Introduction The following text is a review on the Harvard Business Review Have you restructured for global success? By Kumar, N. and P. Puranam, published in 2011. The article focuses on the importance of structural changes that occur or have to be implemented, when multinational companies enter emerging markets, such as China and India, in order to operate successfully and exploit these markets to their full potential. The authors name several examples of what challenges companies faced and how they restructured to adapt to markets in developing countries.
Also, reasons for why existing structures are too deficient to exploit location-specific advantages and gaps between multinational companies’ ambitions and achievements. Moreover they introduce structures such as the the so-called T-shaped structure as one model that companies can adopt. At the end the authors state that structural change is necessary, companies must make trade-offs, appropriate to the economic environment and competitive context to create a global competitive advantage. Main body
The authors Kumar and Puranam express the purpose of the article in the title “Have you restructured for global success? ” and a subtitle “It takes more than localizing your customer-facing business to win in emerging markets. ” Together they indicate the content of the article, rephrased it may look like the following sentence: In order to be successful in emerging markets it takes more than localizing the customer-facing business, but also restructuring and upgrading the existing business structure.
In the conclusion the authors state, “no organizational design is perfect or permanent”. In the article they discuss this statement and support it with arguments and give conclusions such as the following: Before entering emerging markets, multinational companies first have to focus on finding the right structure or what the authors call restructure, in order to successfully adapt to the business environment and to realize their companies’ full operating potential.
Advantages of conducting business in developing countries such as China and India are among others new customers and demands, new products and services, raw materials, suppliers, highly skilled individuals and related to that the possibility for innovation and technology. Furthermore companies will find “the best expertise, at the lowest possible cost and exploit the time zone variation to operate 24/7. ” (page 124) Kumar and Puranam found that many companies struggle to develop products and services that meet local preferences in these countries and introduced the so-called T-shaped structure.
Companies have to cope with two different pressures; on the one hand there is the customer side, which requires a high level of localization on their front end. On the other hand, the back end of the value chain they should “break up operations such as product development and R&D, relocate them, possibly across several countries and integrate them across the world. ” (page 127) The vertical stroke describes the need for depth within each country and the horizontal stroke stands for the connection between them.
Structure will change dramatically in the future, according to Kumar and Puranam, because India and China are sources of talent for new product and process development and moreover their customers have distinct demands and needs. They speak of Asianization and that the political center of gravity will shift eastward. Regarding the layout, there is a picture of the Microsoft CEO giving a speech about the opening of the companies’ headquarters in China. It indicates China as one of the countries that will be discussed in the article, however the article does not refer to this example anymore.
The authors use headings and paragraphs to make the article more vivid and give a nice overview, although there are some long text sections which could have been divided in multiple paragraphs. Moreover important quotes are highlighted and there is an interesting diagnostic tool, which can “help to calibrate how geographically, clustered, or dispersed the key capabilities of a business are. ” (page 124) On the right side of page 127 there is an advertisement on business education programs, which we consider aimless, because we could not identify the link between the content of the text and this advertisement.
The article begins with a short example of the company Starwood Hotels and the actual introduction starts in the third paragraph of page 123. It is a relatively long introduction that is also very detailed. What follows are reasonable content and clearly structured topics, the authors addressed. They provide adequate argumentation and evidence to support their statements e. g. by referring to past research (page 127) when talking about separation and integration – two complementary approaches to coordinate geographies.
They mention real life examples such as GE’s John Welch Technology Centre in Bangalore and explain how it operates, divides tasks by setting up centres of expertise and in this way successfully exploits local skills. The authors mention the T-shaped structure on the second page, however the actual explanation follows on the fourth page of the article. This might be confusing for the readers if they did not know the definition. Furthermore throughout the article there are abbreviations that are not explained beforehand, such as R&D, M&A, P&G, which might also lead to confusion while reading the text.
Multinational companies, expanding abroad, adapting structures to markets in order to operate successfully etc. are all topics of our courses. This article shows an important aspect of international business because according to Kumar and Puranam emerging markets are growing rapidly and managers are realizing what potential these markets have and how successful they can be exploited. In other words, the trend to operate in developing countries will be followed by more and more companies in the future.
Since we are studying business, we intend to work in this field in a couple of years. It is important to learn about the current business environment and about the future. Conclusion This Harvard Business review discusses a relevant topic; multinationals entering emerging markets is an ongoing process and not expected to decline in the near future. Many real life examples and subtopics are discussed among others cultural barriers that enforce structural change and guidelines to operate successfully in emerging markets.
Although we criticized minor aspects such as missing explanations for abbreviations that a reader might not know and explanations that follow two pages later, we can recommend it to students that are interested in this field of business as we mentioned in the last paragraph of the body part. This is an overall reasonable article, and an accomplished combination of an introduction to the topic, specific background information, adequate examples and arguments, that support the authors statements.