The impacts on an organization as it becomes a global enterprise span all major organizational functions, including information technology, marketing, management, and finance. As an organization such as Microsoft makes the decision to expand or enter into a global market, management needs to decide how that expansion will take place. For example, will the organization export its goods and services, form a joint venture, or acquire another existing company within the global market? This decision is often determined by how knowledgeable management is about the market and its culture. In cases where management needs to gain practical knowledge about the market’s culture and legislative environment, low-risk investments such as exporting and joint ventures suit the organization best (Poulos, 2012). Regardless of which expansion strategy is executed, it requires additional human resources, training and collaboration with outside entities.
Prior to the execution of an expansion strategy, the organization’s management also needs to consider the local demographic. Will the mix of products and services the organization plans to offer appeal to the local market? Will the advertising messages need to be differentiated to avoid alienating or offending cultural norms and practices (Poulos, 2012)? How much market research needs to be conducted prior to implementation? Are there local laws and regulatory considerations concerning currency exchange or otherwise that will impact operations and require additional financial resources? Will relocated staff needs to be trained on the local cultural norms and regulatory environment?
Besides regulatory concerns, organizations need to consider the impact of the competition. Do brand names need to be changed or modified in order to overcome cultural bias? Furthermore, if an acquisition of an existing local company is chosen as the expansion strategy, how will the company’s assets (tangible and intangible) be absorbed or combined with the parent organization (Poulos, 2012)? Any global expansion has the potential for financial rewards for the various stakeholders of an organization, but it also taxing in terms of expending financial and human resources.
Poulos, T. (2012). Becoming mega or being meager? Telecom Asia, 23(4), 35.