The results of the globalization is often hard to predict. The success depends on many factors no matter how much research and preparation the company has put into pre-hand. Per Tristrategy’s theory, the timing of introduction and macro environment, the market readiness, the synergy of the expansion and the willingness of adoption from the customers are the key to success.
Tesco, top British grocery chain(about 30% of the UK market share), is not doing well with its US business after the openings of its Fresh & Easy stores from 2007. Daily grocery is a sensitive area of every common folk’s life and some local taste and habits may not easily be changed over. Part of the reason of this globalization story is that US folks’ stickiness to their daily grocery habits were underestimated by Tesco. Although US market is best known for its cutting-edge innovations in many areas, US consumers can be very stubborn and traditional, esp. on living styles and daily habits, just like French folks can’t live without their daily baguettes, cheese and wine.
The other part of the reason is also the timing and location. When they first opened Fresh & Easy stores in 2007, they chose California, Arizona and Navada. These were the hardest hit housing markets which started melting down terribly from 2007.
On another side note, sensitivity to the local markets in globalization is always important, not only for businesses entering into a foreign market, but also for all economic and political initiations. Cultural and religious sensitivity is hard to be over-emphasized in today’s politics, but also in any globalization attempt for business. Relying on local supporters can help overcome some of the obstacles, but preparation in the mindsets of the business leaders and respects to these sensitivities are also super important if a smoother result is expected. It surely adds challenges to the concept of globalization.
P.S. on 9/24/2013: An update on the Tesco story- On September 10, 2013, Tesco agreed to sell most of its Fresh & Easy chain (about 150 stores out of 200) to billionaire Ron Burkle’s Yucaipa investment company and to exit the U.S market after a six-year trial. The rest of the unsold stores will be closed.
Recent disasters of the complete write-down and lawsuit with Autonomy purchase from the tech industry giant HP provided us some valuable insights to today’s business world and management lessons:
1. A sky-dived savior from outer space seldom will save the world. HP’s use of ex-CEO from an European company proved to be more of a disaster than a game changer. European’s business culture and management system differ startlingly from those of the Americans. High flying ideas and quick turnarounds that are rarely seen from the European business arena cannot be tested on a big American company without a proof of concept.
2. Like holidays sales, hot purchases based on wishful thinking usually cool soon after getting into the hands. A lot worse for those “no-return” ones. Microsoft’s 2007 purchase of AQuantive at $6.3 billion with 85% premium (a writedown of $6.2 billion in July 2012) and HP’s purchase of Autonomy at $11.7 billion with 64% premium (a writedown of $8.8 billion in November 2012) were of the same suit. There are more similar stories to come(for example, the May 2011 acquisition of Skype for $8.5 billion while Skype was valued at $2.75 billion by EBay’s divestiture just 18 months earlier.”So wish to get it, no matter at what cost” typically describes the mindset and behaviors of those hot-headed high-ups. What you wish to get vs. what you got, how you wished it be used vs. where you truly can use it are of different things even for companies with many brilliant lawyers and accountants- it’s just not their job to decide. It’s more of the display of the management’s “sudden brilliant flashes in the head”. Caution is needed. Compare, research and listen to the questions and opposite views before you buy.
3. This is a time for many businesses on a true transformation. Yesterday’s breadwinners may no longer be suitable to feed today’s hunger needs. The worldwide recession is a warning and also a calling. Systems-political and economical, industries, individuals, welcome to a changing world where old routines may no longer apply. Tides of changes are coming in bigger and faster ways than many companies have anticipated before. For those who have the culture of easily burning tomorrow’s bread-winners on today’s altar, time to call for a wakening. Tomorrow is already here. Yes, “Elephant can dance”, but it needs leaders who stays current but can see far ahead, who truly understand the culture, the business, who has the determination and means, who has the full backing of the key stakeholders and a little bit of time, to get there. The questions usually are: where to find these leaders, will the companies still have enough time before the next crushing wave? Are leaders and companies prepared in mindset?
In the past two years, TriStrategy has established a partnership with consulting company Sirus6 in Seattle area. Working closely with its President and CEO Lorraine, we have strengthened our mutual offerings and increased our resource pool, esp. for local Microsoft projects. We look forward to collaborating with Sirus6 in more areas in the near future.
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