Challenges in Today’s Global Management
Dear Readers – welcome again to another edition of the Tefen Tribune!
Since our last publication, in which we explored new ways to ensure customer delight in an aggressively competitive and uniquely uncertain world, the global economic landscape has become no less turbulent. Whilst this undoubtedly brings certain opportunities, it also makes guaranteeing the future impossible, and the impact on the ground is often that choices are not made, risk aversion sets in, and stagnation ensues.
Therefore, once a company does commit to a bold, strategic way forward in this global storm, this is not the time for making mistakes; this is the time for navigating through the turbulence with due vigilance and diligence, with thorough planning and careful execution.
This is the topic of your new Tribune: how best to meet your challenges amidst global uncertainty, by excelling in implementation both globally and locally.
Our first article looks at the process of launching a new product globally, focusing on the biomedical sector. Clearly, it is not only the strategic positioning and pricing of a new product that is key to a successful market launch, but also excellent preparation, stakeholder targeting, and supply execution. The authors propose the Blue Ocean Strategy methodology to apply differentiation and exploit the maximum value from a target market; but also to understand the market’s stakeholders, to target them with relevant processes and messages, and to set up a coherent supply and distribution strategy. The key to all of it is to anticipate and coordinate all internal mechanisms so that the project flows in a synchronized way, to avoid wastage due to delays, missed opportunities or value erosion.
Our interview this edition is with Mr. Arnon Eshed, Managing Director and CEO of Palram Industries Ltd. Palram Industries is a leading international manufacturer of thermoplastic sheets by extrusion from various materials, most specifically polycarbonates and PVC. The company has a distinctive take on the risks and rewards of organic vs. inorganic growth, and has expanded steadily to the point where it has a global reach with a large range of product-market groups. Mr. Eshed takes us through the challenges of operating in a global world in which the company is sometimes regarded as a foreign entity, and explains some successful solutions deployed – including the use of local customized sales and distribution channels and flexible bottom-up forecasting.
The third article is also set in the life sciences sector, and deals with the problem faced by almost all medical companies, of how to devise an organizational structure that is simultaneously efficient (i.e. economical), agile, customer-oriented, and yet retains the functional expertise required to operate safely and at the forefront of this industry. The desire for most companies is to move towards a more ‘process-centric’ model whilst in no way damaging the functional expertise already existing. Our 8-step framework for organization design is explored, and you are led through each step, right from defining the organizational philosophy that must deliver the strategic goals, through the process reengineering steps and the structure redesign steps, on to the role definition and KPI steps. As the foundation of this framework are the "business processes" – i.e. the organization must be built around processes that satisfy internal and external customers - only those tasks and interfaces that add cost but not value are eliminated, guaranteeing that functional and technical excellence be maintained.
One of the main outcomes of uncertainty in markets is ‘shakeout’ - the increase in number of acquisitions and closures. Acquisition levels have been extremely high during 2010 and 2011 globally. Stock markets look for decisiveness during uncertainty, and acquisitions are deemed an example of this, as evidenced by the jump in stock prices after an announcement. But 60% of acquisitions ‘fail’ and all too often the stock dips in the 6-12 months following a merge, as top line benefits are not realized and synergies are not properly exploited. Our next article examines the second of these two issues – the need for excellent post-merge integration – and provides a model for conducting each stage of the plan-do-review cycle properly, ensuring that the strategic priorities are understood by all, that the integration covers all bases (structural, functional and cultural), and that the PMI process itself is well monitored and governed.
Finally, the last article looks at managing change across global spaces, often as a result of acquisitions, but also from global expansion in general. As companies expand their operations in more and more new countries, the tricky issue of corporate, centralized standardization versus local, agile, customization rears up. The traditional decision about program-based organization structures (project-led vs. functional-led) is made much more complex when applied across globally diverse cultures. This article provides a framework for integrating these dimensions, and gives advice on how to distinguish between central tasks and local tasks, from planning through to controlling.
As always, our articles stem from operational research carried out during successful implementation projects with our clients. In this Tefen Tribune, we invite you to step into our world, share our experiences and consider our frameworks and processes, while we navigate together through this age of uncertainty and aim to minimize the impact of operational cost and risk!
By Pete Caldwell, Managing Director, Tefen UK
