Week Ten – Global Marketing, R&D, and Human Resource Management

The list of issues as presented in the course outline is quite comprehensive and well articulated. However there are some other factors which I would call “soft infrastructure” that warrant some attention. These are:

Language: This is incredibly important. As English has emerged as the global business language of choice, the foreign language capacity in the USA, with the exception of Spanish, is virtually non existent in corporate management circles. Here is a primer on how things get difficult.
• The Dutch mostly have mastered English and hence language is not a barrier in spoken and written communications.
• The Germans are less inclined and there can be some difficulties especially will small and medium sized enterprises and dealings with government.
• The French are even less inclined to master English and the challenge increases as do the costs of doing business. (Canada is mostly OK here.)
• The Chinese realize that they must accommodate the English speaking world and will have interpreters readily available to bridge the gap. However the potential for misunderstanding is substantial as all too often the real decision maker has no capacity in English. I have seen some discussion go horribly wrong due to missed nuances and lack of understanding of complex business issues by the interpreter.

Engineering and technical standards: In Iogen’s case the decision was made long ago that we would only look at the old EU and the USA as our first priority market. We have emerging technology and the challenge of launching it successfully in a third world setting is not worth the risk. Later on, for certain the third world holds some appeal, once the bugs have been ironed out.

Legal System: While this has been covered quite well in the course outline, some aspects warrant further comment. While many countries have fairly impressive laws in place protecting foreign investment and other business activities by foreigners, how well are they enforced is the real issue. Is the judiciary completely unbiased when it comes to a legal dispute involving a local person or company and a foreign entity? The track record past disputes is something that the local American Chamber of Commerce would be in a position to comment on.

Quality of Life: Is the country/society one in which an American can comfortably live or visit? Here we are not necessarily talking about the main cities – but where would the business activity actually take place? Housing, shopping (both availability and costs), schools, local transportation, international flight connections, medical care, recreation, meaningful employment for spouses, social structure of the expatriate community, and the like are factors that can seriously inhibit the placement of quality managerial staff associated with a business venture. Besides establishing management on the ground, related issues occur for visiting company officials. If the location is unpleasant – this is detrimental to the enterprise.

Real vs. Perceived Demand: Market assessments in developed economies are frequently of a high standard and reliable. This is often not the case in a developing economy where obvious needs are often equated with market potential. Take low cost housing for instance which is a most pressing need in many countries. To translate this into a meaningful and profitable market opportunity for an offshore company is invariably a challenge. Managing a local workforce, access to local building supplies at non-inflated prices, arcane local permitting and building codes, local housing preferences, access to land and the like all work against what would seem as a perfectly logical enterprise for an offshore company.

General: I have lived and worked for many years in a third world setting along with a host of expatriates from several countries. The challenges of operating a successful business venture is often underestimated while the returns from the venture all too often fall short of expectations. The unknowns are just that much more prevalent in such a setting which often leads to venture underperformance or even failure. 

Global Human Resource Management

The HR element begins with the employee themselves – are they comfortable travelling and being away from head office and the home environment? Students should perhaps do a self evaluation on this because it is a microcosm of what a company has to deal with to get people on the road. Also not all people are effective in unfamiliar circumstances – this should be realized as opportunities will be lost and possibly expensive mistakes will be made when the wrong people are sent into the world.

Then there is the common situation where the employee returns having encountered an entirely different circumstance than anyone expected. Those who were not there must make every effort to grasp the situation in which the traveler found him/her self. Decisions made under such circumstances must be accepted and indeed some can be brilliant. However, the point is that those in the team must be able to respond effectively to the unexpected and realize that a perceived unexpected challenge may really be an opportunity.

The situation of travel has a parallel but is much more complicated when employees and their families are relocated to live in a new environment. The company must have a well thought out support and compensation program for such individuals and their families. For students that might be accepting a foreign assignment, they should be alerted to the fact that reality soon replaces adventure after arrival at a new assignment. Housing, health care, schooling, relocation allowances, spousal employment are but a few of the issues that must be clearly addressed in advance.

A useful conceptual exercise might be to put students into a proposed foreign assignment situation and have them do a check list of issues to be covered for a smooth transition in to a new life.

End of seminar assignment

I have a general comment on the UMUC approach to foreign markets. I appreciate that it is an effort to achieve a global look by American students who all too seldom have the opportunity or inclination to look outside their borders. Thus the inclusion of exotic countries will certainly have some appeal through curiosity if nothing else. Unfortunately, the sad reality is that exotic markets are generally small, rife with complications, possibly corrupt, expensive to get to and operate in and the like. In other words, generally not profitable except for the large multinationals that have a total global outlook and know how best to deal in such circumstances. For the majority of students, foreign in their most likely work situation will mean Canada, Mexico, Western Europe, maybe Australia and perhaps Japan. The Nigerias, South Africa’s. Chiles of this world just do not offer the type of business opportunity most companies can aspire to.

Yours,

Maurice Hladik

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