Internationalization: the cost of strategic analysis
Strategic analysis certainly has an immediate cost. Avoiding this expense can lead to much higher costs in the medium term.
Published by Luigi Bidoia. .Bestpractice Export Internationalisation tools
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The export managers' community is divided between those who consider a strategic approach and who instead evaluates strategic analysis a cost that can be avoided. This gap refers to the classic issue of business management about the relationship between Strategy and Execution, where the former refers to all those activities aimed at explaining direction, ways and operations time !!!(and the latter refers to the operation itself)!!!.
SMEs often haven't a strategic approach
The management of a company is that the Execution can be completed without any explicit Strategy !!!(, that is to say without incurring the costs for its formulation)!!!. At the same time, however, no executions can be implemented without having as a reference a strategic vision. This is not explicit, indeed it is known only by the decision maker.
Low resources organizations, including many small and medium-sized enterprises (SMEs), avoid explicit
strategy costs. Consequently, they appreciate export managers who operate without an explicit reference
strategy.The appreciation for the export manager is directly proportional to the timeliness and the level
of the results obtained.
Furthermore, all strongly vertical organizations (including many SMEs led by a strong company leader) have consolidated processes that incorporate decisions regarding the direction, ways and timing of the action, making these decisions modifiable only through a direct intervention by the CEO. Explaining a strategy is useless because decision makers have already figured it out.
These two evidences create a strong combination between SMEs and "un-strategic" business management, namely a management not supported by an explicit strategy.
What managerial theories teach
Facing an "unstrategic" business management, all managerial theories highlight that:
- if a company has a lot of decision makers, a strategy is essential to stay coherent on goals;
- changing in company outside conditions may influence company strategies, hence it may be necessary to reposition the company in a more sustainable area coherent with the new environemnt;
- if there are changes in the company strategy, everyone has to check whether their actions are consistent with the new strategy, otherwise modify them. Only an explicit strategy can lead to a quick alignment;
- without an explicit strategy / planning, the analytical control of the results is meaningless, impeding, on one hand, from strengthening the skills on the actions that produced the best results. On the other hand, to identify possible areas to improve; i.e. the company does not learn from its successes and mistakes.
Technological revolutions, globalization and market instability are continually changing the external corporate environment
We live in an economic environment characterized by wide and deep technological revolutions:
- there are developing areas, which are constantly interacting with other areas;
- there are markets highly vulnerable to the expectations of economic operators and to the financial market confidence.
In this case the economic environment benchmark of a company is constantly changing.
In the short term, the effects of rising interest rates and changes in international trade policies will be added to the "normal" turbulence. It will change the hierarchy of markets by level of opportunity, types of risks and accessibility degree. If strategies are not coherent to the planned changes, company risks to be passively subjected to them and to wait for better winds -there is no favorable wind for the sailor who does not know where to go (Seneca)-.