German and Chinese cultural differences.

Expanding an organization to spread out globally require great deal of planning and due diligence on issues like, requirement of capital, trustable party's presence, Governmental regulations, and culture of the foreign location.