Global enterprise management strategies and practices

Management of Global Enterprise

The company develops a software solution that is used in business consulting. Basically speaking, the solution proposes a suite of applications that deal with the entire selection, coordination and management of business projects within the company. This way, the entire process is covered with our software. The selection is done taking into account both the projects' cost and the added-value that those projects bring within the company. The management process is coordinated with the help of a project dashboard, while intermediary issues such as project planning is done with applications similar to Microsoft Project.

The company has around 100 employees, mostly developers and beta testers, but also salespersons, consultants and people coordinating the business processes the company is involved in. The idea to go international had, as a primary motivation, the issue of cost reduction. Indeed, as mentioned, most of the employees are programmers and beta testers. By outsourcing the developing function of the organization, while retaining its business core in-house.

2. The country of choice was India, where the workforce is both very specialized in it and programming and relatively cheap to the salary costs in the U.S. The recent economic trends and the rhythm of development in the country support this idea as well. Indeed, the country has grown at an incredible pace throughout the last decades and the rhythm of growth seems to be sustainable. From this perspective, we are likely to have a stable macroeconomic environment, one that will not result in sudden over-evaluations of the national currency or any sudden drops in the GDP.

On the other hand, as expatriate managers, we are bound to expect our business to be affected by cultural differences. One great advantage in this area is that Indians speak English, so this eliminates the problem of communication. However, despite this, it will take some time before implementing a system of economic efficiency and high productivity. The Indians will tend to be less organized in their tasks, so the organization will need to implement its own processes and mechanisms in India.

3. Legal / ethical. Since the company is not planning on selling the products on the Indian market, but only to develop them there, the recommendation is to set up a simple branch office. The actual regulations for setting up such an office are not too complicated. The only thing that is needed is to send a completed Form FNC -12 to the Exchange Control Department of the Reserve Bank of India, Foreign Investment Division.

On the other hand, there are also several other legal issues to be taken into consideration when opening our branch office in India. First of all, one needs to clearly specify in the contracts with the employees and third parties that the law governing the contracts is the U.S. law. Further more, given the nature of our activity, one would also need to study the implications of the Indian laws of intellectual property.

Political. India is recognized as the world's largest democracy. From this perspective, the democratic system that works in India is bound to create a stable political environment for our company. This reduces very much the risk of potential problems such as nationalization or destabilization, caused by political turmoil. However, the last decades have seen a dangerous surge in terrorist acts in the country. From this perspective, the security environment is less optimistic in India than the political one.

Economical. The macroeconomic variables still remain very attractive in India. Besides the constant GDP growth of 5-6%, India can also boast a good education system, ready to prepare specialists for companies such as ours.

Any threats in this area can come from the risk of macroeconomic instability. This can take the form of inflation, if the economic growth encourages aggregate demand beyond saturation. Further more, it seems that many of the World Bank loans were not used towards structural reforms, but rather towards short-termed macroeconomic projects.