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External Issues


External Issues

Introduction

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 situations.

Issues

Issue: Competition 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.

Impact

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.

Action

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 more flexible.

Impact

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.

Action

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.

Issue: New Technologies Appear In Some Locations That Offer New Opportunities

Technology 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:

  • 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.

Impact

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.

Prevention

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.

Action

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.



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