Globalisation: a challenge or a threat?
Although many companies in Belgium think that internationalisation does not concern them, the impact of globalisation in the business world is becoming increasingly tangible. Management Discovery Days provide Vlerick with the ideal opportunity to explain the risks, challenges, advantages and drawbacks of globalisation during the session on “Doing business in an international environment”. The thought-provoking real-life business cases presented illustrate that internationalisation can also spell success for Belgian companies. We spoke to Professor Leo Sleuwaegen.
On the offensive
In a recent study, Prof. Sleuwaegen looked at how companies in Belgium deal with globalisation. Do they go on the offensive and actively seek out new opportunities, or do they tend to adopt a more passive attitude and perceive globalisation as a threat? “It’s quite possible to successfully capitalise on the new economic context,” comments Sleuwaegen. “The real-life business case of luxury lingerie maker Van de Velde is a good example in this respect. Back in the 1980s this company expanded into the international market and its business interests have prospered as a result of collaboration with China. Some firms have developed their product range to include high-quality items, while others have slimmed down their operations, retaining only distribution, for example. The crux of the matter is that globalisation has an impact on all aspects of a company’s operations and can be very threatening for those who just watch from the sidelines. The opposite is also true, though: by acting proactively in an international context, it is possible to develop into a large-scale business enterprise.”
New skills
“One of the messages that we want to put across during the Management Discovery Days is that internationalisation is becoming a prerequisite for success in many sectors,” continues Sleuwaegen. “In Belgium, companies are still not taking full advantage of the new opportunities offered by globalisation. One of the reasons for this is that we still have a lot of family businesses, which are often hindered by their very structure from going international.” Outsourcing or offshoring helps companies to be successful. This is confirmed by the research conducted by Prof. Sleuwaegen and his team. “Unfortunately, only about a quarter of Belgian processing firms make use of offshoring. The picture is completely different if we look at subsidiaries of foreign companies in Belgium, where up to 90% of their activities are offshored and the tendency is to operate within networks. However, working with external networks and parties calls for specific skills that are frequently lacking in Belgian companies. Whereas they’re usually very strong in terms of technological know-how, there’s often a shortage of commercial skills or marketing and management expertise. If you want your company to grow internationally, you need people who can work out a specially adapted business model, dream up potential new combinations for new markets and identify the skills needed to launch your business model worldwide.”
New horizons
Companies seeking to develop their activities internationally need more than a good business model, however. They frequently come into contact with other cultures and societies that are organised differently. Acquiring intercultural management skills is one way of improving interpersonal relationships, but often it takes more than an awareness of cultural differences. Prof. Sleuwaegen again: “Companies that are expanding abroad have to deal with what is known as the ‘liability of foreignness’; in other words, a lack of knowledge about specific rules and regulations, how networks work, how to deal with the authorities, how to settle disputes, etc. Many companies underestimate the importance of these critical issues. If you’re thinking of going international, you need to scrutinise the broad institutional context in the countries concerned. Often managers focus on the market and the financial aspects, but forget about the broader context in which they have to do business, not just when opening a subsidiary abroad, but also when acquiring a new business activity.”
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Orator - June 2007