External 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
Issue: Local Laws
Are Impacting The Project
Many 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.
If 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.
Understanding 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.
If a problem with local
regulations surfaces, try to address the issue while keeping the project going.
You do not want to draw off personnel from the project team unless it is
absolutely necessary. Start another project to deal with the local regulations.
Is Much More Intense In A Specific Country
Competition 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.
The 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.
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.
If 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 Laws
There 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
In 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.
Prevention 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
If 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.
Conditions In One Country Worsen
Many 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.
The 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.
There 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
If there is a sudden
downturn, then there should be an organized assessment of all of the locations
to determine if other ones will be impacted. You really don’t want to wait for a
crisis to occur. You should have a proactive approach ready when the problem
Operations In One Country Have More Urgent Work Than The Project
An 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.
Morale 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.
Companies 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.
If 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.
Technologies Appear In Some Locations That Offer New Opportunities
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:
What are the real benefits of the technology?
If the technology is not pursued, what are the impacts?
Are competitors likely to use the technology soon?
Is the technology sufficiently mature to be able to be
placed in many countries around the world?
Is there sufficient infrastructure of support available?
Answering these questions can lead you to defer the new technology
until it has matured.
New 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.
There 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.
If 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 Countries
When 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.
Without 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.
Before 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.
If 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 Project
A 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.
The 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.
All 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.
If 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 Country
In 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
The 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.
The specific steps depend on the individual company and
project. However, one approach is to create alternative versions of the project
that address different audiences.
If the problem arises, consideration should be given to
halting or redirecting the project.
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