Might multinational managers be the problem?

My recent US trip was principally motivated the big annual conference of international business scholars – the AIB. I spent five sunny days in San Diego presented, discussing and pondering the nature of multinational activities, strategies and impact with 900 or so other academics. There were a range of fascinating sessions and papers.

An opening session featured some IB luminaries – Pankaj Ghemawat and Udo Zander – discussing the nature of the global business environment (notionally the rather non-controversial Flat versus Spikey debate). Both made strong arguments that none of the purported globalisation we’ve seen in recent decades is particularly unprecedented when we look at a time frame of a century or more, nor is international trade and production as integrated or connected as most people assume. They presented some conflicting implications of this however.

Ghemawat argued that firms run the risk of assuming the world is flat and thus adopting big, bland reductionist strategies that will satisfy no consumer’s needs and will stumble in the face of genuine country and regional differences.

Zander argued a more complex and controversial position. In his tale, only a small number of multinationals manage to build temporary innovation and knowledge advantages that they can leverage via global cloning (i.e. advantages that are sufficiently transferable and applicable across multiple markets). Other multinationals will struggle to adapt to to local needs and thus fail (or at least underperform).

So far, there’s not much new in this perspective. Even his explanation for the barriers to firm adaptation/learning aren’t surprising – the multinationals are burdened by the organisational history/institutional memory and current wisdom is sticky.

Where it gets intriguing is the examples he gave of subsidiary managers in markets steadfastly refusing to change their strategy in the face of years of failure and repeated suggestions to adapt and learn.

This begs the question, as does Ghemawat’s characterisation of strategies being too simple, are multinational managers the handbrake on multinational success?

Perhaps we have placed too much weight on the size of the challenges in international business, and too little on the failure of managers to tackle these challenges. Firms may be failing more because of the weaknesses of their managers rather than any insurmountable liabilities of foreignness or risks of doing international business.

As scholars we spend too little time looking at failures and too much time looking at the winners. Perhaps the winners are just those who stuffed it up the least. Might we learn more from the mistakes?

Retail reflections from the Road – part two

I’m back again with some comments about my experiences as a consumer in the home of consumerism – the USA (California specifically).

Firstly, I can (finally) speak with first hand experience about the monster of all retailers – Wal-Mart.  I popped into one of the stores on the outskirts of a relatively innocuous mid-size town.  It was a pretty underwhelming experience, not overly different to an Aussie Big-W or K-Mart.  The merchandise was certainly cheap, but it was also pretty cruddy.  I wouldn’t be heading there for much more than some brand name essentials that I might buy in bulk.  The vibe was very much indicative of the spartan practices of the firm.

Of course, this is exactly what this firm trades on.  Much of the sources of competitive advantage come from cutting the fat out of the customer interface and all other aspects of the value chain (see much more discussion of that here). The latter is not likely to be obvious to the casual visitor.

There is one other aspect worthy of note in both Wal-Mart and numerous other large-scale retailers we’ve encountered. We are frequently served by elderly sales assistants, male and female.  This segment of the labour force is rarely employed in such roles in Australia.  Presumably turnover amongst them would be much lower than among the usual troops of high school and uni students enduring such employment down our way.  This springs from significant differences in industrial relations laws and the like.  It would be intriguing to know whether such variation is viewed as a further barrier to these US firms entering Australia.

Retail reflections from the Road – part one

Blogging hasn’t been front of mind for me over the past 10 days of so.  Indeed, I have been fixated on consuming burgers, seeing sights, reading roadsigns and booking hotel/motel rooms as I traipse down through California towards San Diego.

Nevertheless, I thought I’d take this opportunity to relate my an early experience in my travels to previous posts on this here Blog.

In San Francisco I had the opportunity to experience Aussie shopping centre giant Westfield’s US expansion.  They had done a fine job of branding and delivering a suitably slick real estate and retail offering.

There were a couple of Aussie retailers on display (Napoleon Perdis and courier-bagsters Crumpler), as well as the expected mix of US and international chains.  I was disappointed by Zara and H&M’s offerings (their clothes didn’t seem quite as flashy yet utilitarian as they do in Europe).

I was more impressed by the offerings of Martin+Osa, a fashion house that it turns out is a brand extension from the more ubiquitous and mainstream American Eagle Outfitters.  These two brands serve as a strong reminder of the sheer size and scale of the US market and the limited need for US retailers to internationalise.  American Eagle is yet to spread its wings beyond Canada, while Martin+Osa only has stores in 17 states.  Nevertheless they are able to offer decent quality clothing at their respective (surprisingly low) price points.  Australia-only fashion retailers would simply not be able to compete at that level.

The presence of Perdis and Crumpler remind us that Aussie retailers really do need a neat point of difference to justify tackling the US scene (and beyond).

More on retail in the coming days…