A Primer for Global Start-Ups

Hordes, M. W., Clancy, J. A., & Baddaley, J. (1995). A primer for global start-ups.

The authors of this article begin by defining what a truly global enterprise is and how it differs distinctly from both international and multinational enterprises.  First, an international enterprise is characterized as one having a headquarters set up in one "home country" and simultaneously locating part or all of its operations in at least one other country.  Examples include the airline and telecommunications industries. 

A multinational enterprise is more culturally and organizationally diverse in that autonomy regarding operational decisions is increased in national /regional operations.  Local cost drivers and discretion play a bigger part as headquarters, which acts mainly by providing guidance, runs operations through a "national" instead of a "transplant".  Examples include the automotive and banking industries. 

Global enterprises differ from both of these in that they have "created an organizational culture that values diversity and a few core values are their major unifying force".  The headquarters of a global enterprise is headed up by a team of managers comprised of various locations.  Examples include pharmaceutical and management consulting industries. 

This article next reflects on characteristics required to complete a global start-up.  The authors refer to some mentioned in a previous article by Oviatt and McDougall, but also insist on a few more critical factors. 
The first of these is Instant Critical Mass.  Creating this requirement demands " very focused globalization strategy and the ability t execute that strategy consistently in rapid time frame". 
 The second characteristic is the ability to Leverage Capability and Develop Knowledge Workers by generating new knowledge and applying it to where it's needed.  Knowledge needs to be shared throughout the company and included in the training and development of global workers. 
  Finally, the authors discuss Global Coordination as a necessary means to gaining the competitive advantage.  This includes working a strong strategy of information transformation and allocation of responsibilities across dispersed places.  Flexibility is gained with global coordination, allowing such enterprises to respond quickly to threats, pick battles of their own choice and stay on top. 

The authors believe that a new trend is emerging which includes an increasing amount of truly global enterprises being formed that are forcing out others who are not doing the same.  However, going global often fails, as it is not as easy to do as going international or multinational.  Three main reasons are offered for why such attempts may fail. 
The first includes strategic alliances because these days its partnerships, not going it alone, that will bring you benefits for long term success and competitive advantage. 
 The second includes functionality and form in that to be considered as a global enterprise, organizations must span several countries and understand the creative organizational designs being used today such as outsourcing and shared sources. 
The final cause is the myth of the human side of the enterprise.  The authors accentuate this point about how critical it is that global enterprises must focus on their orientation, training and cultural exposure, all of which are crucial to operating globally successfully.  They go further into the point by suggesting more specific aspects that human resources must consider.  These include building deep cultural understanding with staff, training people in cultural concepts and characteristics, learning a second language, conducting inter cultural team building and creating internal global teams. 

There are many factors and characteristics illustrated in this article that comprise the making of a truly global enterprise which is predicted to be the competitive leader of tomorrow.  This article was very helpful in gaining such a perspective and examining what variables a firm needs to focus on in order to even be able to compete in the future.

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