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External IssuesExternal IssuesIntroductionExternal issues are
those that arise from government, competition, and other factors that are not
within the organization. Hence, there is a lack of control. Often, management is
caught by surprise by these issues. They have trouble reacting to the
situations. IssuesIssue: Local Laws Are Impacting The ProjectMany firms make assumptions regarding local laws. They sometimes assume that the laws in the country are compatible with their own. Companies can get into such difficulties that they are forced to withdraw from the country for some time. ImpactIf a firm does not give attention to local laws and customs, then projects tend to run into barriers. The project team is forced into a reactive mode. Work on the project stops and the issues raised by local laws are dealt with. The project may just unravel. PreventionUnderstanding of local laws requires more than a few local attorneys. You have to get at the interpretation of the laws in the specific location of the country. In China, for example, each province can interpret rules and regulations differently. You should look for similar projects that ran into trouble and succeeded. Draw lessons learned from these experiences. Issue: Competition Is Much More Intense In A Specific CountryCompetition impacts a company’s operations in terms of what products and services they offer. It also affects such areas as advertising. People get the impression that just because a project is not involved in competition that there is no impact. This is often not the case. Competitive pressures require responses and generate many activities by the managers and staff at the specific location. This then denies the use of the resources for the project. In one soft drink bottling company several major construction projects as well as IT efforts had to be postponed because the attention had to be given to ensuring customer satisfaction and in feeding the distribution channels. Headquarters may not be aware of the pressures that one location is feeling. Management may still insist that the project be done. ImpactThe above discussion pointed to the negative aspects of competition where projects are deferred or put on hold. There can be a positive impact. If, for example, a competitor adopts some technology or embarks on some project to expand their market share, then this is an opportunity for a new project. This happened recently with one retail chain that detected major store upgrades in the works at a competitor. It triggered a response to upgrade their stores—thereby preserving their share of the market. However, the situation can arise where the management in the field propose a new project in response to competitive pressure to headquarters. Headquarters may not be interested or willing to start the project. The local office is then left with trying to carry out smaller efforts to stem any damage. Only later does the management at headquarters wake up to find out the opportunity that was missed. PreventionHeadquarters management should take several proactive steps. First, they should encourage each location to undertake a regular competitive assessment. In some industries this should be done once a year. In other more aggressive settings it should be done more frequently. Headquarters should provide guidelines and training in how to generally go about this while leaving the detailed structure of the work to the individual location’s management. The second step is to encourage each location to submit ideas for new projects and efforts. Many times this is restricted to an annual basis. However, business changes much more dynamically so that a better approach is to do it on a quarterly basis. ActionIf there is a competitor who is getting more aggressive, then the local office can be encouraged to collect the information about this effort. Headquarters can then poll the other locations to find out what is going on. A concerted response can then be planned and taken in one or more locations. Issue: Savings From A Project Are Not Attainable Because Of Local LawsThere are many local regulations that inhibit the attainment of savings. One example is a restriction on currency conversion and transfer out of the country. The savings may have to remain in the country. A second case is where there are strong labor laws that protect jobs and make it difficult to downsize. That is why, for example, many European firms first downsize and obtain economies in other continents. Their labor laws are much less restrictive. While the short-term benefits are obvious to the job market, the long-term effect is to shift employment to countries where the labor laws are more flexible. ImpactIn many projects there is little thought given to how the benefits and savings will be realized. People assume that there will be the same benefits as at headquarters. They later find out to their dismay that there are no savings in some locations. Management may then try to force economies. Future projects are then discouraged. PreventionPrevention is really simpler than it first appears. The firm needs to be aware of the local laws and regulations. Then they can plan how to take advantage of the savings in other ways. For example, if there is a currency restriction, then other uses of the funds from the project results can be found in the country. Charitable projects might be undertaken. Parts of a plant can be expanded. In the case where people cannot be terminated, then the employees can be redirected into other work. In one southeast Asia country we organized such an effort. Both quality and overall productivity improved. ActionIf a project is started and the benefits are not thought through, then a possible action is to initiate another project to determine how the benefits can be used locally. Issue: Economic Conditions In One Country WorsenMany economies of the world behave in harmony and sympathy due to globalization. However, it can still happen that one or more locations may be in recession or worse. The question is whether to pursue projects in these countries. While the first answer would seem to be no, there is the argument that a downturn is a good time to make the situation better in the company’s operations so that when the recovery occurs, the company can take advantage of the new and improved situation. ImpactThe initial impact of a downturn has been in the past to put new projects on hold and to scale back on current projects. Many projects today are on a larger scale so that scaling back or stopping is not an economically attractive option. Then the decision is made to continue. PreventionThere is a need to gather economic information as well as internal business information in each area in which a company operates. This will provide an early warning system to potential problems that may affect projects. Issue: The Operations In One Country Have More Urgent Work Than The ProjectAn organization may have many far-flung operations. Each location has its own individual needs and problems. When headquarters initiates a project that does not really benefit many of the business locations, then people at the local offices become quite resentful. Morale may suffer. Productivity may drop. The company may appear to many as being mismanaged. This was certainly the case when many firms rolled out ERP systems. ImpactMorale and productivity are affected. More importantly, the new project robs resources in each location that could have been employed to address local problems. Moreover, management attention becomes focused on the new project so that there is less time to deal with local issues. PreventionCompanies exist in a global environment. Making decisions based on one location, even if it is the headquarters, is very short sighted and tends to result in more problems. Projects should be planned across all offices in a proactive way as opposed to reacting to specific situations. The most successful firms are often those that are highly sensitive to local conditions. ActionIf a project is started at headquarters, an assessment of the impact and benefits at each location should be undertaken. Perhaps, the project should only be undertaken in a few locations. Later, it can be expanded when the situation warrants action. Issue: New Technologies Appear In Some Locations That Offer New OpportunitiesTechnology advances relentlessly. The pace of technology tends to be uneven due to the unpredictability of breakthroughs. While there have been many successes, it can be argued that there have been many failures. Widespread deployment of PCs in the 1980s often led to lowered productivity without networking. More recently, the adoption of portable, handheld devices has found to be wasteful since there were no real business applications. To take advantage of new technology requires a company to assess the following:
Answering these questions can lead you to defer the new technology until it has matured. ImpactNew technology has benefits, but it is also disruptive. Everything around the technology is affected. Thus, it has been the case that while there are long-term benefits, the short-term effects of the new technology are quite negative. PreventionThere should be a technology watch capability in companies of substantial size. This provides an early warning to new technologies. The company can then be more selective and follow a proactive approach to the selected technology. Unfortunately, much technology is adopted in a reactive mode that is not fully thought through. ActionIf a technology has been adopted for use in a company, one of the parts of the project should be an assessment to determine the readiness of each company location to accept and use the technology. Issue: It Is Difficult To Line Up Qualified Suppliers In Some CountriesWhen you undertake a new project, you often have to rely on contractors and suppliers to provide labor, material, and expertise. In a multinational firm there are likely to be a number of locations where there is no local support available. The alternative then is to relocate supplier staff to remote locations—very expensive. ImpactWithout qualified suppliers a project may languish and flounder in some locations. Local management may be blamed for not getting the project off of the ground. PreventionBefore any new project is started, an assessment is necessary to determine how the project will be rolled out in different countries. It may be determined that some countries may have to have the project deferred for several years. ActionIf the project has already started and contractors are on board, an effort needs to be undertaken with the contractors to determine how each location will be supported. If there are gaping holes, then deferment is almost a necessity. Issue: The Culture In A Country Is Not Compatible With The Results Of The ProjectA project produces results that should benefit the business in each location. However, the culture of the country may be such that the results are counterculture. A simple example occurred when a fast food firm rolled out a new product worldwide. Too bad that the firm did not realize that the religious sensitivities of the citizens of the country were offended. There were street demonstrations and several stores were destroyed by arson. The firm had to retrench. It took over three years to recover to the sales level before the disaster product was launched. ImpactThe example points to the problems when projects are carried out without sufficient thought and sensitivity. The result extends to more than failure of the project. PreventionAll of the aspects of a project need to be explained to local management prior to the start of the project. Managers should be encouraged to voice any concerns. This must be done long before the project is started. If it is done too close to the project start, then there is too much momentum to make changes. ActionIf a project is started without the analysis, then the project should be reviewed as soon as possible in each location. The firm must be willing to halt the project in specific countries. Issue: There Are Many Different Cultures And Languages In A CountryIn most countries of the world now there are many different religions, cultures, and languages. If the company pays too much attention to the characteristics of the dominant group, then they risk alienating other groups. ImpactThe impact in direct terms is lost sales. These sales are often lost forever or for a long term regardless of what the firm does. The people feel that the company is a agent of the dominant group. PreventionThe specific steps depend on the individual company and project. However, one approach is to create alternative versions of the project that address different audiences. ActionIf the problem arises, consideration should be given to halting or redirecting the project. 353
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