International Project Management: Leadership in Complex Environments

Over the past decades we have experienced an explosion of international and large-scale projects. Benefits from these efforts have, in turn, spurred on more efforts. Here are some trends.

• Expansion of individual firms to sell their products and services in other countries. This began in the nineteenth century, but really accelerated after World War II. Today, you see the same products and services in almost all countries—leading to resentment of the invasion of the local culture.

• Standardization in government regulations and simplification. Governments around the world have seen the benefits of expanding trade and business through changing and simplifying regulations through free trade zones and other measures.

• Mergers and acquisitions. This will be explored in Chapter 12 in more detail. Today, you can see that the number of individual large companies doing business in just one country or area has greatly diminished.

• Requirement for a global presence to be viable in an industry. Whether you look at automobiles, banking, insurance, pharmaceuticals, or one-hundred other industries, you can see that there is drive for global presence.

• Worldwide manufacturing and distribution. When you buy any complex product that has multiple components, chances are that individual pieces were made in a variety of locations. Assembly was then carried out somewhere else.

Why have these occurred? A prime reason is improved communications and technology. Another reason has been expansion of transportation. Both of these have lowered the cost of doing business in multiple locations to the point that is affordable to many individuals as well as companies.

What are the benefits that organizations seek in carrying out international and complex projects such as those mentioned above?

• Economies of scale. By having one headquarters you achieve administrative economies of scale. By centralizing manufacturing activities of the same type you have additional economies of scale and lower costs of operations.

• Strength in size. For many firms there are major benefits to increased size. Retailing is a good example. A WalMart or Carrefour can obtain goods at lower prices and then be more competitive.

• Penetration of new markets and increased sales. The elapsed time to enter new markets has been dramatically reduced. In addition, a company can enter a market on a test basis and then later withdraw or retrench if the conditions are not favorable.

• Access to human resources. Many firms are challenged with labor problems such as a lack of personnel with specific skills or high labor costs. Operating internationally can help ease these problems.

• Lower cost of operations. With economies of scale and flexibility in moving and locating operations to lower cost locales, the cost of doing business is reduced.

• Maintenance and expansion of the firm’s competitive position. You often either grow or risk dying out. This has been the case in banking, insurance, and the automotive industry. When a competitor has success in expansion, you often have no choice but to copy the move.

What is the impact of these global trends? More international projects. But as you have seen, the results are often mixed. For every case of success, there are many instances of failure and problems. Look at the merger of Chrysler and Daimler-Benz for one example of problems.